19–010

108TH CONGRESS REPORT " SENATE ! 1st Session 108–44

AUTHORIZING APPROPRIATIONS FOR FISCAL YEAR 2004 FOR INTELLIGENCE AND INTELLIGENCE-RELATED ACTIVITIES OF THE UNITED 

STATES GOVERNMENT, THE COMMUNITY MANAGEMENT ACCOUNT, AND 

THE CENTRAL INTELLIGENCE AGENCY RETIREMENT AND DISABILITY 

SYSTEM, AND FOR OTHER PURPOSES

MAY 8, 2003.—Ordered to be printed 

Mr. ROBERTS, from the Select Committee on Intelligence, 

submitted the following 

R E P O R T 

[To accompany S. 1025] 

The Select Committee on Intelligence (SSCI or Committee), having considered the original bill (S. 1025), to authorize appropriations for fiscal year 2004 for intelligence and intelligence-related 

activities of the United States Government, the Community Management Account, and the Central Intelligence Agency Retirement 

and Disability System, and for other purposes reports favorably 

thereon and recommends that the bill pass.

CONTENTS 

page 

Classified Supplement to the Committee Report .................................................. 2

Section-by-Section Analysis and Discussion .......................................................... 2

Committee Comments on Fiscal Year 2004 Intelligence Authorization Bill 

and Other Matters ............................................................................................... 12

Intelligence Community Management, Planning, and Performance: 

Intelligence Community strategic and performance planning ...................... 12

Intelligence Community compliance with Federal financial accounting 

standards ....................................................................................................... 13

National Security Agency budget, acquisition, and compensation reform ... 15 

Defense Finance and Accounting Service and the National Security Agency .................................................................................................................... 19

Authority for Intelligence Community elements of Department of Defense 

to award personal service contracts ............................................................ 19

Report on detail of civilian intelligence personnel throughout the Intelligence Community and the Department of Defense ................................. 19

Protection of certain Intelligence Community personnel from tort liability 20

Modification of authority to obligate and expend certain funds for intelligence activities ............................................................................................ 20

Modification of notice and wait requirements on projects to construct 

or improve Intelligence Community facilities ............................................. 20

2

Provision of affordable living quarters for certain students working at 

National Security Agency Laboratory ......................................................... 21

Repeal of certain Intelligence Community reporting requirements ............. 21

Cancellation of other Intelligence Community reporting requirements ...... 22

Central Intelligence Agency Act of 1949 notification requirements ............. 22

Information Collection, Analysis, and Dissemination: 

‘‘Hard Target’’ human intelligence .................................................................. 23

Pilot Program on analysis of signals and other intelligence by intelligence 

analysts of various elements of the Intelligence Community ................... 24

Pilot program on training for intelligence analysts ....................................... 25

Report on modifications of policy and law on classified information to 

facilitate sharing of information for national security purposes ............... 26

Report on data-mining capabilities for the Intelligence Community ........... 27

Security and Counterintelligence: 

Protecting against unauthorized disclosures of classified information ........ 28

Coordination of United States Government research on security evaluations ................................................................................................................ 29

Report on cleared insider threats to classified computer networks ............. 30

Report on security background investigations and security clearance procedures of the Federal Government ............................................................ 30

Report on United States dependence on computer hardware and software 

manufactured overseas ................................................................................. 30

Summary of Reporting Requirements .................................................................... 31

Committee Action .................................................................................................... 32

Estimate of Costs ..................................................................................................... 32

Evaluation of Regulatory Impact ........................................................................... 33

Changes in Existing Law ........................................................................................ 33

CLASSIFIED SUPPLEMENT TO THE COMMITTEE REPORT

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

recommendations in this Report. The Committee has prepared a 

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

same legal status as public law. The Classified Annex to this Report explains the full scope and intent of the Committee’s action as 

set forth in the classified Schedule of Authorizations. Reports required by the Classified Annex and this Report have been incorporated by reference in Section 105 of the Bill. In addition, the 

Committee expects the Intelligence Community to comply with any 

other directions as requirements contained therein as it would any 

other statutory requirement. 

The classified supplement to the Committee Report is available 

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

of Senate Resolution 400 of the 94th Congress. 

The classified supplement is made available to the Committees 

on Appropriations of the Senate and the House of Representatives, 

the Permanent Select Committee on Intelligence of the House of 

Representatives and to the President. The President shall provide 

for appropriate distribution within the Executive Branch. 

SECTION-BY-SECTION ANALYSIS AND EXPLANATION

The following is a section-by-section summary of the fiscal year 

2004 Intelligence Authorization Bill. Following the section-by-section analysis and explanation is a more detailed discussion of the 

provisions contained in the Bill and of the Committee’s related 

comments. 

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TITLE I—INTELLIGENCE ACTIVITIES

Section 101. Authorization of appropriations 

Section 101 lists the U.S. Government departments, agencies, 

and other elements for which the Act authorizes appropriations for 

intelligence and intelligence-related activities for fiscal year 2004. 

Section 102. Classified schedule of authorizations 

Section 102 makes clear that the details of the amounts authorized to be appropriated for intelligence and intelligence-related activities and applicable personnel ceilings covered under this title 

for fiscal year 2004 are contained in a classified Schedule of Authorizations. The Schedule of Authorizations shall be made available to the Committees on Appropriations of the Senate and House 

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

Section 103. Personnel ceiling adjustments 

Section 103 authorizes the Director of Central Intelligence, with 

the approval of the Director of the Office of Management and 

Budget (OMB), in fiscal year 2004 to authorize employment of civilian personnel in excess of the personnel ceilings applicable to the 

components of the Intelligence Community under section 102 by an 

amount not to exceed two percent of the total of the ceilings applicable under section 102. The Director of Central Intelligence may 

exercise this authority only if necessary to the performance of important intelligence functions. Any exercise of this authority must 

be reported to the Intelligence Committees. 

Section 104. Intelligence Community Management Account 

Section 104 authorizes appropriations for the Community Management Account (CMA) of the Director of Central Intelligence and 

sets the personnel end-strength for the Intelligence Community 

Management Staff (CMS) for fiscal year 2004. 

Subsection (a) authorizes appropriations of $198,390,000 for fiscal year 2004 for the activities of the CMA of the Director of Central Intelligence. Subsection (a) also authorizes funds identified for 

advanced research and development to remain available for two 

years. 

Subsection (b) authorizes 310 full-time personnel for elements 

within the CMA for fiscal year 2004 and provides that such personnel may be permanent employees of the CMA element or detailed from other elements of the U.S. Government. 

Subsection (c) authorizes additional appropriations and personnel 

for the CMA as specified in the classified Schedule of Authorizations and permits the additional funding for research and development to remain available through September 30, 2005. 

Subsection (d) requires that, except as provided in section 113 of 

the National Security Act of 1947, personnel from another element 

of the U.S. Government be detailed to an element of the CMA on 

a reimbursable basis, or for temporary situations of less than one 

year on a non-reimbursable basis. 

Subsection (e) authorizes $37,090,000 of the amount authorized 

in subsection (a) to be made available for the National Drug Intelligence Center (NDIC). Subsection (e) requires the Director of CenVerDate Jan 31 2003 04:12 May 11, 2003 Jkt 019010 PO 00000 Frm 00003 Fmt 6659 Sfmt 6602 E:\HR\OC\SR044.XXX SR044
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tral Intelligence to transfer these funds to the Department of Justice to be used for NDIC activities under the authority of the Attorney General, and subject to section 103(d)(1) of the National Security Act. 

Section 105. Incorporation of reporting requirements 

Section 105 incorporates reporting requirements in the conference report to the Act, and the House and Senate reports on the 

associated Bills, and the classified annexes thereto, into the Act. 

Section 106. Preparation and submittal of reports, reviews, studies, 

and plans relating to intelligence activities of Department of 

Defense or the Department of Energy 

Section 106 governs preparation and submittal of reports relating 

to Department of Defense (DoD) or Department of Energy (DoE). 

TITLE II—CENTRAL INTELLIGENCE AGENCY RETIREMENT AND

DISABILITY SYSTEM

Authorization of Appropriations 

Section 201. Authorization of appropriations 

Section 201 authorizes appropriations in the amount of 

$226,400,000 for fiscal year 2004 for the Central Intelligence Agency Retirement and Disability Fund. 

TITLE III—GENERAL PROVISIONS

Subtitle A—Recurring General Provisions 

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

Section 301 provides that funds authorized to be appropriated by 

this Act for salary, pay, retirement, and other benefits for Federal 

employees may be increased by such additional or supplemental 

amounts as may be necessary for increases in such compensation 

or benefits authorized by law. 

Section 302. Restriction on conduct of intelligence activities 

Section 302 provides that the authorization of appropriations by 

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

of any intelligence activity that is not otherwise authorized by the 

Constitution or laws of the United States. 

Subtitle B—Intelligence 

Section 311. Modification of authority to obligate and expend certain funds for intelligence activities 

Section 311 amends the National Security Act of 1947 by removing the ‘‘unforeseen requirements’’ criterion from section 

504(a)(3)(B) of the Act (50 U.S.C. 414(a)(3)) (relating to the funding 

of certain intelligence activities by reprogramming). 

5

Section 312. Modification of notice and wait requirements on 

projects to construct or improve Intelligence Community facilities 

Section 312 amends section 602 of the Intelligence Authorization 

Act for Fiscal Year 1995 (Public Law 103–359) to change 

unprogrammed construction notice and wait periods and to raise 

notification thresholds for certain construction and renovation 

projects. Section 312(b) amends section 602(b)(2) of the Act to authorize the Director of Central Intelligence and Secretary of Defense to initiate within seven days (vice 21 days) of congressional 

notification unprogrammed construction projects in excess of the 

amount specified in section 602(a) of the Act. The provision separately authorizes, in emergencies, commencement of construction 

immediately upon notification despite the 7-day waiting period that 

would normally apply, subject to a joint Director of Central Intelligence-Secretary of Defense determination that ‘‘an emergency relating to the national security or the protection of health, safety, 

or environmental quality exists and that delay would harm any or 

all of those interests.’’ For projects that primarily concern subsection (b)(3) authorizes the Director of Central Intelligence to 

make the required determination unilaterally. 

Section 313. Use of funds for counterdrug and counterterrorism activities for Colombia 

Section 313 authorizes the use of funds designated for intelligence or intelligence-related purposes for assistance to the Government of Colombia for counterdrug activities for fiscal year 2004 

(and any unobligated funds designated for such purposes for prior 

years) to be utilized to support a unified campaign against narcotics trafficking and against activities by organizations (such as 

the Revolutionary Armed Forces of Colombia (FARC), the National 

Liberation Army (ELN), and the United Self-Defense Forces of Colombia (AUC)), and to take actions to protect human health and 

welfare in emergency circumstances, including undertaking rescue 

actions. A similar provision was enacted as Section 501 of the Intelligence Authorization Act for Fiscal Year 2003 (Public Law 107–

306). 

Section 314. Pilot program on analysis of signals and other intelligence by intelligence analysts of various elements of the Intelligence Community 

Section 314 requires the National Security Agency (NSA) to develop a pilot program to improve the ability of analysts in other intelligence agencies to obtain access to and analyze data collected 

and held by NSA while retaining appropriate handling safeguards. 

Section 315. Pilot program on training for intelligence analysts 

Section 315 proposes that a Reserve Officers Training Corps 

(ROTC)-like Intelligence Analyst Program be established by the Assistant Director of Central Intelligence for Analysis and Production 

(ADCI/A&P). The goal of the program should be to recruit entrylevel analysts and operations specialists with enhanced analytic 

and foreign language skills who are committed to a career in the 

Intelligence Community. 

6

Section 316. Extension of National Commission for the Review of 

the Research and Development Program of the United States 

Intelligence Community 

Concerning Section 316, because of military operations to disarm 

Iraq, Senate organizational issues, and other priorities, the Senate 

leadership has not yet appointed Commission members. This section extends the Commission to permit appointment of members 

and commencement of the Commission’s duties. 

Subtitle C—Surveillance 

Section 321. Clarification and modification of sunset of surveillance-related amendments made by USA PATRIOT Act of 2001 

Regarding Section 321(a) of this measure, it should be recalled 

that Section 224 of the USA PATRIOT Act of 2001 (Public Law 

107–56 (Oct. 26, 2001)) contained language that would terminate 

certain provisions of that Act on December 31, 2005. Section 224 

clearly assumed, but did not explicitly provide, that the pre-existing text of laws modified by the Act would be restored upon operation of this ‘‘sunset’’ clause. This has raised some concern on account of the provisions of 1 U.S.C.108, which provides as a general 

rule of statutory construction that ‘‘[w]henever an Act is repealed, 

which repealed a former Act, such former Act shall not thereby be 

revived, unless it shall be expressly so provided.’’ The Committee 

believes that because the USA PATRIOT Act ‘‘sunset’’ clause does 

not involve the ‘‘repeal’’ of actual ‘‘Acts,’’ that 1 U.S.C. 108 would 

in all likelihood not affect the coherence of Section 224 of the Act. 

Nevertheless, in order to provide absolute clarity, the Committee 

provides in this section that laws modified by those sections of the 

USA PATRIOT Act listed in Section 224 will return to their preUSA PATRIOT Act form after the operation of the ‘‘sunset’’ provision. 

Section 216 of the USA PATRIOT Act modified authorities relating to the use of pen registers and trap and trace devices. Section 

204 of the Act clarified that intelligence exceptions continued to 

apply to limitations on the interception and disclosure of wire, oral, 

and electronic communications, notwithstanding the modifications 

of Section 216. Section 224 of the Act contains a sunset provision 

that excludes section 216, but includes section 204. This omission 

of Section 204 from the sections excluded from ‘‘sunset’’ creates a 

technical anomaly. Section 321(b) corrects the technical oversight 

and removes Section 204 of the Act from the sunset provision. If 

not removed, valuable and necessary intelligence exemptions to the 

pen register and trap and trace provision would be lost after December 31, 2005. 

Subtitle D—Reports 

Section 331. Report on cleared insider threats to classified computer 

networks 

Section 331 requires the Director of Central Intelligence, in conjunction with the Secretary of Defense, to provide, in a one-time report to Congress, an assessment of the national security risks 

posed by ‘‘cleared insiders’’ that are inherent in current computer 

security practices within the Intelligence Community and DoD. 

7

Section 332. Report on security background investigations and security clearance procedures of the Federal Government 

Section 332 requires the Director of Central Intelligence, in coordination with the Secretary of Defense, to provide a report on the 

adequacy and future direction of security background investigations and clearance procedures within the U.S. Government. 

Section 333. Report on detail of civilian intelligence personnel 

among elements of the Intelligence Community and the Department of Defense 

Section 333 requires the Director of Central Intelligence, in conjunction with the Secretary of Defense, to provide an assessment 

to Congress of ways to ease movement of civilian intelligence personnel between various elements of the Intelligence Community to 

respond more flexibly and effectively to the shifting needs of intelligence collection and analysis. 

Section 334. Report on modifications of policy and law on classified 

information to facilitate sharing of information for national security purposes 

Section 334 requests that the President review Executive Orders 

12333 and 12598 and submit a report within 6 months on potential 

changes to the Executive Orders or legislative actions which could 

be applied to facilitate information sharing and data access across 

the Intelligence Community.

Section 335. Report of Secretary of Defense and Director of Central 

Intelligence on strategic planning 

Section 335 requires the Secretary of Defense and the Director 

of Central Intelligence, jointly, to report not later than February 

15, 2004, on progress toward establishing an independent, comprehensive, analytical capability to assess collection program alternatives, as well as the steps taken to better coordinate DoD and 

Intelligence Community strategic planning. 

Section 336. Report on United States dependence on computer hardware and software manufactured overseas 

Section 336 directs the Director of Central Intelligence to prepare 

a thorough evaluation of the trends and the strategic implications 

of increasing United States reliance on foreign hardware and software. 

Section 337. Report on lessons learned from military operations in 

Iraq 

Section 337 requires the Director of Central Intelligence to submit a report regarding intelligence lessons learned as a result of Intelligence Community support to military operations during the 

course of Operation Iraqi Freedom. The report must be submitted 

to the appropriate committees not later than one year after enactment of this Act. 

8

Section 338. Reports on conventional weapons and ammunition obtained by Iraq in violation of certain United Nations Security 

Council resolutions 

Section 338 requires the Director of the Defense Intelligence 

Agency (DIA), not later than 120 days after the cessation of hostilities in Iraq, to submit a preliminary report to certain specified 

committees regarding conventional weapons and ammunition obtained by Iraq in violation of applicable United Nations resolutions. 

A final report is required not later than 270 days after the cessation of hostilities in Iraq. Given the May 1, 2003 remarks by the 

President concerning the conclusion of major combat operations in 

Iraq, the Committee believes there has been a cessation of hostilities in Iraq as of that date for purposes of this reporting requirement. 

Section 339. Repeal of certain report requirements relating to intelligence activities 

Section 339 eliminates certain reporting requirements that no 

longer have enough utility in the legislative oversight process to 

justify the burdens they impose upon intelligence agencies that are 

hard at work protecting the United States against international 

terrorism, supporting our troops in combat in Iraq and Afghanistan, and otherwise safeguarding and advancing our national security. This section identifies a number of reports for elimination. 

Subtitle E—Other Matters 

Section 351. Extension of suspension of reorganization of Diplomatic 

Telecommunications Service Program Office 

Section 351 extends for an indefinite period the suspension authorized in section 311 of the Intelligence Authorization Act for fiscal year 2002, Public Law 107–108 (Dec. 28, 2001), and extended 

by section 351 of the Intelligence Authorization Act for Fiscal Year 

2003, Public Law 107–306 (Nov. 27, 2002). Section 311 of the Intelligence Authorization Act for Fiscal Year 2002 suspended the provisions of the Intelligence Authorization Act for Fiscal Year 2001 (22 

U.S.C. 7301 et seq.) that required reorganization of the Diplomatic 

Telecommunications Service Program Office (DTS–PO). Section 315 

of this Act extends the suspension until 60 days after the appropriate congressional committees are notified by the Secretary of 

State or the Director of OMB, or the Director’s designees, that the 

present operating framework for the DTS–PO has been terminated. 

In designating officials under this section, the Committee expects 

that the Director of OMB shall designate at least those officials referenced in the Classified Annex to this Bill. 

Section 352. Modifications of authorities on explosive materials 

Section 352 amends the Safe Explosives Act, Public Law 107–

296, Secs. 1121–28 (Nov. 25, 2002), to ensure that the provision 

provides sufficient authority for the Secretary of Defense and the 

Director of Central Intelligence to conduct, respectively, authorized 

military and intelligence activities of the U.S. Government. In addition, the provision makes minor technical corrections to certain 

other provisions in the Act.

9

Section 353. Modification of prohibition on the naturalization of certain persons 

Section 353 amends section 313(e)(4) of the Immigration and Nationality Act (8 U.S.C. 1424(e)(4)), bringing the provision into essential conformity with the determination process established in 

comparable provisions of law governing the admission or expedited 

naturalization of certain aliens and their immediate family members, based on the alien having contributed to the national security 

or intelligence mission of the United States. Under section 7 of the 

Central Intelligence Agency Act of 1949 (CIA Act) (50 U.S.C. 403h), 

section 316(f) of the INA (8 U.S.C. 1427(f)), and section 305 of Public Law 104–293 (Oct. 11, 1996) (8 U.S.C. 1427 note), admission determinations regarding an alien’s national security or intelligence 

mission contribution are made by the Director of Central Intelligence, the Attorney General, and (formerly) the Commissioner of 

Immigration and Naturalization. Unlike those provisions, section 

313(e)(4) requires consultation with the Secretary of Defense. This 

difference from comparable determination processes has created 

implementation difficulties. This amendment to section 313(e)(4) 

leaves the determination process to the Director of Central Intelligence, the Attorney General, and the Secretary of Homeland Security, reflecting the transfer of responsibility for adjudication of 

naturalization petitions from the Commissioner of Immigration and 

Naturalization to the Department of Homeland Security. See 

Homeland Security Act of 2002, Public Law 107–296 (Nov. 25, 

2002). The Secretary of Defense may still request the naturalization of a particular alien by forwarding to the Director of Central 

Intelligence the names of aliens who have made a national security 

or intelligence contribution to DoD. Moreover, when DoD activities 

are relevant to the determination, consultation with the Secretary 

of Defense would still be required. 

Section 354. Modification to definition of financial institution in the 

Right to Financial Privacy Act 

Section 354 provides enhanced authority for authorized Intelligence Community collection activities designed to prevent, deter, 

and disrupt activities directed against the United States. This section expands the definition of ‘‘financial institution’’ for purposes of 

section 1114 of the Right to Financial Privacy Act (12 U.S.C. 3414). 

Section 1114 currently permits U.S. Government authorities engaged in counterintelligence or foreign intelligence activities to obtain certain financial records. The definition of ‘‘financial institution’’ in the Right to Financial Privacy Act—essentially unmodified 

since the Act became law in 1978—significantly excludes certain 

entities that provide financial services to the public. Financial 

records maintained by these entities are not covered by the Act 

and, thus, are not accessible by counterintelligence and foreign intelligence elements of the U.S. Government under the Act, limiting 

the effectiveness of national security investigations. In order to expand the definition of ‘‘financial institution’’ for purposes only of 

section 1114, this subsection adopts, in part, the definition of ‘‘financial institution’’ found in section 5312(a)(2) of title 31, United 

States Code. The expansion of this definition is consistent with the 

definition used in section 804(5) of the Counterintelligence and SeVerDate Jan 31 2003 04:12 May 11, 2003 Jkt 019010 PO 00000 Frm 00009 Fmt 6659 Sfmt 6602 E:\HR\OC\SR044.XXX SR044
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curity Enhancements Act of 1994, Public Law 103–359 (50 U.S.C. 

438). 

Section 355. Coordination of Federal Government research on security evaluations 

Section 355 requires that the National Science Foundation and 

the Office of Science and Technology jointly submit to Congress a 

written report identifying the research most likely to advance the 

understanding of the use of certain assessments of individuals in 

security evaluations; distinguish between short-term and long-term 

areas of research in order to maximize the utility of short-term and 

long-term research on such assessments; identify the Federal agencies best suited to support such research; and develop recommendations for coordinating future Federally-funded research for the development, improvement, or enhancement of security evaluations. 

Section 356. Technical Amendments 

Section 356 corrects now-erroneous citations to section 103(c)(6) 

of the National Security Act of 1947 (50 U.S.C. 403–3(c)(7)), which 

was redesignated section 103(c)(7) by section 901 of the USA PATRIOT Act of 2001, Public Law 107–56 (Oct. 26, 2001), thus necessitating the technical correction made by this section. This section 

also corrects incorrect cross-references in Section 15 of the CIA Act 

(50 U.S.C. 403o) and Section 11 of the National Security Agency 

Act of 1959 (50 U.S.C. 402 note) to the authorities of the General 

Services Administration (GSA) special policemen. The authorities 

of GSA special policemen were transferred to ‘‘officers and agents 

of the Department of Homeland Security’’ pursuant to Section 

1706(b)(1) of the Homeland Security Act of 2002, Public Law 107–

296 (Nov. 25, 2002) (40 U.S.C. 1315). This section provides technical corrections to the referenced statutes.

TITLE IV—CENTRAL INTELLIGENCE AGENCY

Section 401. Amendment to certain Central Intelligence Agency Act 

of 1949 notification requirements 

Section 401 amends the CIA Act (50 U.S.C. 403e(b)(5)) to exempt 

section 4(b)(1) implementing regulations from the prior notification 

requirements of section 4(b)(5). To the extent the Central Intelligence Agency (CIA) adopts unique allowances and benefits under 

section 4(b)(2) or (b)(3) or adopts or modifies regulations under section 4(b)(4), notification of the Intelligence Committees prior to implementation is still required. 

Section 402. Protection of certain Central Intelligence Agency personnel from tort liability 

Section 402 provides protections from tort liability for certain 

specified CIA personnel (and, with respect to specified NSA personnel, Section 502) when those personnel take reasonable action, 

including the use of force, (1) to protect an individual in their presence from a ‘‘crime of violence’’, (2) to assist an individual who has 

suffered, or is threatened with, bodily harm, or (3) to prevent the 

escape of an individual who the personnel reasonably believe to 

have committed a crime of violence in their presence. 

11

Section 403. Repeal of obsolete limitation on use of funds in Central 

Services Working Capital Fund 

Section 403 modifies the CIA Central Services Program (CSP) by 

removing the technically expired requirements of section 21(f)(2)(B) 

of the CIA Act (50 U.S.C. 403u(f)(2)(B)). 

Section 404. Technical amendment to Federal Information Security 

Management Act of 2002 

Section 404 is a technical amendment to the Federal Information 

Security Management Act of 2002. Section 1001(b)(1) of the Homeland Security Act of 2002 and Section 301(b)(1) of the E–Government Act of 2002 amended title 44, United States Code, to require 

an annual independent evaluation of information security programs. As enacted, only an Inspector General created by the Inspector General Act of 1978 or an independent external auditor 

may perform the evaluation required by these provisions. Section 

404 clarifies that Inspectors General authorized by other statutes 

(e.g., Section 17 of the CIA Act (50 U.S.C. 403q)) may also perform 

the required evaluation. 

TITLE V—DEPARTMENT OF DEFENSE INTELLIGENCE MATTERS

Section 501. Protection of operational files of the National Security 

Agency 

Section 501 allows the Director of NSA, in coordination with the 

Director of Central Intelligence, to exempt certain operational files 

of NSA from search and review under the Freedom of Information 

Act (FOIA), 5 U.S.C. 552. This section would allow exemptions for 

files concerning the activities of NSA that document the means by 

which foreign intelligence or counterintelligence is collected 

through scientific and technical systems. This exemption authority 

parallels that currently enjoyed by CIA, the National Imagery and 

Mapping Agency (NIMA), and the National Reconnaissance Office 

(NRO). 

Section 502. Provision of affordable living quarters for certain students working at National Security Agency laboratory 

Section 502 amends section 2195 of title 10, United States Code, 

to permit the Director of NSA to provide and pay for living quarters for Cooperative Education Program and Summer Program students to address an existing housing shortage. 

Section 503. Protection of certain National Security Agency personnel from tort liability 

Section 503 provides protections from tort liability for certain 

designated NSA personnel when those personnel take specified actions. The protections are similar to those afforded certain CIA personnel under Section 402. 

Section 504. Authority for Intelligence Community elements of Department of Defense to award personal service contracts 

Section 504 provides authority for Intelligence Community elements of DoD to award personal services contracts, similar to the 

CIA’s existing authority for personal services contracts under Section 8 of the CIA Act (50 U.S.C. 403j(a)(1)). 

12

COMMITTEE COMMENTS ON FISCAL YEAR 2004 INTELLIGENCE

AUTHORIZATION BILL AND OTHER MATTERS

The Committee is mindful of the many sacrifices over the last 

year made by members of the Intelligence Community around the 

world. The Committee expresses its profound gratitude to them, 

and offers its heartfelt condolences to the families of those who 

made the supreme sacrifice. 

INTELLIGENCE COMMUNITY MANAGEMENT, PLANNING, AND

PERFORMANCE

The Committee has been vigilant and will continue to vigorously 

oversee the management, planning, and performance of the Intelligence Community. We have grown concerned with—and the Administration has continually raised—the issue of bureaucratic impediments to the prosecution of the important national security 

mission of the Intelligence Community. To address these impediments, the Committee has repealed or modified statutory requirements on the Intelligence Community that no longer serve a legitimate oversight purpose, are unnecessary obstacles to the implementation of new initiatives, or fail to account for the passage of 

time. The Committee remains concerned, however, with several 

management issues still unresolved by the Intelligence Community. 

Intelligence Community strategic and performance planning 

Fiscal year strategic and performance plans 

For the last two fiscal years, the Committee has expressed in its 

report language an interest in strategic and performance planning 

within the Intelligence Community. In response, the CMS in 2002 

submitted strategic and performance plans for the Intelligence 

Community as a whole, as well as for selected agencies within the 

National Foreign Intelligence Program (NFIP). These documents 

were the first-ever plans coordinated across the Intelligence Community aimed at establishing performance measures aligned with 

the stated goals and priorities of the Director of Central Intelligence. 

While the Committee was pleased with this first effort by CMS 

and the Intelligence Community, Senate Report 107–149 contained 

suggestions for improvements to future reports. Specifically, the 

Committee was concerned that the Intelligence Community’s initial 

performance plans focused more on increasing intelligence capabilities than on the value that such capabilities would add to achieving 

the Intelligence Community’s missions. As such, the Committee directed that the fiscal year 2004 performance plans include ‘‘mission-based’’ performance measures linking Intelligence Community 

capabilities to the stated strategic goals of the Director of Central 

Intelligence. The Committee believes that these mission oriented 

performance measures should complement the budget process within the CMS and the agencies within the NFIP. For this reason, the 

Committee also directed that the fiscal year 2004 performance 

plans include specific information on how the agencies utilized 

them in preparing their respective sections of the fiscal year 2004 

budget for the NFIP. 

On February 25, 2003, the CMS submitted to the Committee the 

Fiscal Year 2004–2009 Intelligence Community Strategy, as well as 

13

the strategies for the component agencies. The Committee, however, has yet to receive an updated Intelligence Community performance plan for fiscal year 2004 and has received only two fiscal 

year 2004 performance plans for individual Intelligence Community 

components. These documents were due to Congress by March 1, 

2003. Although the Committee understands that the CMS is still 

editing and revising the performance plans submitted by the component agencies, no extension of the March 1, 2003, deadline has 

been requested. The Committee is disappointed that the Intelligence Community has not completed these valuable documents in 

time to support the Committee’s authorization for this fiscal year 

or to inform the Intelligence Community’s own planning processes. 

The Committee looks forward to receiving the performance plans 

and expects that CMS will submit them in the near future. Before 

submitting these reports, CMS should coordinate their efforts with 

the office of the Under Secretary of Defense for Intelligence to ensure that requirements in CMS performance reports do not conflict 

with commitments that Intelligence Community agencies within 

DoD make as part of the DoD strategic and performance planning 

processes. 

Strategic planning for sensors and platforms 

The Committee is aware of no capability within DoD or the Intelligence Community for objectively, independently, and comprehensively evaluating alternative sensor and platform architectures and 

capabilities. There are some capabilities within different agencies 

and departments, but none that are available, independent of the 

program offices, to model and assess cross-program trades without 

regard to the location of the sensor or platform (air, space, land, 

or sea) or the level of compartmentation. Consequently, although 

DoD and Intelligence Community officials expend substantial effort 

and time evaluating program trades, they do so without the benefit 

of the rigorous quantitative modeling necessary to optimize collection capabilities and architectures. Given the vast sums involved in 

these programs, even modest increases in the efficiency of resource 

allocation could lead to substantial benefits. Further, the Committee notes that the national military strategy, as well as the Defense Planning Guidance, have been developed in recent years 

without the participation of the Director of Central Intelligence or 

his staff, notwithstanding the growing importance of intelligence to 

military operations and the need to build forces commensurate to 

validated threats. 

Accordingly, in Section 335, the Committee requires the Secretary of Defense and the Director of Central Intelligence to jointly 

report on progress toward establishing an independent, comprehensive, analytical capability to assess collection program alternatives, 

as well as the steps taken to better coordinate DoD and Intelligence Community strategic and budgetary planning. 

Intelligence Community compliance with Federal financial accounting standards 

In Senate Report 107–63, the Committee conveyed its concern 

with the Intelligence Community’s financial management practices 

and required the Director of Central Intelligence and the Secretary 

of Defense to task the appropriate statutory Inspectors General to 

14

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

financial statements of NSA, DIA, NIMA, and CIA. This audit was 

designed to ascertain if these agencies were able to produce financial statements that met Federal Government financial accounting 

standards and OMB requirements. The NRO was not included in 

this requirement because its financial statements have been audited by an independent public accounting firm for the past three 

years. 

The resulting DoD and CIA Inspectors General reports found 

that NSA, DIA, NIMA, and CIA could not produce auditable financial statements. Among the faults depicted were the improper preparation of selected required statements, failure to use accrual accounting, inability to reconcile the fund balance with Treasury, and 

inaccurate reporting of property, plant, and equipment. The Committee found the lack of internal controls reflected by these problems of great concern. 

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

Intelligence, in consultation with the Secretary of Defense, should 

ensure that NSA, DIA, NIMA, and CIA all receive an audit of their 

financial statements no later than March 1, 2005, to be executed 

by a statutory Inspector General or a qualified independent public 

accountant. The Committee acknowledged that NSA, DIA, and 

NIMA may be affected by DoD plans to implement a DoD-wide Financial Management Modernization Program, which is not expected to be completed before 2007. For example, the DoD Inspector General noted that NSA halted its plan to purchase a compliant 

accounting system based on guidance from the Under Secretary of 

Defense (Comptroller). This, in turn, affected DIA and NIMA, 

which both use portions of the NSA accounting system. 

In Senate Report 107–149, to facilitate adequate oversight of the 

Intelligence Community’s financial management systems and practices, the Committee directed that the Deputy Director of Central 

Intelligence for Community Management provide the Intelligence 

Committees with a report on how CMS is structured to monitor Intelligence Community compliance with the Chief Financial Officers 

Act and related OMB guidance. The report recently provided to the 

Committee by CMS included plans to monitor the ability of each 

agency to produce a financial statement audit by 2005 and a description of the ability of CMS to assess the financial systems of 

each agency in order to generate required oversight information. 

Prior to the 2005 audit requirement, and as follow-on to the initial Inspectors General reports, Public Law 107–306 contained a 

statutory requirement for annual reports from each agency head 

describing the activities their organization had undertaken to 

produce auditable financial statements. Additionally, the annual 

agency reports required by Public Law 107–306 were to include a 

description of the impact of the DoD modernization program and 

the steps being taken to make current systems compliant with Federal standards in the interim. As of this writing, no such report has 

been received from NSA, DIA, NIMA, or CIA. The Committee notes 

that, due to the shift of certain report due dates in Public Law 

107–306, some confusion existed as to the actual due date of these 

reports. CMS recently coordinated interim responses from the subject agencies. The Committee, however, is concerned that this initial failure to consult the Committee on the due date is an indicaVerDate Jan 31 2003 04:12 May 11, 2003 Jkt 019010 PO 00000 Frm 00014 Fmt 6659 Sfmt 6602 E:\HR\OC\SR044.XXX SR044
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tion that the Intelligence Community still lacks the appropriate 

level of interest in responsible financial management. 

While the Committee has not received direct agency responses, 

it notes that the DoD Inspector General independently provided the 

Committee with follow-up reports that addressed the soundness of 

the fiscal year 2002 financial statements of DIA and NIMA, as well 

as the adequacy of their related procedures and controls. The DoD 

Inspector General found that the financial statements of these 

agencies were still unreliable. The reports determined that neither 

agency dedicated the proper resources to the financial management 

and reporting function and had not addressed the lack of internal 

controls or deficiencies related to reconciling the data contained in 

the various financial statements. The reports noted that the existing noncompliant budgeting systems and the current DoD financial 

management modernization program hampered the agencies. The 

DoD Inspector General recommended that the agencies institute 

improved internal control procedures and devote the appropriate 

resources toward the preparation of financial statements that will 

meet OMB and DoD standards. A similar follow-up report on NSA 

is in progress. 

The CMS report on its oversight capabilities noted that the respective DoD agency heads, not the Director of Central Intelligence, have direct financial management authority and responsibility for their agencies. Thus, the agency directors, not the CMS, 

should provide the annual reports describing the activities that 

each agency has undertaken to produce auditable financial statements. Furthermore, in response to known difficulties in acquiring 

the systems necessary to produce financial statements, the Committee has indicated its willingness to address the issue of extending the 2005 audit requirement. However, in the absence of the required progress reports from the directors of NSA, DIA, NIMA, and 

CIA, the Committee has elected to delay a decision on the deferral 

of the 2005 audits, pending the receipt of these progress reports by 

December 1, 2003. The Committee has recently learned that a decision on the contractor for the new DoD financial management architecture is forthcoming. In light of this imminent selection, the 

Committee believes the December 1, 2003 deadline will provide the 

agencies with ample time to assess the impact of the new architecture. 

National Security Agency budget, acquisition, and compensation reform 

Congressional Budget Justification Book 

The Committee commends the Director of NSA for the progress 

made in the presentation and format of the Congressional Budget 

Justification Book (CBJB) for the Administration’s request for fiscal year 2004. When compared to previous submissions, NSA’s 

CBJB represents a good faith effort to project to Congress an accurate, comprehensible request. The new budget structure and attendant cross-walk, while complex, are understandable. Much remains to be done, but the progress displayed in this single year is 

noteworthy. 

16

Acquisition 

The Committee continues to be concerned with the state of the 

NSA acquisition process and frustrated by the lack of progress realized in remedying this problem over the past three years. The Administration’s budget request sustains the long overdue increase 

for the Consolidated Cryptologic Program (CCP) executed by NSA. 

Last year’s significant increase over the previous year coupled with 

the fiscal year 2004 requested increase, will allow NSA to continue 

its transformation initiative while supporting the global war on terrorism and the war to liberate Iraq. These significant investments 

will lead to major acquisition programs designed to modernize the 

Signals Intelligence (SIGINT) enterprise for the future. The lack of 

a fundamentally sound acquisition process, however, raises concerns with respect to the efficiency and execution of these major acquisitions. 

The Committee’s concern with the health of the NSA acquisition 

process is not new. In both fiscal year 2002 and 2003, the Committee noted significant shortfalls and recommended actions that 

would correct the documented deficiencies. In both the Fiscal Year 

2002 and 2003 Intelligence Authorization Act Conference Reports, 

lack of a credible NSA acquisition process was noted, along with 

several recommendations for corrective actions. While NSA has 

made modest progress in some of the various components of a good 

acquisition process, reports from oversight departments within the 

Administration point out one glaring fault in the road to progress: 

the authority of the NSA Senior Acquisition Executive (SAE) is not 

commensurate with that needed to empower him to take the necessary actions to correct even the most elementary deficiencies. The 

NSA SAE has not been given the requisite authority by the Director of NSA to bring the agency’s acquisition process up to acceptable DoD standards. 

In June 2000, the SAEs for the Intelligence Community and the 

Assistant Secretary of Defense for Command, Control, Communications and Intelligence (ASD(C3I)), in response to a Congressionally 

Directed Action (CDA), provided a report titled ‘‘Independent Review of the National Security Agency Acquisition Process’’, which 

they have updated on a periodic basis. These reviews have covered 

nine specific components that can contribute to attaining the DoD 

standard for acquisition performance. The review is metrics based. 

The nine categories are evaluated on a ‘‘red, yellow, green’’ criteria 

and an assessment measurement has been added for implementation. While marginal progress has been noted, none of the nine criteria has yet to be judged fully green, and none of the implementation ratings is above 2 on a 1–4 scale. After three years, the average for the nine categories is ‘‘yellow—Process and Structure Identified.’’ The average assessment is 1.4, with the definition of a 2 

rating being ‘‘Process immature; inconsistent application or effectiveness.’’ A rating of 1 is defined as ‘‘Process ineffective or limited 

acceptance and practice.’’ Perhaps the most glaring area reviewed 

is titled ‘‘Establish a dedicated SAE reporting directly to the [Director of NSA].’’ This category actually moved down from ‘‘Yellow/

Green’’ to ‘‘Yellow’’ over the last evaluation period and is judged to 

be at implementation level 1. Establishing an NSA SAE that reports directly to the Director of NSA can be remedied easily, and 

the fact that the rating associated with this component has moved 

17

backward is of great concern to the Committee. To hire the very 

best NSA SAE is commendable; to deny that individual the necessary authority to make a difference is an opportunity missed. 

The Committee recommends that the Director of NSA take the 

following actions immediately: (1) Clarify the lines of authority to 

and responsibility of the NSA SAE for program execution; (2) Align 

Program Manager (PM) and Acquisition Program Manager (APM) 

acquisition responsibilities under the NSA SAE; (3) Establish clear 

budgetary authority for the NSA SAE over all budgets associated 

with major acquisition programs; (4) Establish clear reporting and 

evaluation lines from the PMs and APMs to the NSA SAE; (5) Provide the NSA SAE true management power over the acquisition decision process. The requirement for acquisition decisions to be 

made by consensus must be eliminated. Acquisition management 

groups made up of non-acquisition professionals must be made advisory only, and the NSA SAE must not be forced to form a consensus within these groups to enable an acquisition decision. 

The Committee greatly appreciates the efforts by CMS and DoD 

to remedy this problem and requests that an update to the February 2003 report be submitted to the Committee no later than August 30, 2003. 

Acquisition baseline 

For the past two years, the Committee has made an issue of the 

inadequacy of the NSA acquisition baseline. It is very difficult for 

the Committee to understand what needs to be done to modernize 

NSA when NSA cannot provide an adequate baseline of ongoing development and acquisition programs, projects, and activities. A 

great deal of funding has been appropriated to NSA over the past 

year, and there is little doubt that more will be required to ensure 

that the country has the very best SIGINT capability in the world. 

The results witnessed during the ongoing global war on terrorism 

and the support provided to our troops in Iraq has been excellent. 

But our successes will not be lost on future enemies, and the threat 

will evolve to defeat our present capabilities. Transformation is expensive, and the Committee wants to support the Director of NSA 

in this effort, but without the knowledge of what is actually being 

funded at NSA, it is difficult to sustain support for increasing levels of authorization. 

The Committee has fenced funds over the past two fiscal years 

to try to bring command attention to this problem. Submissions to 

date have shown progress, but are not comprehensive in identifying 

known projects and programs that are being funded in the CCP. 

Several projects listed in the CBJB requesting continued funding 

in fiscal year 2004 are not currently listed in the project baseline 

provided to the Committee. It is imperative that the baselining effort be put under competent, empowered authority with clear direction to develop a complete and comprehensive baseline. Future 

funding requests will be balanced against the NSA acquisition 

baseline so it is in the agency’s best interest to get this done right, 

and soon. 

The Committee directs NSA, beginning the first quarter of fiscal 

year 2004, to submit quarterly to the Committee a document baselining all programs, projects, and activities ongoing within the 

CCP. This document should be prepared by the NSA SAE in conVerDate Jan 31 2003 04:12 May 11, 2003 Jkt 019010 PO 00000 Frm 00017 Fmt 6659 Sfmt 6602 E:\HR\OC\SR044.XXX SR044
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junction with the Chief Financial Manager—the only two authorities below the Director of NSA who have the ability to validate, 

track, and link NSA programs, projects, and activities to acquisition schedules and funding authorizations. These quarterly reports 

will integrate each entry in the baseline to a master schedule and 

link the various entries showing dependencies and functional similarities. Specific requirements will be listed with the entries such 

that customer relationships are understood and definable. Ideally, 

the NSA acquisition baseline can be fully automated and put online 

so that all members of the SIGINT enterprise can understand what 

projects, programs, and activities are ongoing to reduce 

redundancies and facilitate technology exchange. Rates of expenditures by appropriations will be reflected in these quarterly submissions. 

Menwith Hill Station 

The Committee is encouraged by the budgetary increase requested to improve the condition of the facilities and infrastructure 

at Menwith Hill Station. There may be an opportunity to improve 

these conditions even further with a process known as the ‘‘Public 

Private Partnership’’—a process used effectively by other organizations in the United Kingdom. This acquisition method is used to establish a long-term contract for acquiring, building, and updating 

facilities and could benefit both infrastructure and mission support. 

The ‘‘Public Private Partnership’’ is frequently coupled with a ‘‘Private Financing Initiative’’ that leverages private financing to provide capital funding for infrastructure projects. In the United Kingdom, the Ministry of Defence is moving positively to this acquisition method and the method might have considerable benefit to 

United States interests in the United Kingdom, as well. 

The Committee directs that the Director of NSA review the ‘‘Public Private Partnership’’—and the ‘‘Private Financing Initiative’’ concepts for application to Menwith Hill Station and report to the 

Committee the findings of the review no later than June 13, 2003. 

The report should describe the benefits of this approach, identify 

any potential issues, and recommend whether this acquisition 

method should be executed by the U.S. Government. The report 

should capitalize on the experience gained by the host government, 

particularly the experiences of the General Communications Headquarters (GCHQ) in their recent initiatives in this regard. The review will be coordinated with the U.S. Executive Agent for the 

United Kingdom and the on-going Menwith Hill Transition Team. 

National Security Agency Compensation Reform 

The NSA has briefed the Committee on the proposed implementation of its new Compensation Reform Plan. Changing compensation systems is difficult in any work force, and the Committee is 

pleased to see that the NSA leadership has taken the time to ensure that all employees are informed of the need for change and 

of the impacts on them of the new system. As a necessary precursor to any new compensation plan, the Committee has supported the implementation of a new employee performance evaluation mechanism. The Committee strongly believes that any new 

evaluation mechanism should be implemented at least a year before initiation of a revised compensation plan. The Committee will 

19

closely follow both the implementation of the new employee performance evaluation mechanism and the initiation of the pilot compensation reform initiative at NSA. 

Defense Finance and Accounting Service and the National Security 

Agency 

The NSA is making progress in its financial and accounting practices. Additional work remains to be done, however, and resources 

will be required to modernize this critical part of the NSA business 

practice. 

The Committee has been advised that the Defense Finance and 

Accounting Service (DFAS) is considering moving certain aspects of 

the NSA support centers to a centralized accounting and finance 

structure under the control of DFAS. The Director of NSA is making progress in modernizing his business practices. Separation of 

the finance function from his authority would not support the overall objectives of this Committee to improve the acquisition business 

area at NSA. Therefore, the Committee directs that DFAS brief the 

Committee before any transfer of authority, personnel, or resources 

is considered or affected. 

The Deputy Director of Central Intelligence for Community Management will notify the Committee of any efforts by DFAS to transfer accounting or finance authorities from any NFIP components 

prior to such transfer. No transfer will be affected without the approval of this Committee.

Authority for Intelligence Community elements of Department of Defense to award personal service contracts 

Intelligence Community elements of DoD frequently have a temporary need for additional personnel with specific expertise to meet 

unanticipated, yet significant, operational requirements that necessitate a bolstering of organizational and personnel efforts created 

by world events. Current examples include experts on al-Qa’ida, 

the countries of the Middle East, chemical and biological warfare, 

and Islamic militant personalities, along with linguists to support 

interrogation of detainees and review of captured documents. 

Under current law, U.S. Government agencies generally must 

choose between hiring additional personnel as government employees or contracting for their services under the restrictive provisions 

for the temporary or intermittent employment of experts and consultants under section 3109 of title 5, United States Code. The 

Committee provides relief from these more restrictive authorities 

by granting authority for Intelligence Community elements of DoD 

to award personal services contracts notwithstanding any other 

provision of law. This authority is similar to that already exercised 

by CIA under Section 8 of the CIA Act (50 U.S.C. 403j(a)(1)). This 

provision will optimize the capabilities of Intelligence Community 

elements of DoD in the performance of their roles in the global war 

on terrorism and in the execution of future national security missions. 

Report on detail of civilian intelligence personnel throughout the Intelligence Community 

The Committee is aware that DoD uses a system for quickly and 

rapidly moving Senior Executive Service employees from one comVerDate Jan 31 2003 04:12 May 11, 2003 Jkt 019010 PO 00000 Frm 00019 Fmt 6659 Sfmt 6602 E:\HR\OC\SR044.XXX SR044
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ponent to another to respond flexibly and effectively to shifting 

needs and to implement policy guidance from seniors. The Committee believes that the Intelligence Community should study a 

similar system. To that end, Section 333 requires the Director of 

Central Intelligence, in conjunction with the Secretary of Defense, 

to provide an assessment to Congress of ways to ease movement of 

civilian intelligence personnel between the various elements of the 

Intelligence Community to respond to the shifting needs of intelligence collection and analysis. 

Protection of certain Intelligence Community personnel from tort liability 

Specified law enforcement and Diplomatic Security Service officers are provided protections from tort liability pursuant to section 

627 of the Omnibus Consolidated and Emergency Supplemental 

Appropriations Act of 1999 (Public Law 105–277) when they take 

reasonable action, including the use of force, (1) to protect an individual in their presence from a ‘‘crime of violence’’, (2) to assist an 

individual who has suffered, or is threatened with, bodily harm, or 

(3) to prevent the escape of an individual who the personnel reasonably believe to have committed a crime of violence in their presence. The Committee extends these protections from tort liability 

to certain specified personnel of CIA and NSA. When these highly 

trained CIA and NSA professionals are on official duty and take 

reasonable actions to protect and aid individuals in their presence, 

they should not be deprived of protections from tort liability that 

other similarly situated personnel of the Federal Government are 

granted under existing law. In recognition of the current potential 

exposure of these personnel to tort liability and the protections in 

law for other personnel of the U.S. Government, the Committee (in 

Sections 402 and 503) extends the protections of section 627 of 

Public Law 105–277 to these specified CIA and NSA personnel. 

Modification of authority to obligate and expend certain funds for 

intelligence activities 

Section 504 of the National Security Act of 1947 (50 USC 414) 

requires that funds appropriated to an intelligence agency for an 

intelligence or intelligence-related activity may be obligated or expended only if such funds are specifically authorized for use for 

such activities. Although reprogrammings to meet a higher-priority 

intelligence need are permitted upon notification to the Intelligence 

Committees, Section 504(a)(3)(B) also mandates that the need be 

based on ‘‘unforeseen requirements.’’ The ‘‘unforeseen requirements’’ criterion in Section 504 tied the hands of Congress and the 

Intelligence Community in unnecessary and time-consuming legal 

debates over proposed reprogrammings. 

In Section 311 of the Bill, the Committee amends Section 504 to 

delete the ‘‘unforseen requirements’’ criterion, ensuring that the Intelligence Community—in cooperation with the Intelligence Committees—can react more quickly to confront higher-priority intelligence needs. Elimination of this requirement will permit 

reprogrammings to be reviewed on the basis of relative needs and 

priorities. The provision will also provide the Intelligence Community and Congress with flexibility to resolve differences between 

21

funds appropriated for intelligence and intelligence-related activities but not specifically authorized, and vice versa. 

Modification of notice and wait requirements on projects to construct or improve intelligence community facilities 

Section 602 of the Intelligence Authorization Act for Fiscal Year 

1995, Public Law 103–359 (Oct. 14, 1994) (50 U.S.C. 403–2b) 

placed certain notification requirements for unprogrammed Intelligence Community construction and renovation projects. Since passage of the original notification requirements over eight years ago, 

construction costs have grown steadily—particularly those costs related to security and information technology. Moreover, in recognition of the Intelligence Community’s need for increased agility to 

meet shifting threats, the Committee has lowered the ‘‘notice-andwait’’ period associated with certain unprogrammed construction 

and renovation projects from 21 days to 7 days and added an additional emergency category in which only notice (and no wait) would 

be required. The Committee expects that the emergency category 

would be used only in the most extraordinary circumstances. 

Provision of affordable living quarters for certain students working 

at National Security Agency laboratory 

Student programs are essential for NSA to compete in the highly 

challenging labor market and to ensure that it remains a competitive, prospective employer for students with hard-to-find scientific 

and technical skills. The single biggest obstacle identified by NSA 

to the growth of these student programs is a lack of affordable 

short-term housing in and around NSA. By permitting the Director 

of NSA to pay for living quarters for certain students in specified 

NSA programs, Section 502 seeks to ensure that future students 

are not deterred from seeking a valuable and beneficial employment opportunity with NSA simply because of the unavailability of 

affordable, short-term housing. 

Repeal of certain Intelligence Community reporting requirements 

The Committee maintains that ad hoc reporting requirements 

and other CDAs imposed by Congress upon the Intelligence Community are a vital tool of legislative oversight and are often highly 

valuable to various committees. Unfortunately, these reporting obligations have proven easier to impose than to remove. As a result, 

the Intelligence Community has faced ever-increasing reporting 

burdens, even when the practical utility of specific reports to Congress has largely lapsed. As the reporting burdens multiplied, the 

fragmented and unsystematic nature of reporting requirements led 

the Intelligence Community to become lax about fulfilling its obligations to provide the requested reports in a timely and effective 

manner. In sum, neither Congress nor the Executive Branch was 

well served by the reporting and CDA process that had developed. 

In Title VIII of the Intelligence Authorization Act for Fiscal Year 

2003, Congress took steps to rationalize and structure the previously ad hoc reporting process—organizing and incorporating the 

myriad existing requirements into a single reporting structure, imposing clear deadlines, and reemphasizing that the Intelligence 

Community is required by law to comply with all such requirements. 

22

The Committee is resolved to building upon prior efforts to bring 

the reporting/CDA process under control. In this bill, the Committee takes affirmative steps to eliminate reporting requirements 

that no longer have sufficient utility in the legislative oversight 

process to justify the burdens imposed upon intelligence agencies 

hard at work protecting the United States against international 

terrorism, supporting our troops in combat in Iraq and Afghanistan, and otherwise safeguarding and advancing our national security. Section 339 identifies a number of reports for elimination and 

changes one semiannual report to an annual report. 

Periodic reports are often very important tools of legislative oversight, but there can be no substitute for taking affirmative steps 

to request information from the Intelligence Community as an everyday part of effective oversight. The Committee anticipates that 

the elimination of these and other reporting requirements will in 

no way diminish the vigor of intelligence oversight, will contribute 

to the Intelligence Community’s ability to accomplish its important 

national security missions, and will not otherwise effect (and will 

hopefully improve) the Community’s willingness to fulfill the dayto-day requests of the Intelligence Committees.

Cancellation of other Intelligence Community reporting requirements 

In addition to the modifications to certain statutory reporting obligations, the following reports required to be submitted by Committee reports from previous fiscal years shall be deemed cancelled 

when the fiscal year 2004 Intelligence Authorization Bill is reported by the Committee. Thereafter, the Executive Branch need 

not submit: 

a. Recurring report(s) on comprehensive annual reviews of 

customer satisfaction created under ‘‘Customer Satisfaction 

With Intelligence Collection and Analysis and Production,’’ National Foreign Intelligence Program, discussed on p. 4, Senate 

Report 106–48, Authorizing Appropriations for Fiscal Year 

2000 for the Intelligence Activities of the United States Government and the Central Intelligence Agency Retirement and 

Disability System and for Other Purposes; and 

b. Recurring report on the Intelligence Community’s information infrastructure, created under ‘‘Assessment of the Intelligence Community’s Information Infrastructure’’ on p. 17, Senate Report 105–185, Authorizing Appropriations for Fiscal 

Year 1999 for the Intelligence Activities of the United States 

Government and the Central Intelligence Agency Retirement 

and Disability System and for Other Purposes. 

Central Intelligence Agency Act of 1949 notification requirements 

Section 4(b)(5) of the Central Intelligence Agency Act of 1949 

Section 4(b) of the CIA Act (50 U.S.C. 403e(b)(5)) permits CIA to 

authorize and implement certain allowances and benefits for payment to officers and employees of CIA and to personnel detailed or 

assigned to CIA. Section 4(b)(5) requires CIA to submit all regulations authorizing allowances and benefits under section 4(b) to the 

Intelligence Committees prior to implementation. This notification 

requirement was included to ensure that the Intelligence CommitVerDate Jan 31 2003 04:12 May 11, 2003 Jkt 019010 PO 00000 Frm 00022 Fmt 6659 Sfmt 6602 E:\HR\OC\SR044.XXX SR044
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tees were apprised of CIA’s use of the broad authority conferred by 

section 4(b)—particularly with respect to sections 4(b)(2) and (b)(3), 

which authorize CIA to adopt Agency-unique allowances and benefits under certain circumstances. 

Under section 4(b)(1), however, CIA may adopt only allowances 

and benefits comparable to those authorized for members of the 

Foreign Service under the Foreign Service Act of 1980 or other applicable laws. Section 4(b)(1) does not authorize CIA to adopt Agency-unique allowances and benefits such as those authorized under 

sections 4(b)(2) and (3). Section 4(b)(5), however, still requires that 

the Intelligence Committees be notified prior to implementation of 

section 4(b)(1) allowances and benefits. The notification requirement for these section 4(b)(1) regulations adds nearly a month to 

CIA’s process for implementation of employee-friendly policies that 

enhance morale or meet recruitment and retention concerns—allowances and benefits already authorized for members of the Foreign Service. In order to speed implementation of these section 

4(b)(1) allowances and benefits, the Committee amends section 

4(b)(5) to exempt section 4(b)(1) implementing regulations from the 

prior notification requirement. 

Section 21(f)(2)(B) of the Central Intelligence Agency Act of 

1949 

The Committee removes the technically expired requirements of 

section 21(f)(2)(B) of the CIA Act (50 U.S.C. 403u(f)(2)(B)). This 

subparagraph required the Director of Central Intelligence to obtain the approval of the Director of OMB and to notify the Intelligence Committees before expending amounts in the CSP Working 

Capital Fund that are attributable to certain fees imposed and collected under the program. Although CIA has continued to comply 

with the terms of this expired mandate, the approval and notification requirements set forth in the subparagraph are no longer necessary given CIA experience using CSP authorities. Removing the 

requirement of subparagraph (f)(2)(b) will not deprive OMB of its 

oversight role with respect to the CSP. Moreover, the Committee 

expects that CIA will also continue to comply with other generally 

applicable requirements for informing Congress of information relating to the management of the CSP, such as the requirements of 

Title V of the National Security Act of 1947.

INTELLIGENCE COLLECTION, ANALYSIS, AND DISSEMINATION

‘‘Hard Target’’ Human Intelligence 

The invaluable contributions of accurate Human Intelligence 

(HUMINT) to United States efforts in Operation Enduring Freedom, Operation Iraqi Freedom, and the global war on terrorism are 

evident. 

Particularly in the context of the 107th Congress’s Joint Inquiry 

into the terrorist attacks of September 11, 2001, various Committee 

Members expressed concern about the need for more vigorous 

HUMINT collection—especially unilateral collection—under non-official cover and from non-traditional HUMINT ‘‘platforms.’’ Some 

experts have even suggested the need for the creation of a small, 

highly-specialized semi- or fully-independent HUMINT entity 

charged with collecting against non-traditional targets and rogue 

24

states that traditionally have proven highly resistant to HUMINT 

penetration involving traditional official-cover operations. 

Without endorsing such a radical solution at this time, the Committee attaches the highest degree of importance to far more aggressive and sustained non-traditional HUMINT collection program. The Intelligence Community must act now to meet the 

United States requirement for much improved HUMINT collection 

against hard targets. This will require diligent effort and new approaches to HUMINT management within existing agency components. The Committee hopes and expects that the Director of Central Intelligence will ensure the implementation and success of 

such changes within the Intelligence Community. 

Pilot program on analysis of signals and other intelligence by intelligence analysts of various elements of the Intelligence Community 

The Committee has become increasingly concerned in recent 

years about bureaucratic and cultural obstacles to effective information and data sharing. Such resistance to data access by ‘‘outsiders’’ within the Intelligence Community—let alone to other entities such as analysts at the new Department of Homeland Security—causes at least three serious problems. 

First, it impedes the ability of the Intelligence Community to 

adopt state-of-the-art data-mining and analytical tools that are 

badly needed to help analysts cope with the flood of information 

brought in by collection components. Cutting-edge analytical tools, 

many of which are already in use in the private sector, increasingly 

involve innovative automated or computer-assisted tools to perform 

large-scale, multi-database analysis and pattern recognition. Using 

such approaches within the Intelligence Community, however, cannot proceed far without a significant revision of current orthodoxy 

as to information ‘‘ownership’’ and control. 

Second, barriers to data access inhibit the Intelligence Community’s ability to understand, correlate, and assess information that 

they already possess. Data-control restrictions sometimes impede 

sharing within an individual element of the Community, as well as 

between elements, limiting the effectiveness of analytical work far 

beyond what is necessary to protect highly sensitive information 

from undue risk of compromise. 

Third, barriers to data access prevent the Community from employing other elements’ analysts in understanding available information—both for the basic purpose of reducing data overload, and 

for more sophisticated goals like applying fresh analytical perspectives and experience to existing analytical tasks. The Committee 

supports additional analytic views to issues, and those views can 

only be enriched when informed by access to all available information and data. 

The NSA, in particular, is an analytical organization that is far 

too small to handle the volumes of data that it collects. The reluctance of NSA to give other agency analysts access to data that NSA 

analysts do not have time or priority to review—even when such 

analysts are as well trained as NSA personnel in protecting ‘‘U.S. 

person’’ information—has prevented the use of non-NSA analytic 

manpower to help narrow the gap between collection and analysis 

and to ensure that more of the unevaluated NSA data is reviewed 

25

by an analyst. It has also drained NSA of trained analysts, because 

the agency elects to send many of its analysts to other agencies and 

organizations to supervise and regulate the small degree of NSA 

information sharing that does occur. 

If other agency analysts were properly trained in the rules and 

procedures governing the handling of SIGINT information (as 

many are) and these analysts enjoyed the trust of NSA, such analysts would provide ‘‘value added’’ beyond their numbers. Many 

NSA liaison officers who are now situated in other Intelligence 

Community agencies to provide those agencies with the ability to 

access NSA data could return to full-time NSA analytical work. 

It has proven difficult to achieve significant improvements in 

data sharing and information access within and between elements 

of the United States Intelligence Community. The events of September 11, 2001—and the record of the Community’s preparedness 

for these terrorist atrocities, as detailed by the Senate and House 

Intelligence Committees’ Joint Inquiry during the 107th Congress—make immediate action and cooperation imperative. Accordingly, in Section 314, the Committee requires that concrete steps 

be taken to pave the way for a future of vastly improved data sharing and information analysis within the Intelligence Community. 

Section 314 requires NSA to develop a pilot program to improve 

the ability of analysts in other Intelligence Community elements to 

obtain access to and analyze data collected and held by NSA, while 

retaining appropriate handling safeguards. The pilot program’s objectives are: (a) to augment the Intelligence Community’s ability to 

undertake true ‘‘all-source fusion’’ analysis in support of intelligence requirements by helping build a legal and practical foundation for increased inter-agency cooperation and data sharing; (b) to 

increase to the maximum practicable extent the proportion of NSAcollected information that is reviewed and assessed by intelligence 

analysts; and (c) to reduce the drain on NSA analytical manpower 

caused by current barriers to inter-agency information sharing. 

Not later than December 31, 2003, therefore, NSA must begin to 

implement a program to: 

a. Develop efficient and effective methods for certifying that 

designated analysts from other agencies are properly trained in 

the relevant procedures for handling SIGINT information and 

for ‘‘minimizing’’ any ‘‘U.S. person’’ information that might be 

contained therein so that such analysts may be given access to 

NSA databases in an identical fashion to NSA analysts; those 

analysts from other agencies will be designated as requiring 

such access by the head of their parent agency, who will retain 

full accountability for the analytic products produced by such 

agency’s analysts; and 

b. Explore and improve innovative ways to allow other agencies to apply their analytical expertise to NSA data, including 

the use of ‘‘detailees in place’’ (i.e., other-agency employees who 

are notionally detailed to NSA, thus becoming part of the 

SIGINT enterprise while remaining at their home agency). 

Pilot program on training for intelligence analysts 

Current programs that encourage students to pursue educational 

programs relevant to national security or foreign language training 

have not produced the number of qualified analysts or foreign lanVerDate Jan 31 2003 04:12 May 11, 2003 Jkt 019010 PO 00000 Frm 00025 Fmt 6659 Sfmt 6602 E:\HR\OC\SR044.XXX SR044
26

guage experts necessary to meet the ongoing needs of the Intelligence Community. Although the David L. Boren National Security Education Act of 1991, Title VIII, Public Law 102–183 (Dec. 4, 

1991) moves in the right direction, the David L. Boren National Security Education Program (NSEP) places students in national security positions throughout the Federal Government, not merely 

within the analytic components of the Intelligence Community. 

To address the shortage in language proficient and area expert 

analytic capabilities within the Intelligence Community, the Committee proposes the Director of Central Intelligence establish a 

ROTC-like Intelligence Analyst Program. This program should seek 

to increase the number of qualified entry-level intelligence professional analysts available to the Intelligence Community. The goal 

of the program should be to recruit entry-level analysts and operations specialists with enhanced analytic and foreign language 

skills who are committed to a career in the Community. The Committee believes this program should be national in scope (conducted 

at universities throughout the United States), able to identify individuals interested in working in the Intelligence Community, able 

to provide financial assistance to participants, and capable of providing guidance to participants in selecting courses that would be 

most useful for an intelligence analyst’s career. The program 

should also include educating participants on the various analytic 

specialties and opportunities within the Intelligence Community. 

Prerequisites of the program, and financial assistance thereunder, 

should include the ability to obtain a security clearance and a commitment for service within the Intelligence Community. 

The Committee is pleased that the ADCI/A&P has expressed 

strong support of the goals of this initiative. Moreover, the Committee believes that the ADCI/A&P is the proper entity to manage 

such a pilot program for approximately 150 students in fiscal year 

2004. Therefore, the Committee recommends an increase of $8.0 

million to the ADCI/A&P to create and manage this pilot program. 

Report on modifications of policy and law on classified information 

to facilitate sharing of information for national security purposes 

The Committee is concerned that Executive Orders 12333 and 

12958 and related regulations and policies may inappropriately 

limit the effective sharing of intelligence information and data. The 

Committee therefore has several provisions within the Bill to improve sharing within the Intelligence Community to enhance the 

quality and timeliness of intelligence products. Furthermore, it is 

the sense of the Committee that information sharing will become 

increasingly important as the Department of Homeland Security 

endeavors to move critical information in both directions between 

the Intelligence Community and regional, state, and local governments. 

Of particular concern to the Committee are various sections in 

Executive Orders 12333 and 12958 that the Administration should 

expeditiously review to accurately reflect the movement to electronic data collection and storage and to address the requirement 

to more effectively assess and share pertinent national security information. The war on terrorism and the proliferation of weapons 

of mass destruction require foreign and domestic and national and 

27

local partners to effectively collaborate on analysis and coordinate 

on operations. Achieving this aim will require the U.S. Government 

to move beyond the paradigm imposed by individual agency ‘‘ownership’’ of information. In that regard, the Committee notes that 

agencies that collect information often do not have the requisite 

analytic workforce to fully exploit the data they collect. Further, expanded access to data—providing it is done securely—will foster 

more rapid access and more competitive analysis and exploitation. 

Notwithstanding extremely sensitive security, operational, and related matters, the President should continue to encourage broader 

and more secure exchange of information within the Intelligence 

Community and between the Community and its many consumers. 

Executive Order 12958 should be revised not only to remove restrictive impediments within the Executive Order as to the interagency sharing of classified information, but also to facilitate sharing and access (except in narrowly defined circumstances). Executive Order 12333 similarly needs to be revised such that other organizations besides NSA can engage in SIGINT activities, specifically analysis of SIGINT information that has been lawfully collected. 

Revisions to Executive Orders 12333 and 12958 are needed, but 

represent one of many issues that need to be addressed to achieve 

greater teamwork in the defense of the nation. Technical solutions, 

such as the need to implement machine-enabled processes to automatically tag data, are needed to facilitate efficient access and 

analysis. Further, the Intelligence Community must recognize that 

information sharing cannot succeed without revised security policies and technologies. This Bill, therefore, requires several related 

reports, including reviews of security clearance procedures, the 

threats to networks posed by ‘‘cleared insiders,’’ and the growing 

reliance of the United States on foreign hardware and software. 

Only with a broad approach, encompassing policy and technology 

and security and sharing, can we achieve the maximum advantages 

offered by modern information technologies and a highly-trained 

and motivated workforce. 

The Committee requests that the President review Executive Orders 12333 and 12598 and submit a report within 6 months on potential changes to the Executive Orders or legislative actions which 

could be applied to facilitate information sharing and data access 

across the Intelligence Community. 

Report on data-mining capabilities for the Intelligence Community 

Data mining is emerging as potentially one of the most valuable 

tools for Intelligence Community analysts. Data mining involves 

the use of data analysis tools to discover previously unknown, valid 

patterns and relationships in large data sets. This technology has 

the potential to provide intelligence analysts with the capability to 

identify terrorists, to recognize the development and proliferation 

of weapons of mass destruction, and to detect illicit narcotics activity (e.g., communications, money transfers, and travel) by examining voluminous records. 

The Committee is concerned, however, that components of the Intelligence Community are investing in a variety of data-mining capabilities without sufficient coordination of Community-wide datamining requirements. Strategic planning in this area is vital to enVerDate Jan 31 2003 04:12 May 11, 2003 Jkt 019010 PO 00000 Frm 00027 Fmt 6659 Sfmt 6602 E:\HR\OC\SR044.XXX SR044
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sure that there is no redundancy of effort and that interface standards are in place to enable collaboration and cross-program application, as required.

Accordingly, the Committee directs that the Chief Information 

Officer for the Intelligence Community (CIO) and the ADCI/A&P 

jointly review data-mining capabilities throughout the Intelligence 

Community and assess which capabilities meet Intelligence Community analytic requirements. The CIO will publish guidelines to 

the Community on standards and protocols to enable cross-agency 

interfaces for migration and data-level information exchange. The 

results of this assessment should be included in a written report 

to the House and Senate Intelligence Committees (submitted no 

later than December 1, 2003) and should include funding requirements for respective data-mining capabilities. 

SECURITY AND COUNTERINTELLIGENCE

Although the Committee has sought to eliminate or limit the 

number of reporting obligations placed on the Intelligence Community, several issues—from security investigations of U.S. Government personnel to the protection of the sensitive national security 

information maintained by the U.S. Government—require closer 

examination. To that end, the bill contains a number of one-time 

reports that will aid the Committee in the careful analysis of the 

issues presented. 

Protecting against unauthorized disclosures of classified information 

For some time, the Committee has been greatly concerned about 

the dangers posed to United States national security from the epidemic of ‘‘leaking’’—when persons with detailed access to highly 

sensitive national security information reveal it to unauthorized 

persons. As President Bush, Secretary of Defense Rumsfeld, Attorney General Ashcroft, Federal Bureau of Intelligence Director 

Mueller, Director of Central Intelligence Tenet, and many other 

government officials have repeatedly emphasized, unauthorized disclosures of national security information impose huge and ongoing 

costs. Such leaks give valuable intelligence to our adversaries, can 

cost the lives of intelligence sources, imperil foreign government liaison relationships, compromise collection capabilities, imperil the 

lives of American servicemen and women and the public at large, 

and greatly impede the U.S. Government ability to protect and advance vital national security interests in the war on terrorism, in 

fighting foreign espionage, and in prosecuting military campaigns 

in Iraq and elsewhere. Such leaks also cost the American taxpayer 

vast sums of money, because capabilities compromised due to leaks 

must be slowly, laboriously, and expensively rebuilt—or new and 

costly substitutes must be found. 

In the Intelligence Authorization Bill for Fiscal Year 2001, Congress attempted to pass legislation making it a felony to disclose 

properly classified information. President Clinton vetoed the legislation, however, and the Authorization Act was only made law after 

Congress had removed the section criminalizing unauthorized disclosures. Understanding that such a broad measure still appears to 

lack political support—despite the demonstrable costs that today’s 

‘‘leak culture’’ has imposed, especially since September 11, 2001—

29

the Committee wishes to encourage the Executive Branch to adopt 

a new and more aggressive approach to leak issues. The Committee 

recommends that the U.S. Government consider the workability of 

aggressive criminal and civil enforcement, even civil compensatory 

remedies (e.g., liquidated damages). 

Coordination of United States Government research on security 

evaluations 

In October 2002, the National Academies of Science released a 

report entitled, ‘‘The Polygraph and Lie Detection’’—‘‘a scientific review of the research on polygraph examinations that pertains to 

their validity and reliability, in particular for personnel security 

screening.’’ In the report—the first comprehensive assessment of 

the polygraph since the 1983 study by the U.S. Office of Technology 

Assessment—the National Academies stated: 

[W]e recommend an expanded research effort directed at 

methods for deterring and detecting major security 

threats, including efforts to improve techniques for security screening. * * * We cannot guarantee that research 

related to techniques for detecting deception will yield valuable practical payoff for national security, even in the 

long term. However, given the seriousness of the national 

need, an expanded research effort appears worthwhile. 

* * * The research program we envision would seek any 

edge that science can provide for deterring and detecting 

security threats. It would have two major objectives: (1) to 

provide Federal agencies with methods of the highest possible scientific validity for protecting national security by 

deterring and detecting espionage, sabotage, terrorism, 

and other major security threats; and (2) to make these 

agencies fully aware of the strengths and limitations of the 

techniques they use.

In Section 355, the Committee authorizes $500,000 from the Intelligence Community Management Account for the National 

Science Foundation and the Office of Science and Technology to 

convene components of the U.S. Government to provide a forum to 

catalogue and coordinate Federally-funded research activities relating to the development of new techniques in the behavioral, psychological, or physiological assessment of individuals to be used in 

security evaluations. This effort is intended to serve as an important step in developing a more focused research effort leading to 

the development of alternatives to the polygraph as a security evaluation tool for the U.S. Government. By March 1, 2004, the National Science Foundation and the Office of Science and Technology 

are required to jointly submit to Congress a written report identifying the research most likely to advance the understanding of the 

use of such assessments of individuals in security evaluations; distinguish between short-term and long-term areas of research in 

order to maximize the utility of short-term and long-term research 

on such assessments; identify the Federal departments and agencies best suited to support such research; and develop recommendations for coordinating future Federally-funded research for the development, improvement, or enhancement of security evaluations. 

The components of the Federal Government who will participate in 

30

this effort include DoD, DoE, the Department of State, the Department of Justice, the Department of Homeland Security, the Director of Central Intelligence, the Federal Bureau of Investigation, 

and the National Counterintelligence Executive. 

Report on cleared insider threats to classified computer networks 

The Committee is concerned that the classified computer networks of the U.S. Government lack adequate protections from 

cleared insiders and from certain outside threats. Accordingly, section 331 requires the Director of Central Intelligence, in conjunction with the Secretary of Defense, to provide a one-time report to 

Congress. The report should assess the national security risks 

posed by ‘‘cleared insiders’’ that are inherent in current computer 

security practices within the Intelligence Community and DoD with 

regard to vulnerabilities such as Information Warfare (IW), Information Operations (IO), Computer Network Exploitation (CNE), 

and Computer Network Attack (CNA) activity by foreign governments, international terrorist organizations, or organized crime 

groups. In particular, this report should describe the risks inherent 

in furnishing to users of local area networks (LANs) and wide-area 

networks (WANs) that include classified information such capabilities as e-mail, upload/download authorization, and removable storage media without comprehensive firewalls, accountability procedures, or other appropriate security controls. The Committee understands, for instance, that thousands of classified computer terminals within DoD may suffer from these vulnerabilities, which 

have been highlighted by recent exercises conducted within the 

U.S. Government in light of the Regan and Hanssen espionage 

cases. The Committee expects that the report should not only assess what vulnerabilities exist in this regard, but should also describe in detail what steps are being taken to eliminate these 

threats, including any budget requirements to address shortfalls. 

Report on security background investigations and clearance procedures of the United States Government 

Most publicly known instances of foreign espionage in this country have been committed by persons who legitimately obtained sensitive security clearances before deciding to betray their country. 

The Committee is concerned that current security investigations, 

however, focus more upon screening individuals prior to giving 

them clearances than upon ascertaining their trustworthiness on 

an ongoing basis. With this in mind, the Committee has requested 

a report to assess the relative risks of pre-clearance and post-clearance compromise. This report should state whether current approaches address adequately the risk of cleared employees compromising classified information after their period of access to such information has already begun. The report should also make recommendations about how background investigations might in the 

future be better targeted to historically verifiable counterintelligence vulnerabilities. 

Report on United States dependence on computer hardware and 

software manufactured overseas 

After 1973, when the risks inherent in America’s reliance on foreign oil became clear, many positive steps were taken to ameliorate 

31

United States vulnerabilities. Those steps included, among other 

things, establishment of a strategic petroleum reserve, establishment of a Central Command, and research and development into 

alternative fuel supplies. In many respects, information technology 

has become as important to the functioning of the United States 

economy as oil, and the growing dependence of the United States 

on foreign information technology raises concerns similar to those 

raised with respect to foreign oil dependence. Unlike foreign oil dependence, however, United States dependence on foreign information technology creates opportunities for espionage and clandestine 

information operations that are extremely difficult to detect. In 

that regard, the Committee notes that most of the leading suppliers of hardware and software to the United States are countries 

that the Federal Bureau of Investigation indicates are already actively engaged in economic espionage against this country. 

To accurately determine the dimensions of the problem relating 

to United States dependence on foreign hardware and software, the 

Committee directs the Director of Central Intelligence to prepare a 

thorough evaluation of the trends within this critical industry and 

the strategic implications of increasing United States reliance on 

foreign hardware and software. Recognizing that some of the greatest sources of expertise on this issue reside in the private sector, 

the Committee authorizes and supports such consultation with industry as may be required. Once the Committee has received this 

analysis, Congress will be in a better a position to develop appropriate policies to mitigate this new vulnerability. 

SUMMARY OF REPORTING REQUIREMENTS

One-time reporting requirements 

The Fiscal Year 2004 Intelligence Authorization Bill requires the 

following one-time reporting requirements, which are discussed 

throughout the report: 

(a) Report on cleared insider threat to classified computer 

networks; 

(b) Report on security background investigations and security clearance procedures of the United States Government; 

(c) Report on detail of civilian intelligence personnel among 

elements of the Intelligence Community and the Department of 

Defense; 

(d) Report on modifications of policy and law on classified information to facilitate to sharing of information for national security purposes; 

(e) Report of Secretary of Defense and Director of Central Intelligence on strategic planning; 

(f) Report on United States dependence of computer hardware and software manufactured overseas; 

(g) Report on intelligence lessons learned from military operations in Iraq; 

(h) Report on conventional weapons and ammunition obtained by Iraq in violation of certain United Nations Security 

Council resolutions; 

(i) Report on data-mining capabilities for the Intelligence 

Community; 

32

(j) Report on the National Security Agency Senior Acquisition Executive; 

(k) Quarterly report baselining all program, projects, and activities ongoing within the Consolidated Cryptologic Program; 

(l) Report on a review of the ‘‘Public Private Partnership’’ and the ‘‘Private Financing Initiative’’ concepts for application 

to Menwith Hill Station.

Reports repealed or cancelled 

The following is a list of reports that are repealed or cancelled, 

and are no longer required to be submitted to the Committee. Additional reports repealed in the Fiscal Year 2004 Intelligence Authorization Bill are contained in the Classified Annex. 

(a) Annual Evaluation of Performance and Responsiveness of 

Intelligence Community; 

(b) Periodic and Special Reports on Disclosure of Intelligence 

Information to the United Nations; 

(c) Annual Report on Intelligence Community Cooperation 

with Counterdrug Activities; 

(d) Annual Report on Russian Nuclear Facilities; 

(e) Annual Report on Covert Leases; 

(f) Annual Report on Protection of Covert Agents; 

(g) Annual Report on Certain Foreign Companies Involved in 

Proliferation of Weapons of Mass Destruction; 

(h) Annual Report on Intelligence Activities of People’s Republic of China; 

(i) Annual Report on Coordination of Counterintelligence 

Matters with the Federal Bureau of Investigation; 

(j) Reports on Decisions not to Prosecute Violations of Classified Information Procedures Act; 

(k) Report on Postemployment Assistance for Terminated Intelligence Employees; 

(l) Annual Report on Activities of Federal Bureau of Investigation Personnel Outside the United States; 

(m) Annual Report on Exceptions to Consumer Disclosure 

Requirements for National Security Investigations; 

(n) Recurring report(s) on comprehensive annual reviews of 

customer satisfaction; 

(o) Recurring report on the Intelligence Community’s information infrastructure. 

COMMITTEE ACTION

On May 1, 2003, the Select Committee on Intelligence approved 

the Bill and ordered that it be favorably reported. 

ESTIMATE OF COSTS

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

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

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

from the Executive Branch, and therefore the Committee deems it 

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

Standing Rules of the Senate, to include such estimates in this report. On [ ], 2003, the Committee transmitted this Bill to the 

33

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

Bill. 

EVALUATION OF REGULATORY IMPACT

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

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

will be incurred by implementing the provisions of this legislation. 

CHANGES IN EXISTING LAW

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

the requirements of paragraph 12 of rule XXVI of the Standing 

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

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