Lapses in the Department of Energy's (DOE's) security and counterintelligence programshave plagued DOE since 1977, when the department was established by merging 40 governmentorganizations, including the Energy Research and Development Administration and the FederalEnergy Administration. (1) The purpose in establishing the new agency was to focus the government's research centers onfinding solutions to the energy crisis then confronting the United States. The view, according tosome, is that DOE's establishment represented an unsuccessful attempt to merge more than 40different government agencies and organizations, an event from which DOE arguably has neverrecovered. (2) Congress created the semi-autonomous National Nuclear Security Administration (NNSA)in 1999 in the wake of a recommendation by the President's Foreign Intelligence Advisory Board(PFIAB) that DOE's weapons research and stockpile management functions should be placed whollywithin a new semi-autonomous agency within DOE "that has a clear mission, streamlinedbureaucracy, and drastically simplified lines of authority and accountability." (3) Since then, however, someobservers have questioned whether the current dual counterintelligence (CI) office structureestablished by Congress -- with DOE operating one counterintelligence office and NNSA a second,independent one -- is the most effective structure to combat foreign espionage. Or, as some havewarned, does such a bifurcated structure expose both agencies to the possibility of futurecounterintelligence missteps because it contributes to coordination and communicationsproblems? (4) One of DOE's legacies has been its continuing struggle to strike an acceptable balancebetween open scientific inquiry and the need to protect highly sensitive and classified informationthat comprises many of those inquiries. In the past, this inherent tension led many observers toquestion whether the security of DOE's highly classified weapons-related program, particularly withregard to CI, has received sufficient attention. These and other concerns prompted the ClintonAdministration to issue a Presidential Decision Directive (PDD-61) in which he ordered DOE tofundamentally restructure its counterintelligence program. PDD-61 called for a number of changes,including one that placed the Federal Bureau of Investigation (FBI) in charge of DOE'scounterintelligence program. In 1999, Congress went further by establishing the semi-autonomousNational Nuclear Security Administration (NNSA) and giving it control over DOE's nationalsecurity-related programs, including the department's sensitive weapons laboratories. It alsoestablished a separate counterintelligence office within NNSA -- one separate and independent ofthe DOE's Office of Counterintelligence. This new office was given responsibility for developingand implementing counterintelligence programs within NNSA. Although representing separateorganizations, the two CI offices share resources, funds, and personnel for some programs. (5) This partially bifurcated counterintelligence structure, and its long-term effectiveness,continues to generate concern in some quarters, (6) particularly given that DOE and NNSA facilities are expected toremain major espionage targets of foreign intelligence services. (7) In 1998, President Clinton issued PDD-61 out of concern about intelligence evidenceindicating that the People's Republic of China (PRC) had stolen secrets from DOE's weaponslaboratories. Aimed at strengthening DOE's counterintelligence program, (8) the President's directivemandated the establishment of an independent counterintelligence office -- known as the Office ofCounterintelligence (OCI) -- within the department and placed it under the supervision of a seniorFBI official. (9) Previously,DOE's counterintelligence program had been highly decentralized and, according to some observers,grossly underfunded. (10) The President's directive also mandated that the head of the new office report directly to theEnergy Secretary and that existing DOE lab contracts be amended to take into accountcounterintelligence goals and compliance measures. The directive consolidated under the OCIDirector's control counterintelligence oversight functions previously assigned to DOE operations andfield offices. As part of a follow-on implementation plan issued in 1999, the Director also assumedprogramming, funding, and personnel authority over counterintelligence activities at all DOE fieldoffices and laboratories. Despite these changes, a majority in Congress decided that DOE'scounterintelligence reforms were insufficient. March 1999 marked a turning point in DOE's counterintelligence program. That month LosAlamos National Security Laboratory scientist Wen Ho Lee was fired after allegedly failing apolygraph exam. (11) (Leehad also allegedly failed to notify DOE officials about certain contacts with individuals in the PRC,to properly safeguard classified material, and to cooperate with authorities with regard to certainsecurity matters. He pleaded guilty to one felony count of unlawful retention of national defenseinformation; the government dropped 58 additional counts. (12) ) In May of that same year,a bipartisan House Select Committee charged in a report that was declassified that the PRC hadstolen U.S. nuclear weapons secrets. In June, the President's Foreign Intelligence Advisory Board(PFIAB) criticized DOE for the "worst" security record on secrecy that panel members said they hadever encountered. (13) The criticism was contained in a PFIAB report, the first of its kind to be publicly released in thepanel's 38-year history. Although the PFIAB dismissed assertions of wholesale losses of nuclearweapons technology as a result of espionage, the panel did concur, on balance, with the U.S.intelligence community's assessment that the PRC had stolen classified U.S. nuclear weaponsinformation that probably enabled the PRC to accelerate its development of nuclear weapons. (14) Congress and thePresident responded to the panel's report by establishing NNSA (15) and placing it charge ofDOE's national security-related nuclear programs. (16) In restructuring DOE and establishing NNSA, Congress created dual counterintelligenceoffices in DOE and NNSA, respectively. Within DOE, the already-existing Office ofCounterintelligence was codified and made responsible for establishing counterintelligence policyfor both DOE and NNSA. The department further directed that the office be responsible forimplementing CI programs at non-NNSA facilities. Within NNSA, the Office of Defense NuclearCounterintelligence was created by statute to implement DOE counterintelligence policy, but onlyat NNSA facilities. Conferees further stipulated that a presidentially appointed, Senate-confirmedUnder Secretary for Nuclear Security be designated to serve as NNSA Administrator, and that theAdministrator report directly to the Energy Secretary. In approving this reorganization, conferees cited the PFIAB's report, which blamed DOE'scounterintelligence failures on poor organization and a failure of accountability. Conferees alsonoted the PFIAB's criticism of the DOE bureaucracy for being dysfunctional with regard to securitymatters, and incapable of reform. (17) Over time, this partially bifurcated CI structure has produced debate over its effectiveness. Critics warn that there is a lack of communication and coordination between the two offices thatcould undermine delicate counterintelligence investigations. Supporters of the dual office structureargue, however, that a separate, dedicated CI office within NNSA is necessary if counterintelligenceprotection of DOE's national security laboratories is to receive the focus it warrants. In assessing the current debate over DOE counterintelligence policy, observers have generallyfocused on two interrelated questions. First, are DOE and NNSA effectively managing their CIprograms? And second, is the current dual office organizational structure within DOE and NNSAflawed? In a 2002 report, the Commission on Science and Security blamed dysfunctional managementat DOE for deficiencies in DOE's security and counterintelligence programs, including a lack ofclarity, consistency, and broad strategic planning. The commission criticized DOE for failing tosystematically assess the espionage risk to its programs and establish appropriate protectionpriorities. It also said that DOE's investments in counterintelligence technology were inadequate andthat its focus on cybersecurity threats was insufficient. (18) Authors of a second study issued in January 2003 concluded that both agencies were makingprogress in accomplishing their basic CI missions. (19) The Office of the National Counterintelligence Executive(NCIX) reported that DOE and NNSA were working cooperatively, particularly in the areas ofstrategic planning, operating procedures, and creating joint information-sharing systems. Both studies, however, contained expressions of concern about the current CI organizationalstructure. (20) With regard to the current bifurcated structure, two views generally prevail. According tothe first view, articulated by the PFIAB in its 1999 report, real and lasting CI reform is "unworkablewithin DOE's current structure and culture. To achieve the kind of protection that these sensitivelabs (DOE's national security laboratories) must have, they and their functions must have their ownautonomous operations structure free of all the other obligations imposed by DOEmanagement." (21) Accordingly, the PFIAB advocated the establishment within DOE of a semi-autonomous agency,with its own separate and coherent counterintelligence program and structure. (22) The Commission on Science and Security summed up the opposing view in its 2002 report,concluding: Counterintelligence must be an enterprise-widefunction, responsible for counterintelligence issues anywhere within the DOE complex. Furthermore, counterintelligence investigations, analysis, and all other counterintelligenceinformation must be developed within a unified organization and provided to the Secretary and othersenior officials without bureaucratic delays. This vital function necessitates one organization withone chief of counterintelligence reporting to the office of the Secretary. (23) The commission went on to warn that the current bifurcated counterintelligence structure willinevitably cause counterintelligence responsibilities to fragment, thereby preventing theestablishment of a single, strong department-wide counterintelligence program. (24) NCIX appeared to concur with the commission's view, noting in its own study that "'thispartial bifurcation' of CI responsibilities at DOE not only served to further complicate theformidable challenge of managing CI at DOE, but also endangered the goals and implementation ofan effective CI program." (25) The NCIX further stated in its report that, "[i]n light of thehistory of CI investigations that foundered because of mis-communications within well-establishedagencies, the two-office arrangement has raised the odds of missteps and problems." (26) NCIX blamed the current dual-office structure for numerous day-to-day problems, includingduplicative and at times contradictory messages to field sites; mis-routing of sensitive CI informationrelated to investigations; uncoordinated communications to the FBI and the intelligence community;and dual, sometimes inconsistent, program tasking. (27) According to one law enforcement officer cited by NCIX, the two-office configuration"might some day lead the department to miss a serious CI breach or prevent the conduct of aneffective investigation." (28) The Directors of Central Intelligence and the Federal Bureau ofInvestigation (FBI) endorsed the NCIX findings in separate letters to the SSCI Chairman and ViceChairman. (29) NCIX recommended in its report that the two CI offices be consolidated under one seniorcounterintelligence officer who would report directly to the DOE Secretary and who would beresponsible for department-wide counterintelligence program. (30) As part of his own review, former DOE Secretary Spencer Abraham concluded in 2003 thatthe bifurcated structure was "not optimal." He proposed to Congress that the department's two CIprograms be consolidated under DOE's control, and that the combined office report directly to theEnergy Secretary. (31) Instead, however, the Senate Armed Services Committee, in the FY2005 Defense authorization bill, authorized the DOE Secretary to consolidate the two offices, but under the control of the NNSAadministrator. (32) TheHouse disagreed, and the Senate receded to the House's position. In agreeing to retain the bifurcatedstructure, conferees stated in their conference report: The conferees note that the NNSA was originally setup as a semi-autonomous agency, in large part, to ensure that there would be adequate focus andpriority placed on counterintelligence activities. The conferees urge the counterintelligence officesat DOE and NNSA to work together to ensure security of both DOE and NNSA programs andfacilities. (33) Congress, of course, could choose to maintain the current organizational structure. (34) If Congress, however,ultimately decides to modify the structure, a number of organizational approaches have beenproposed. The range of alternatives currently being discussed include the following: (1) consolidatethe two counterintelligence programs under the control of a new DOE intelligence agency; (2)consolidate the two counterintelligence programs under the control of NNSA; (3) establish a newDOE intelligence agency but maintain a separate NNSA counterintelligence program; (4) completelysever DOE's and NNSA's counterintelligence programs; and (5) maintain the status quo. One approach, which the DOE Secretary has initiated, integrates DOE's Office ofIntelligence, whose principal task is to assess other countries' nuclear weapons programs, (35) and DOE's CI office undera newly created DOE Office of Intelligence and Counterintelligence. (36) The new office containsseparate directorates responsible for intelligence and counterintelligence, respectively. In a secondphase, NNSA's CI office would be consolidated under the new intelligence agency'scounterintelligence directorate. Such a change would require congressional approval. The Houseof Representatives has approved a measure as part of the FY2007 Defense Authorization Act thatwould abolish NNSA's CI office and reintegrate its functions into DOE's new intelligence andcounterintelligence office. (37) The Senate's version of the legislation is silent on the issue, andHouse and Senate conferees will likely address the matter. Proponents assert that such a consolidation would produce a more efficient bureaucraticstructure, one that would better serve DOE's broader intelligence needs and responsibilities. Specifically, they suggest that by creating a new intelligence agency, DOE will be able to improvecoordination and communication between those responsible for assessing foreign intelligence andthose in charge of the department's counterintelligence programs. Proponents also contend that bymerging DOE's and NNSA's CI programs under a new DOE intelligence agency, the department willbe able to clarify roles and missions and to improve coordination and communication. Opponents believe the current bifurcated CI program -- with DOE and NNSA splittingresponsibilities for counterintelligence -- is the program's principal weakness, and favorconsolidating the two CI offices within a single office in DOE. They question, however, theadvisability of placing such an integrated CI program under the control of a new intelligence agencywithin DOE. Doing so, they contend, will weaken the authority and effectiveness of those in chargeof counterintelligence by superimposing a new bureaucratic layer between them and the DOESecretary. Currently the counterintelligence leadership has direct access to the Energy Secretary.Opponents also question DOE's commitment, and Congress's willingness, to eliminate the currentbifurcated CI structure, which, in their view, is the principal reason that counterintelligence effortsare not effective. Failing to eliminate program bifurcation and leaving NNSA's CI program in placewhile permitting DOE's new intelligence agency to absorb the department's CI program would onlyworsen matters, according to these opponents. The second approach consolidates all DOE CI implementation under NNSA. (38) Proponents suggest thatthis approach would improve coordination because NNSA would be able to focus its resources onprogram implementation, while leaving DOE's counterintelligence office to concentrate onformulating CI policy. They also assert that NNSA is best suited to implement DOE's overall CIprogram, because it already is responsible for overseeing DOE's most sensitive classified activitiesby virtue of overseeing the department's weapons labs. Opponents counter that leaving in place twoCI offices, one responsible for policy and the other for operations, will contribute to continuingconfusion over roles and missions. This approach would integrate the DOE's Office of Intelligence and counterintelligence officeunder a new DOE intelligence agency that would develop CI policy for DOE and NNSA, but wouldimplement it only at non-NNSA facilities. NNSA's CI office would continue to function separatelyand remain responsible for implementing CI policy at NNSA facilities. Proponents concede that thisapproach would fall short of a preferred goal, which would be to consolidate DOE and NNSAcounterintelligence programming, but argue that it nevertheless would enhance counterintelligenceefforts by improving communication and coordination between the two existing programs. Some opponents counter the department can eliminate problems of program fragmentation,coordination, and communication only by eliminating the current bifurcated structure. This approach is a complete separation of DOE and NNSA counterintelligence programs,with DOE's new intelligence agency providing CI support to DOE through its CI directorate, andNNSA's program operating independently. Proponents suggest that this approach would clarify linesof authority for CI within DOE and NNSA, thereby improving communication and coordination. Opponents counter that such an arrangement would produce chaos in the field; could lead to futureproblems of redundancy, coordination, and communications; and could undermine relations with lawenforcement. (39) Under this approach, DOE's Office of Counterintelligence would continue to be responsiblefor developing CI policy across DOE (including the NNSA) but implementing that policy only atnon-NNSA facilities. NNSA's counterintelligence office would continue to implement CI policyat NNSA facilities. Proponents of the status quo point to congressional concern in 1999 that DOE was failingto focus necessary and appropriate attention on counterintelligence. The semi-autonomous NNSAand its counterintelligence office, they argue, were established for the express purpose of having oneentity outside of DOE focus on, and be held accountable for, implementing CI policy at DOE'ssensitive nuclear and national security programs, including its weapons labs. The current structure,they assert, accomplishes that goal while maintaining a reasonably close integration of programactivities with DOE's counterintelligence office. Opponents counter that the current bifurcatedstructure produces "inefficiency, confusion, unnecessary contention, and mis-communication." (40) They also suggest that,"In some areas, the NNSA structure within DOE has exacerbated the general problem of too manylayers in DOE." (41)

Summary:
Concerned by reported security and counterintelligence (CI) lapses at the Department ofEnergy (DOE), Congress in 1999 established a semi-autonomous agency -- the National NuclearSecurity Administration (NNSA) -- to oversee DOE's national security-related programs. WithinNNSA, Congress established the Office of Defense Nuclear Counterintelligence to implement NNSA's counterintelligence program. Although DOE's existing Office of Counterintelligencedevelops CI policy for both agencies, it implements policy only at non-NNSA facilities. Somestudies have questioned the effectiveness of a dual office structure in combating foreign espionageand have urged the adoption of an alternative structure. Several alternative organizationalapproaches have been discussed, including the following. One approach, which DOE has initiated, merges under the control of a new DOE Office ofIntelligence and Counterintelligence DOE's Office of Intelligence, which assesses foreign nuclearweapons programs, and DOE's CI office. Under an anticipated second phase, which would requirecongressional approval, the new office would absorb NNSA's CI program. Proponents assert thatconsolidation would improve command, control, and communication. Opponents argue thatconsolidation would dilute the focus on counterintelligence at DOE's weapons labs. Under a second approach, the DOE and NNSA CI programs could be consolidated under thecontrol of the NNSA administrator. Proponents argue that a semi-autonomous agency such asNNSA, by virtue of its independence, is better able to implement CI measures than is DOE.Opponents contend that such a consolidation would undermine the effectiveness of acounterintelligence program, which they argue requires a consolidated DOE-wide program thatincludes NNSA and is under the direct control and supervision of the Energy Secretary. Under a third approach, DOE could integrate its Office of Intelligence and CI office undera new DOE intelligence agency, but allow NNSA's CI office to remain as a separate entity.Proponents argue that such an approach would not eliminate the current bifurcated structure -- apreferred outcome -- but would enhance overall communication and coordination between the twoexisting programs. Opponents counter that only way to resolve coordination and communicationproblems is to consolidate the two CI programs within DOE. A fourth approach would be to completely separate the DOE and NNSA counterintelligenceprograms. Proponents suggest that such an approach would clarify the chain of command.Opponents assert that separation could further undermine coordination and communication. A final approach would be to maintain the status quo. Proponents suggest that the currentstructure is required for counterintelligence to receive focused attention at the weapons labs. Opponents counter that dual offices are inefficient and ultimately ineffective. This report will beupdated as warranted.