This report examines the Federal Bureau of Investigation's (FBI's) intelligence program and its reform. While the report serves as an update of the FBI's efforts in these areas, a substantial part of its focus is on the implementation on the FBI's intelligence reform in the field. An important question is whether intelligence policy designed by senior level Intelligence Directorate personnel at FBI headquarters, with field input, has been accepted, adopted and implemented within the FBI's field structure. The report covers a number of issues of interest to Congress relating to how well the FBI is progressing with its reform efforts. The report also outlines the advantages and disadvantages of several congressional options to make further changes to the FBI's intelligence program. Finally, a number of appendices concerning contextual issues surrounding FBI intelligence reform are provided. The September 11, 2001 terrorist attacks on the United States have been called a major intelligence failure, similar in magnitude to that associated with the Japanese attack on Pearl Harbor. In response to criticisms of its role, the FBI has introduced a series of reforms to transform the bureau from a largely reactive law enforcement agency focused on criminal investigations into a more mobile, agile, flexible, intelligence-driven agency that can prevent acts of terrorism. FBI Director Robert S. Mueller III has vowed to assert Headquarters' control over the FBI's historically fragmented and much-criticized intelligence program. He also has signaled his intention to improve the FBI's intelligence program by, among other measures, consolidating and centralizing control over fragmented intelligence capabilities, both at FBI Headquarters and in the FBI's largely autonomous field offices. Finally, he has contended that intelligence has always been one of the FBI's core competencies and organic to the FBI's investigative mission, and asserted that the organization's intelligence efforts have and will continue to be disciplined by the intelligence cycle (i.e., the development and conduct of intelligence collection requirements, collection, analysis, and dissemination). Since the September 11, 2001 attacks, Mr. Mueller has attempted to restructure the Bureau's intelligence program. He has created a new Directorate of Intelligence (DI) at Headquarters and established Field Intelligence Groups (FIGs) at each of the FBI's 56 field offices to improve the Bureau's intelligence capacity. A number of reports has examined the FBI's intelligence reform efforts in the wake of the 2001 attacks, and Congress passed far-reaching legislation reforming the Intelligence Community, including providing the FBI additional authorities. The Administration has also responded by directing the FBI to implement changes. In a sweeping indictment of the FBI's intelligence activities relating to counterterrorism, the Congressional Joint Inquiry Into Intelligence Community Activities Before and After the Terrorist Attacks of September 11, 2001 (JIC), criticized the FBI for failing to focus on the terrorist threat domestically; collect useful intelligence; strategically analyze intelligence; and, to share intelligence internally, and with the rest of the IC. Prior to 9/11, according to the congressional inquiry, the FBI was incapable of producing significant intelligence products and was seriously handicapped in its efforts to identify, report on, and defend against the foreign terrorist threat to the United States. The National Commission on Terrorist Attacks Upon the United States (hereafter, the 9/11 Commission) essentially endorsed reforms the FBI initiated following the September 11 attacks. The Commission noted that the FBI, under Director Mueller, "has made significant progress in improving its intelligence capabilities." In its July 2004 report, the Commission recommended leaving the responsibility for counterterrorism intelligence collection with the FBI, but called for an integrated national security workforce within the Bureau. Such an option has often been referred to as "a service within a service." Specifically, the Commission recommended that the FBI establish a specialized and integrated national security workforce consisting of agents, analysts, linguists, and surveillance specialists who are recruited, trained, rewarded, and retained to ensure the development of an institutional culture with a deep expertise in intelligence and national security. While rejecting the establishment of a separate domestic intelligence agency, the Commission stated that it wanted to ensure that the FBI's preventative counterterrorism posture is "... more fully institutionalized ..." so that it survives beyond Director Muller's tenure. Commissioners also concluded that "... two years after 9/11 we also found gaps between some of the announced reforms and the reality in the field." On November 23, 2004, the President issued a Memorandum for the Attorney General , titled, "Further Strengthening Federal Bureau of Investigation Capabilities." In the memorandum, Mr. Bush approved a recommendation made by the 9/11 Commission calling for the establishment of an integrated national security workforce. Specifically, the White House directed the Attorney General to implement the following recommendation of the 9/11 Commission: A specialized and integrated national security workforce should be established at the FBI, consisting of agents, analysts, linguists and surveillance specialists who are recruited, trained, rewarded and retained to ensure the development of an institutional culture imbued with a deep expertise in intelligence and national security. In adopting the Commission's recommendation, the President also instructed the Attorney General and the Director of the FBI to provide a "... a comprehensive plan with performance measures, including timelines for achievement of specific, measurable progress..." to the President within 90 days. This comprehensive plan was to address the following issues: (1) Analysis (including standards for recruitment, hiring, training, and performance of FBI analysts), (2) Products (including standards for measuring the responsiveness of those products to nationally determined priorities), (3) Sources (including standards for asset validation and asset contributions for filling intelligence gaps), (4) Field intelligence operations (including standards for assessing staffing and infrastructure), and (5) Contribution of the FBI's intelligence products to intelligence and national security information made available to the President and Vice President (including the degree to which each Field Office is collecting against, and providing information in response to, national requirements). On February 16, 2005, the FBI responded to the November 23, 2004 White House Memorandum to the Attorney General, issuing its Report to the President of the United States —FBI Directorate of Intelligence—Comprehensive Plan for the FBI Intelligence Program with Performance Measures . This classified report outlined steps the FBI had taken or anticipated taking. The report addressed performance measures and milestones in the following five areas: (1) Resources and Authority for the DI, (2) Intelligence Operations, (3) Human Resources, (4) Infrastructure, and (5) Planning, Budget, and Performance. An analysis of this classified report by the Commission on Intelligence Capabilities of the United States Regarding Weapons of Mass Destruction (hereafter the WMD Commission) concluded that while the FBI has taken "... some commendable steps in the direction of an integrated national security workforce..." its plan "... fails to create a truly 'specialized and integrated national security workforce'...." Moreover, the WMD Commission concluded that "... In essence, the [DI] functions as an overlay on intelligence activities that are managed by other elements of the FBI..." and "... the Directorate's lack of authority prevents the FBI from vertically integrating foreign intelligence collection, analysis and operations...." With respect to the collection of foreign intelligence within the United States, a function in which both the FBI and elements of the Central Intelligence Agency engage, the WMD Commission argued for "... a fluid system for coordination—where both agencies are involved in the collection of foreign intelligence in the United States and conflicts are resolved by the Director of National Intelligence (or the Attorney General if it is a question of what U.S. law permits)." The WMD Commission concluded, in part, that Although the FBI is making progress toward becoming a full member of the Intelligence Community, it has a long way to go and significant hurdles remain. In our view, the FBI has not constructed its intelligence program in a way that will promote integrated intelligence efforts, and its ambitions have led it into unnecessary new turf battles with the CIA. Regarding the contentious issue of whether the FBI should continue to play a leading federal role in domestic intelligence collection, or, instead, be replaced by a separate agency akin to the British Security Service (MI-5), the 9/11 and WMD Commissions rejected the establishment of a separate entity, although the WMD Commission qualified its rejection, concluding ... We recommend that the policymakers re-evaluate the wisdom of creating a separate agency—an equivalent to the British "MI-5"—dedicated to intelligence collection in the United States should there be a continued failure to institute the reforms necessary to transform the FBI into the intelligence organization it must become. On June 29, 2005, the President issued a memorandum stating his acceptance of the WMD Commission's recommendation that a National Security Service be established within the FBI. The White House called for the ... creation of a new National Security Service within the FBI under a single Executive Assistant Director. This service would include the Bureau's Counterterrorism and Counterintelligence Divisions and the Directorate of Intelligence. The service would be subject to the coordination and budget authorities of the DNI, as well as the same Attorney General authorities that apply to other Bureau divisions. The President directed the Attorney General, in cooperation with the Director of National Intelligence (DNI) and the Director of the Office of Management and Budget, and any other affected agencies, to implement the following initiatives: (1) combine the mission, capabilities and resources of the counterterrorism, counterintelligence and intelligence elements of the FBI into a new National Security Service, (2) obtain the concurrence of the DNI before an individual is appointed as head of the FBI's National Security Service, (3) ensure the FBI's National Security Service, both at headquarters and in the field, is funded though the National Intelligence Program ..., and (4) establish programs to build an FBI National Security Service workforce.... The White House directed that National Security Service be headed by an FBI "Executive Assistant Director (EAD) or other senior FBI Official of an equivalent or higher level of authority, experience, and responsibility." While the details, including the structure and chain of command of this organization have yet to be announced, Figure 1 provides a possible organizational structure.