H.Rpt.104-138,Pt.1 INTELLIGENCE AUTHORIZATION ACT FOR FISCAL YEAR 1996 Permanent Select Committee on Intelligence, June 14, 1995

1995 Congressional Documents
Intelligence and Security

104th Congress 1st HOUSE OF REPRESENTATIVES Rept. 104-138
Session
Part 1
_______________________________________________________________________

INTELLIGENCE AUTHORIZATION ACT FOR FISCAL YEAR 1996

__________

R E P O R T

of the

PERMANENT SELECT COMMITTEE
ON INTELLIGENCE
HOUSE OF REPRESENTATIVES

together with

ADDITIONAL AND MINORITY VIEWS

[To accompany H.R. 1655]

[Including cost estimate of the Congressional Budget Office]

June 14, 1995.--Ordered to be printed

C O N T E N T S

Page
Purpose.......................................................... 8
Overall perspective on the intelligence budget and committee 10
intent.
Scope of committee review........................................ 10
Committee findings and recommendations........................... 11
Areas of Special Interest........................................ 13
Personnel Issues............................................. 13
Terrorism.................................................... 15
Satellite Architecture....................................... 15
Aerial Reconnaissance........................................ 16
Intelligence Broadcasts and Receivers........................ 23
Fusion Development........................................... 25
Tactical Space Operations.................................... 25
Intelligence Support to Targeting............................ 25
Section-by-section analysis of bill as reported.................. 26
Title I--Intelligence Activities................................. 26
Section 101--Authorization of appropriations................. 26
Section 102--Classified schedule of authorizations........... 26
Section 103--Personnel ceiling adjustments................... 26
Section 104--Community management account.................... 27
Title II--Central Intelligence Agency Retirement and Disability 27
System.
Section 201--Authorization of appropriations................. 27
Title III--General Provisions.................................... 27
Section 301--Increase in employee compensation and benefits 27
authorized by law.
Section 302--Restriction on conduct of intelligence 27
activities.
Section 303--Application of sanctions laws to intelligence 28
activities.
Section 304--Thrift savings plan forfeiture.................. 29
Section 305--Authority to restore spousal pension benefits to 29
spouses who cooperate in criminal investigations and
prosecutions for national security offenses.
Section 306--Secrecy agreements used in intelligence 29
activities.
Section 307--Limitation on availability of funds for 31
automatic declassification of records over 25 years old.
Title IV--Central Intelligence Agency............................ 31
Section 401--Extension of the CIA voluntary separation pay 31
act.
Section 402--Volunteer service program....................... 31
Title V--Department of Defense Intelligence Activities........... 31
Section 501--Defense intelligence senior level positions..... 31
Section 502--Comparable benefits and allowances for civilian 33
and military personnel assigned to defense intelligence
functions overseas.
Section 503--Extension of authority to conduct intelligence 33
commercial activities.
Section 504--Availability of funds for Tier II UAV........... 34
Section 505--Temporary program to waive mandatory reductions 34
to annuities.
Title VI--Technical Amendments................................... 36
Section 601--Clarification with respect to pay for Director 36
or Deputy Director of Central Intelligence appointed from
commissioned officers of the armed forces.
Section 602--Change of designation of CIA office of security. 37
Title VII--Department of State Intelligence Activities........... 37
Section 701--Consolidation of watch component of the Bureau 37
of Intelligence and Research.
Committee Position............................................... 38
Findings and recommendations of the Committee on Government 38
Reform and Oversight.
Oversight Findings............................................... 38
Congressional Budget Office estimate............................. 39
Committee cost estimates......................................... 43
Inflationary Impact Statement.................................... 43
Changes in existing law made by the bill, as reported............ 43
Minority and additional views.................................... 54
H.L.C.

104th Congress Rept. 104-138
HOUSE OF REPRESENTATIVES

1st Session Part 1
_______________________________________________________________________

INTELLIGENCE AUTHORIZATION ACT FOR FISCAL YEAR 1996

_______________________________________________________________________

June 14, 1995.--Ordered to be printed

_______

Mr. Combest, from the Permanent Select Committee on Intelligence,
submitted the following

R E P O R T

together with

MINORITY AND ADDITIONAL VIEWS

[To accompany H.R. 1655]

[Including cost estimate of the Congressional Budget Office]
The Permanent Select Committee on Intelligence, to whom was
referred the bill (H.R. 1655) to authorize appropriations for
fiscal year 1996 for intelligence and intelligence-related
activities of the United States Government, the Community
Management Account, and the Central Intelligence Agency
Retirement and Disability System, and for other purposes,
having considered the same, report favorably thereon with an
amendment and recommend that the bill as amended do pass.

The amendment is as follows:
Strike out all after the enacting clause and insert in lieu
thereof the following:

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Intelligence Authorization Act for
Fiscal Year 1996''.

TITLE I--INTELLIGENCE ACTIVITIES

SEC. 101. AUTHORIZATION OF APPROPRIATIONS.

Funds are hereby authorized to be appropriated for fiscal year 1996
for the conduct of the intelligence and intelligence-related activities
of the following elements of the United States Government:
(1) The Central Intelligence Agency.
(2) The Department of Defense.
(3) The Defense Intelligence Agency.
(4) The National Security Agency.
(5) The Department of the Army, the Department of the Navy,
and the Department of the Air Force.
(6) The Department of State.
(7) The Department of Treasury.
(8) The Department of Energy.
(9) The Federal Bureau of Investigation.
(10) The Drug Enforcement Administration.
(11) The National Reconnaissance Office.
(12) The Central Imagery Office.

SEC. 102. CLASSIFIED SCHEDULE OF AUTHORIZATIONS.

(a) Specifications of Amounts and Personnel Ceilings.--The amounts
authorized to be appropriated under section 101, and the authorized
personnel ceilings as of September 30, 1996, for the conduct of the
intelligence and intelligence-related activities of the elements listed
in such section, are those specified in the classified Schedule of
Authorizations prepared to accompany the bill H.R. 1655 of the 104th
Congress.
(b) Availability of Classified Schedule of Authorizations.--The
Schedule of Authorizations shall be made available to the Committees on
Appropriations of the Senate and House of Representatives and to the
President. The President shall provide for suitable distribution of the
Schedule, or of appropriate portions of the Schedule, within the
executive branch.

SEC. 103. PERSONNEL CEILING ADJUSTMENTS.

(a) Authority for Adjustments.--With the approval of the Director of
the Office of Management and Budget, the Director of Central
Intelligence may authorize employment of civilian personnel in excess
of the number authorized for fiscal year 1996 under section 102 when
the Director of Central Intelligence determines that such action is
necessary to the performance of important intelligence functions,
except that the number of personnel employed in excess of the number
authorized under such section may not, for any element of the
intelligence community, exceed two percent of the number of civilian
personnel authorized under such section for such element.
(b) Notice to Intelligence Committees.--The Director of Central
Intelligence shall promptly notify the Permanent Select Committee on
Intelligence of the House of Representatives and the Select Committee
on Intelligence of the Senate whenever he exercises the authority
granted by this section.

SEC. 104. COMMUNITY MANAGEMENT ACCOUNT.

(a) Authorization of Appropriations.--There is authorized to be
appropriated for the Community Management Account of the Director of
Central Intelligence for fiscal year 1996 the sum of $80,713,000.
Within such amounts authorized, funds identified in the classified
Schedule of Authorizations referred to in section 102(a) for the
Advanced Research and Development Committee and the Environmental Task
Force shall remain available until September 30, 1997.
(b) Authorized Personnel Levels.--The Community Management Staff of
the Director of Central Intelligence is authorized 247 full-time
personnel as of September 30, 1996. Such personnel of the Community
Management Staff may be permanent employees of the Community Management
Staff or personnel detailed from other elements of the United States
Government.
(c) Reimbursement.--During fiscal year 1996, any officer or employee
of the United States or a member of the Armed Forces who is detailed to
the Community Management Staff from another element of the United
States Government shall be detailed on a reimbursable basis, except
that any such officer, employee or member may be detailed on a
nonreimbursable basis for a period of less than one year for the
performance of temporary functions as required by the Director of
Central Intelligence.

TITLE II--CENTRAL INTELLIGENCE AGENCY RETIREMENT AND DISABILITY SYSTEM

SEC. 201. AUTHORIZATION OF APPROPRIATIONS.

There is authorized to be appropriated for the Central Intelligence
Agency Retirement and Disability Fund for fiscal year 1996 the sum of
$213,900,000.

TITLE III--GENERAL PROVISIONS

SEC. 301. INCREASE IN EMPLOYEE COMPENSATION AND BENEFITS AUTHORIZED BY
LAW.

Appropriations authorized 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.

SEC. 302. RESTRICTION ON CONDUCT OF INTELLIGENCE ACTIVITIES.

The authorization of appropriations by this Act shall not be deemed
to constitute authority for the conduct of any intelligence activity
which is not otherwise authorized by the Constitution or the laws of
the United States.

SEC. 303. APPLICATION OF SANCTIONS LAWS TO INTELLIGENCE ACTIVITIES.

(a) General Provisions.--The National Security Act of 1947 (50 U.S.C.
401 et seq.), is amended by adding at the end thereof the following new
title:

``TITLE IX--APPLICATION OF SANCTIONS LAWS TO INTELLIGENCE ACTIVITIES

``stay of sanctions
``Sec. 901. Notwithstanding any other provision of law, the President
may stay the imposition of an economic, cultural, diplomatic, or other
sanction or related action by the United States Government concerning a
foreign country, organization, or person when the President determines
that to proceed without delay would seriously risk the compromise of an
ongoing criminal investigation or an intelligence source or method. The
President shall lift any such stay when the President determines that
such stay is no longer necessary to that purpose.
``reports
``Sec. 902. Whenever any stay is imposed pursuant to section 901, and
whenever the duration of any such stay exceeds 120 days, the President
shall promptly report to the Select Committee on Intelligence of the
Senate and the Permanent Select Committee on Intelligence of the House
of Representatives the rationale and circumstances that led the
President to exercise the stay authority with respect to an
intelligence source or method, and to the Judiciary Committees of the
Senate and the House of Representatives the rationale and circumstances
that led the President to exercise the stay authority with respect to
an ongoing criminal investigation.''.
(b) Clerical Amendment.--The table of contents in the first section
of such Act is amended by adding at the end thereof the following:
``title ix--application of sanctions laws to intelligence activities
``Sec. 901. Stay of Sanctions.
``Sec. 902. Reports.''.
SEC. 304. THRIFT SAVINGS PLAN FORFEITURE.

Section 8432(g) of title 5, United States Code, is amended by adding
at the end the following new paragraphs:
``(5)(A) Notwithstanding any other provision of law, contributions
made by the Government for the benefit of an employee or Member under
subsection (c), and all earnings attributable to such contributions,
shall be forfeited if the annuity of the employee or Member, or that of
a survivor or beneficiary, is forfeited under subchapter II of chapter
83.
``(B) Forfeitures under this paragraph shall occur only if the
offenses upon which the requisite annuity forfeitures are based
happened subsequent to the enactment of this paragraph.''.

SEC. 305. AUTHORITY TO RESTORE SPOUSAL PENSION BENEFITS TO SPOUSES WHO
COOPERATE IN CRIMINAL INVESTIGATIONS AND
PROSECUTIONS FOR NATIONAL SECURITY OFFENSES.

Section 8318 of title 5, United States Code, is amended by adding at
the end the following:
``(e) The spouse of an individual whose annuity or retired pay is
forfeited under section 8312 or 8313 after the date of enactment of
this subsection shall be eligible for spousal pension benefits if the
Attorney General of the United States determines that the spouse fully
cooperated with Federal authorities in the conduct of a criminal
investigation and subsequent prosecution of the individual which
resulted in such forfeiture.''.

SEC. 306. SECRECY AGREEMENTS USED IN INTELLIGENCE ACTIVITIES.

Notwithstanding any other provision of law not specifically
referencing this section, a nondisclosure policy form or agreement that
is to be executed by a person connected with the conduct of an
intelligence or intelligence-related activity, other than an employee
or officer of the United States Government, may contain provisions
appropriate to the particular activity for which such document is to be
used. Such form or agreement shall, at a minimum, require that the
person will not disclose any classified information received in the
course of such activity unless specifically authorized to do so by the
United States Government.

SEC. 307. LIMITATION ON AVAILABILITY OF FUNDS FOR AUTOMATIC
DECLASSIFICATION OF RECORDS OVER 25 YEARS OLD.

(a) In General.--Each agency of the National Foreign Intelligence
Program shall use no more than $2,500,000 of the amounts authorized to
be appropriated by this Act to carry out the provisions of section 3.4
of Executive Order 12958.
(b) Required Budget Submission.--The President shall submit for
fiscal year 1997 and each of the following five years a budget request
which specifically sets forth the funds requested for implementation of
section 3.4 of Executive Order 12958.

TITLE IV--CENTRAL INTELLIGENCE AGENCY

SEC. 401. EXTENSION OF THE CIA VOLUNTARY SEPARATION PAY ACT.

Section 2(f) of the Central Intelligence Agency Voluntary Separation
Pay Act (50 U.S.C. 403-4(f)), is amended by striking out ``September
30, 1997'' and inserting in lieu thereof ``September 30, 1999''.

SEC. 402. VOLUNTEER SERVICE PROGRAM.

(a) General Authority.--The Director of Central Intelligence is
authorized to establish and maintain a program from fiscal years 1996
through 2001 to utilize the services contributed by not more than 50
annuitants who serve without compensation as volunteers in aid of
systematic or mandatory review for declassification or downgrading of
classified information of the Central Intelligence Agency under
applicable Executive orders governing the classification and
declassification of national security information and Public Law 102-
526.
(b) Costs Incidental to Services.--The Director is authorized to use
sums made available to the Central Intelligence Agency by
appropriations or otherwise for paying the costs incidental to the
utilization of services contributed by individuals under subsection
(a). Such costs may include (but need not be limited to) training,
transportation, lodging, subsistence, equipment, and supplies. The
Director may authorize either direct procurement of equipment,
supplies, and services, or reimbursement for expenses, incidental to
the effective use of volunteers. Such expenses or services shall be in
accordance with volunteer agreements made with such individuals. Sums
made available for such costs may not exceed $100,000.
(c) Application of Certain Provisions of Law.--A volunteer under this
section shall be considered to be a Federal employee for the purposes
of subchapter I of title 81 (relating to compensation of Federal
employees for work injuries) and section 1346(b) and chapter 171 of
title 28 (relating to tort claims). A volunteer under this section
shall be covered by and subject to the provisions of chapter 11 of
title 18 of the United States Code as if they were employees or special
Government employees depending upon the days of expected service at the
time they begin volunteering.
TITLE V--DEPARTMENT OF DEFENSE INTELLIGENCE ACTIVITIES

SEC. 501. DEFENSE INTELLIGENCE SENIOR LEVEL POSITIONS.

Section 1604 of title 10, United States Code, is amended to read as
follows:

``Sec. 1604. Civilian personnel management

``(a) General Personnel Authority.--The Secretary of Defense may,
without regard to the provisions of any other law relating to the
number, classification, or compensation of Federal employees--
``(1) establish such positions for employees in the Defense
Intelligence Agency and the Central Imagery Office as the
Secretary considers necessary to carry out the functions of
that Agency and Office, including positions designated under
subsection (f) as Defense Intelligence Senior Level positions;
``(2) appoint individuals to those positions; and
``(3) fix the compensation for service in those positions.
``(b) Authority To Fix Rates of Basic Pay; Other Allowances and
Benefits.--(1) The Secretary of Defense shall, subject to subsection
(c), fix the rates of basic pay for positions established under
subsection (a) in relation to the rates of basic pay provided in
subpart D of part III of title 5 for positions subject to that title
which have corresponding levels of duties and responsibilities. Except
as otherwise provided by law, an employee of the Defense Intelligence
Agency or the Central Imagery Office may not be paid basic pay at a
rate in excess of the maximum rate payable under section 5376 of title
5.
``(2) The Secretary of Defense may provide employees of the Defense
Intelligence Agency and the Central Imagery Office compensation (in
addition to basic pay under paragraph (1)) and benefits, incentives,
and allowances consistent with, and not in excess of the levels
authorized for, comparable positions authorized by title 5.
``(c) Prevailing Rates Systems.--The Secretary of Defense may,
consistent with section 5341 of title 5, adopt such provisions of that
title as provide for prevailing rate systems of basic pay and may apply
those provisions to positions in or under which the Defense
Intelligence Agency or the Central Imagery Office may employ
individuals described by section 5342(a)(2)(A) of such title.
``(d) Allowances Based on Living Costs and Environment for Employees
Stationed Outside Continental United States or in Alaska.--(1) In
addition to the basic compensation payable under subsection (b),
employees of the Defense Intelligence Agency and the Central Imagery
Office described in paragraph (3) may be paid an allowance, in
accordance with regulations prescribed by the Secretary of Defense, at
a rate not in excess of the allowance authorized to be paid under
section 5941(a) of title 5 for employees whose rates of basic pay are
fixed by statute.
``(2) Such allowance shall be based on--
``(A) living costs substantially higher than in the District
of Columbia;
``(B) conditions of environment which--
``(i) differ substantially from conditions of
environment in the continental United States; and
``(ii) warrant an allowance as a recruitment
incentive; or
``(C) both of those factors.
``(3) This subsection applies to employees who--
``(A) are citizens or nationals of the United States; and
``(B) are stationed outside the continental United States or
in Alaska.
``(e) Termination of Employees.--(1) Notwithstanding any other
provision of law, the Secretary of Defense may terminate the employment
of any employee of the Defense Intelligence Agency or the Central
Imagery Office if the Secretary--
``(A) considers such action to be in the interests of the
United States; and
``(B) determines that the procedures prescribed in other
provisions of law that authorize the termination of the
employment of such employee cannot be invoked in a manner
consistent with the national security.
``(2) A decision by the Secretary of Defense to terminate the
employment of an employee under this subsection is final and may not be
appealed or reviewed outside the Department of Defense.
``(3) The Secretary of Defense shall promptly notify the Permanent
Select Committee on Intelligence of the House of Representatives and
the Select Committee on Intelligence of the Senate whenever the
Secretary terminates the employment of any employee under the authority
of this subsection.
``(4) Any termination of employment under this subsection shall not
affect the right of the employee involved to seek or accept employment
with any other department or agency of the United States if that
employee is declared eligible for such employment by the Director of
the Office of Personnel Management.
``(5) The authority of the Secretary of Defense under this subsection
may be delegated only to the Deputy Secretary of Defense, the Director
of the Defense Intelligence Agency (with respect to employees of the
Defense Intelligence Agency), and the Director of the Central Imagery
Office (with respect to employees of the Central Imagery Office). An
action to terminate employment of an employee by any such officer may
be appealed to the Secretary of Defense.
``(f) Defense Intelligence Senior Level Positions.--(1) In carrying
out subsection (a)(1), the Secretary may designate positions described
in paragraph (3) as Defense Intelligence Senior Level positions. The
total number of positions designated under this subsection and in the
Defense Intelligence Senior Executive Service under section 1601 of
this title may not exceed the number of positions in the Defense
Intelligence Senior Executive Service as of June 1, 1995.
``(2) Positions designated under this subsection shall be treated as
equivalent for purposes of compensation to the senior level positions
to which section 5376 of title 5 is applicable.
``(3) Positions that may be designated as Defense Intelligence Senior
Level positions are positions in the Defense Intelligence Agency and
Central Imagery Office that (A) are classified above the GS-15 level,
(B) emphasize functional expertise and advisory activity, but (C) do
not have the organizational or program management functions necessary
for inclusion in the Defense Intelligence Senior Executive Service.
``(4) Positions referred to in paragraph (3) include Defense
Intelligence Senior Technical positions and Defense Intelligence Senior
Professional positions. For purposes of this subsection--
``(A) Defense Intelligence Senior Technical positions are
positions covered by paragraph (3) that involve any of the
following:
``(i) Research and development.
``(ii) Test and evaluation.
``(iii) Substantive analysis, liaison, or advisory
activity focusing on engineering, physical sciences,
computer science, mathematics, biology, chemistry,
medicine, or other closely related scientific and
technical fields.
``(iv) Intelligence disciplines including production,
collection, and operations in close association with
any of the activities described in clauses (i), (ii),
and (iii) or related activities; and
``(B) Defense Intelligence Senior Professional positions are
positions covered by paragraph (3) that emphasize staff,
liaison, analytical, advisory, or other activity focusing on
intelligence, law, finance and accounting, program and budget,
human resources management, training, information services,
logistics, security, and other appropriate fields.
``(g) `Employee' Defined as Including Officers.--In this section, the
term `employee', with respect to the Defense Intelligence Agency or the
Central Imagery Office, includes any civilian officer of that Agency or
Office.''.
SEC. 502. COMPARABLE BENEFITS AND ALLOWANCES FOR CIVILIAN AND MILITARY
PERSONNEL ASSIGNED TO DEFENSE INTELLIGENCE
FUNCTIONS OVERSEAS.

(a) Civilian Personnel.--Section 1605 of title 10, United States
Code, is amended--
(1) in subsection (a)--
(A) by inserting ``(1)'' after ``(a)'';
(B) by striking out ``of the Department of Defense''
and all that follows through ``this subsection,'' and
inserting in lieu thereof ``described in subsection
(d)''; and
(C) by designating the second sentence as paragraph
(2);
(2) by striking out subsection (c) and inserting in lieu
thereof the following:
``(c) Regulations prescribed under subsection (a) may not take effect
until the Secretary of Defense has submitted such regulations to--
``(1) the Committee on Armed Services and the Select
Committee on Intelligence of the Senate; and
``(2) the Committee on National Security and the Permanent
Select Committee on Intelligence of the House of
Representatives.''; and
(3) by adding at the end the following new subsection:
``(d) Subsection (a) applies to civilian personnel of the Department
of Defense who--
``(1) are United States nationals;
``(2) in the case of employees of the Defense Intelligence
Agency, are assigned to duty outside the United States and, in
the case of other employees, are assigned to Defense Attache
Offices or Defense Intelligence Agency Liaison Offices outside
the United States; and
``(3) are designated by the Secretary of Defense for the
purposes of subsection (a).''.
(b) Military Personnel.--Section 431 of title 37, United States Code,
is amended--
(1) in subsection (a), by striking out ``who are assigned
to'' and all that follows through ``of this subsection'' and
inserting in lieu thereof ``described in subsection (e)'';
(2) by striking out subsection (d) and inserting in lieu
thereof the following:
``(d) Regulations prescribed under subsection (a) may not take effect
until the Secretary of Defense has submitted such regulations to--
``(1) the Committee on Armed Services and the Select
Committee on Intelligence of the Senate; and
``(2) the Committee on National Security and the Permanent
Select Committee on Intelligence of the House of
Representatives.''; and
(3) by adding at the end the following new subsection:
``(e) Subsection (a) applies to members of the armed forces who--
``(1) are assigned--
``(A) to Defense Attache Offices or Defense
Intelligence Agency Liaison Offices outside the United
States; or
``(B) to the Defense Intelligence Agency and engaged
in intelligence-related duties outside the United
States; and
``(2) are designated by the Secretary of Defense for the
purposes of subsection (a).''.
SEC. 503. EXTENSION OF AUTHORITY TO CONDUCT INTELLIGENCE COMMERCIAL
ACTIVITIES.

Section 431(a) of title 10, United States Code, is amended by
striking out ``1995'' and inserting in lieu thereof ``1998''.

SEC. 504. AVAILABILITY OF FUNDS FOR TIER II UAV.

All funds appropriated for fiscal year 1995 for the Medium Altitude
Endurance Unmanned Aerial Vehicle (Tier II) are specifically
authorized, within the meaning of section 504 of the National Security
Act of 1947 (50 U.S.C. 414), for such purpose.
SEC. 505. TEMPORARY PROGRAM TO WAIVE MANDATORY REDUCTIONS TO ANNUITIES.

(a) General Authority.--The Secretary of Defense shall establish a
program under which the reduction of annuities under subsection (h) of
section 8339 of title 5, United States Code, may be waived to encourage
eligible employees to separate voluntarily from service by retiring to
lessen the possibility of involuntary separations due to reduction in
force at the National Security Agency.
(b) Computation of Annuity.--Under this program, annuities shall be
computed under section 8339 of such title without regard to subsection
(h) of such section.
(c) Program Eligibility Requirements.--Under the program established
under subsection (a), the waiver of the annuity reduction may be
offered by the Director of the National Security Agency--
(1) to an employee who--
(A) is an employee of the National Security Agency,
serving under an appointment without time limitation,
who is in the Civil Service Retirement System and is
eligible for an annuity under section 8336(d)(2) of
title 5, United States Code, other than--
(i) a reemployed annuitant under subchapter
III of chapter 83 of such title 5; and
(ii) an employee having a disability on the
basis of which such employee is or would be
eligible for disability retirement under such
chapter 83; and
(B) is within such occupational groups or geographic
locations, or subject to similar limitations or
conditions, as the Director may require; and
(2) for a period not to exceed 90 days during the period
beginning on October 1, 1995, and ending on September 30, 1996.
(d) Payments to the Civil Service Retirement and Disability Fund.--In
addition to any other payment which it is required to make under
subchapter III of chapter 83 of title 5, United States Code, the
National Security Agency shall remit to the Office of Personnel
Management for deposit in the Treasury of the United States to the
credit of the Civil Service Retirement and Disability Fund the amount
necessary to reimburse the Fund for the additional costs of the
unreduced annuities payable under this section. Amounts may be made
available to make such deposits from amounts authorized to be
appropriated to the National Security Agency for the fiscal year in
which this Act is enacted and for the succeeding four fiscal years.
(e) Limitation on Availability of Funds.--No funds shall be payable
under this section based on retirements occurring after September 30,
1996.
(f) Regulations.--The Secretary shall prescribe such regulations as
may be necessary to carry out this section.
TITLE VI--TECHNICAL AMENDMENTS

SEC. 601. CLARIFICATION WITH RESPECT TO PAY FOR DIRECTOR OR DEPUTY
DIRECTOR OF CENTRAL INTELLIGENCE APPOINTED FROM
COMMISSIONED OFFICERS OF THE ARMED FORCES.

(a) Clarification.--Subparagraph (C) of section 102(c)(3) of the
National Security Act of 1947 (50 U.S.C. 403(c)(3)) is amended to read
as follows:
``(C) A commissioned officer of the Armed Forces on active duty who
is appointed to the position of Director or Deputy Director, while
serving in such position and while remaining on active duty, shall
continue to receive military pay and allowances. Funds from which such
pay and allowances are paid shall be reimbursed from funds available to
the Director.''.
(b) Technical Corrections.--(1) Subparagraphs (A) and (B) of such
section are amended by striking out ``pursuant to paragraph (2) or
(3)'' and inserting in lieu thereof ``to the position of Director or
Deputy Director''.
(2) Subparagraph (B) of such section is amended by striking out
``paragraph (A)'' and inserting in lieu thereof ``subparagraph (A)''.

SEC. 602. CHANGE OF DESIGNATION OF CIA OFFICE OF SECURITY.

Section 701(b)(3) of the National Security Act of 1947 (50 U.S.C.
431(b)(3)), is amended by striking out ``Office of Security'' and
inserting in lieu thereof ``Office of Personnel Security''.
TITLE VII--DEPARTMENT OF STATE INTELLIGENCE ACTIVITIES

SEC. 701. CONSOLIDATION OF WATCH COMPONENT OF THE BUREAU OF
INTELLIGENCE AND RESEARCH.

(a) Limitation.--The 24-Hour Watch component of the Bureau of
Intelligence and Research of the Department of State may not be
consolidated into, and its functions may not be transferred to, the
Secretary's Operations Center of the Department of State until 60 days
after the report described in subsection (b) has been submitted by the
Secretary of State to the Permanent Select Committee on Intelligence
and the Committee on International Relations of the House of
Representatives and the Select Committee on Intelligence and the
Committee on Foreign Relations of the Senate.
(b) Report.--The report referred to in subsection (a) shall include--
(1) the measures taken and proposed to be taken to assure
that adequate resources of the Secretary's Operations Center
are dedicated to fulfilling the needs and requirements of the
Bureau of Intelligence and Research;
(2) the measures taken and proposed to be taken, in
consultation with the Director of Central Intelligence
particularly with regard to procedures, staff training, and
facilities, to upgrade the ability of the Secretary's
Operations Center to handle highly sensitive information so it
is properly safeguarded and provided to the Bureau of
Intelligence and Research in a timely manner; and
(3) a comparison of the cost of the measures necessary to
upgrade the Secretary's Operations Center to fulfill the needs
of the Bureau of Intelligence and Research with the costs of
eliminating the 24-Hour Watch component of the Bureau of
Intelligence and Research.
Purpose

The bill would:
(1) Authorize appropriations for fiscal year 1996 for
(a) the intelligence and intelligence-related
activities of the U.S. Government, (b) the Community
Management Account, and (c) the Central Intelligence
Agency Retirement and Disability System;
(2) Authorize the personnel ceilings on September 30,
1996 for the intelligence and intelligence-related
activities of the U.S. Government;
(3) Permit the Director of Central Intelligence to
authorize personnel ceilings in Fiscal Year 1996 for
any Intelligence element up to two percent above the
authorized levels, with the approval of the Director of
the Office of Management and Budget;
(4) Authorize the President to stay the imposition of
sanctions when to proceed without delay would seriously
risk the compromise of an intelligence source or method
or an ongoing criminal investigation and require
reports to the Intelligence of Judiciary committees of
the House and Senate;
(5) Provide for the forfeiture of the U.S.
Government's contribution to the Thrift Savings Plan
and earnings attributable to the contribution when an
individual is convicted of certain national security
offenses;
(6) Provide for eligibility for spousal pension
benefits to spouses who fully cooperate, as determined
by the Attorney General, in the criminal investigation
and prosecution of an individual whose federal annuity
is forfeited upon conviction of certain national
security offenses.
(7) Provide for appropriate flexibility with regard
to the contents of secrecy agreements that individuals,
other than officers and employees of the United States
Government, sign in the conduct of authorized
intelligence activities;
(8) Limit the funds that may be spent to carry out
section 3.4 of Executive Order 12958, regarding
automatic declassification, to no more than $2.5
million per Agency of the National Foreign Intelligence
Program.
(9) Extend the provisions of the CIA Voluntary
Separation Pay Act through fiscal year 1999;
(10) Establish a limited temporary volunteer service
program at the Central Intelligence Agency;
(11) Authorize the Secretary of Defense to establish
the Defense Intelligence Senior Level Personnel System
for employees of the Defense Intelligence Agency and
the Central Imagery Office;
(12) Provide civilian and military personnel assigned
to Defense intelligence functions outside the United
States benefits and allowances comparable to those
provided by the Secretary of State to officers and
employees of the Foreign Service;
(13) Extend the authority of the Secretary of Defense
to engage in commercial activities as cover for
intelligence collection activities for three years,
through 1998;
(14) Authorize expenditure of funds appropriated in
fiscal year 1995 for the Tier II Medium Altitude
Endurance Unmanned Aerial Vehicle;
(15) Require the Secretary of Defense to establish a
temporary program for employees in the Civil Service
Retirement System at the National Security Agency to
retire and receive a waiver of mandatory annuity
reductions.
(16) Clarify that a retired military officer
appointed as Director or Deputy Director of Central
Intelligence shall receive compensation at the
appropriate level of the Executive Schedule under Title
5 of the United States Code.

Overall Perspective on the Intelligence Budget

Committee Intent

The classified Schedule of Authorizations, and the detailed
explanation of it found in the classified annex to this public
report, contain a thorough discussion of all budget issues
considered by the Committee and are available subject to the
requirements of clause 13 of Rule XLIII of the House, to all
Members of the House. The Schedule of Authorizations contains
the dollar amounts and personnel ceilings for the programs
authorized by the bill. The Schedule is directly incorporated
into, and is an integral part of, the bill. It is the intent of
the Committee that all intelligence programs discussed in the
classified annex to this report be conducted in accordance with
the guidance and limitations contained therein.

Scope of Committee Review

U.S. intelligence and intelligence-related activities under
the jurisdiction of the Committee include the National Foreign
Intelligence Program, the Tactical Intelligence and Related
Activities of the Department of Defense, and the newly created
Joint Military Intelligence Program.
The National Foreign Intelligence Program (NFIP) consists
of all programs of the Central Intelligence Agency, as well as
those national foreign intelligence and/or counterintelligence
programs conducted by: (1) the Department of Defense; (2) the
Defense Intelligence Agency; (3) the National Security Agency;
(4) the Central Imagery Office; (5) the National Reconnaissance
Office; (6) the Departments of the Army, Navy and Air Force;
(7) the Department of State; (8) the Department of the
Treasury; (9) the Department of Energy; (10) the Federal Bureau
of Investigation; and (11) the Drug Enforcement Administration.
The Department of Defense Tactical Intelligence and Related
Activities (TIARA) are a diverse array of reconnaissance and
target acquisition programs that are a functional part of the
basic military force structure and provide direct information
support to military operations. TIARA, as defined by the Joint
Chiefs of Staff and the Secretary of Defense, includes those
military intelligence activities outside the General Defense
Intelligence Program that respond to the needs of military
commanders for operational support information, as well as to
national command, control and intelligence requirements. The
programs comprising TIARA also fall within the jurisdiction of
the Committee on National Security.
The Joint Military Intelligence Program (JMIP) was
established in 1995 to provide integrated program management of
defense intelligence elements that support defense-wide or
theater-level consumers. Included within JMIP are aggregations
created for management efficiency and characterized by
similarity, either in intelligence discipline (for example,
SIGINT, IMINT) or function (for example, satellite support or
aerial reconnaissance). The following aggregations are included
in the JMIP: (1) the Defense Imagery Program (DIP); (2) the
Defense Cryptologic Program (DCP); (3) the Defense Mapping,
Charting, and Geodesy Program (DMCGP); and (4) the Defense
General Intelligence Applications Program (GDIAP), which
includes (a) the Defense Airborne Reconnaissance Program
(DARP), (b) the Defense Intelligence Counterdrug Program
(DICP), (c) the Defense Intelligence Agency Tactical Program
(DIATP), (d) the Defense Intelligence Special Technologies
Program (DISTP) and (e) the Defense Space Reconnaissance
Program (DSRP).

committee findings and recommendations

For the past four years, the Committee has recommended
authorization levels for intelligence and intelligence-related
activities that were lower than the amounts requested by the
President. These actions reflected the Committee's view that
the justification for spending on intelligence programs had to
be reexamined in light of the collapse of the Soviet Union and
evolving threats to our national security. Through its budget
review, a majority of the Committee at that time determined
that reductions in the fiscal and personnel resources allocated
to intelligence activities could be made without impairing the
ability of intelligence agencies to provide timely and accurate
information essential to policymakers and military commanders.
A minority of the Committee believed that some cuts were also
driven by a belief of what was a politically acceptable bottom
line rather than a judgment that a program was no longer
necessary in light of the changing world threat environment.
In the examination of the intelligence budget request for
fiscal year 1996, the Committee carefully considered whether
there was a need to continue on the previous path of two to
three percent cuts in the President's budget request. This
review reflected the Committee's belief that intelligence
activities must be examined by function as well as by program
and, thus, was structured to look across program lines at
intelligence disciplines and themes. The Committee held 11 full
Committee budget hearings on the following issues: signals
intelligence (SIGINT); imagery intelligence (IMINT), human
intelligence (HUMINT); collection coordination; production and
analysis; counterintelligence; support to the military;
information security and information warfare; covert action;
personnel; and the perspective of the Acting Director of
Central Intelligence. These were in addition to the more than
20 member briefings on specialized issues of budgetary
significance and more than 200 staff briefings on specific
activities and budgetary lines.
The fiscal year 1996 budget request for the NFIP reflects
an increase of approximately 5 percent over the amounts
appropriated in fiscal year 1995. Based on the record developed
at its hearings, the Committee has recommended an NFIP
authorization that stops the steady decline in the intelligence
budget that began in 1990 and provides for a small increase.
When combined with the JMIP and TIARA accounts, the Committee's
recommended authorization in the aggregate is 1.3 percent above
the amounts requested by the President.
It is the Committee's view that we must no longer examine
the intelligence budget purely in terms of dollars; we must
take a longer view and carefully examine the future needs and
requirements for the Intelligence Community. It is the
Committee's view that we must begin assessing both the threats
that our nation will face in the year 2000 and beyond, and what
intelligence programs, capabilities and capital equipment must
be gotten underway now to meet these threats. The Committee
placed a heavy emphasis on the future needs of the Intelligence
Community. This emphasis is the key to the Committee's major
activity in the 104th Congress--``IC21: The Intelligence
Community in the 21st Century.'' In order to lay the groundwork
for IC21, the Committee broke with past practices and merged
its oversight, legislative and budgetary capabilities to make
the review more intensive and evaluative. This year's
authorization bill reflects a downpayment towards this
approach.
Four basic themes governed the Committee during its review.
First, the Committee sought to evaluate each budgetary line in
the request solely on the program's merits. Second, the
Committee did not work toward a specific budget number while
evaluating the programs. That is, the Committee did not
specifically fund some programs and then make offsetting
``cuts'' in other programs in order to meet an arbitrary total.
The Committee believed that the Congress would accept an
intelligence authorization consisting of properly funded
programs--even if that amounted to a significant increase in
the aggregate over the President's request for the Intelligence
Community. Therefore, for the most part, each program
adjustment was considered as an individual, substantive issue,
rather than a fiscal one. As it turned out, despite some 80
budget actions taken by the Committee, the authorization ended
up only one percent above the President's request.
The third theme was the Committee's desire to focus more
attention on the ``downstream'' activities of processing,
exploitation and dissemination of intelligence data and
analysis. The Committee strongly registered its conviction that
collection costs must be reduced over the long-term and funding
increased for numerous processing activities. Moreover, we
remain very concerned about the Community's ability to utilize
the anticipated volume of information from planned collection
increases.
Finally, throughout the review the Committee applied a
philosophy that is also central to the IC21 process: to avoid
short-term thinking about intelligence priorities, needs and
capabilities and to look longer range at these issues in the
21st Century.
Centralizing authorities to improve cross-program
management and operational efficiency and an effort to
end needless redundancies in collection and, to a
lesser degree, analysis;
Denial and deception;
Improving support to the military, but over the
longer term bearing in mind the need to balance support
to the policymaker and the military, especially given
the significant policy challenges that are likely to be
encountered in the 21st Century;
Establishing priorities among and evaluating
intelligence requirements;
Limiting intelligence collection and analysis to
those activities that justify the use of expensive and
sometimes risky intelligence capabilities; and
Improving counterintelligence, security,
counterterrorism and counterproliferation capabilities.
With the exception of one significant area, the President's
request was largely funded by the Committee. We have taken a
careful look at our national imagery program and the funds that
are being allocated for it. We have studied the systems that
are being procured to insure that they adequately address all
the threats that our nation can reasonably foresee and that we
have the appropriate mix of collectors at the lowest cost
available to the U.S. taxpayer. Finally, the Committee believes
that the authorization levels it has recommended are neither
excessive nor will they encourage needless duplication of
intelligence collection by the various agencies and departments
that are funded by this bill.

Areas of Special Interest

Personnel issues

In the fiscal year 1993 Intelligence Authorization Act,
Congress mandated a 17.5 percent reduction in the number of
civilian personnel in three agencies within the National
Foreign Intelligence Program (NFIP): the Central Intelligence
Agency (CIA), the National Security Agency (NSA), and the
Defense Intelligence Agency (DIA). Congress directed that the
reduction target be met by the end of fiscal year 1997. Former
Director of Central Intelligence, R. James Woolsey, extended
the downsizing program for another two years to achieve an
overall reduction of 22.5 percent by the end of Fiscal Year
1999.
These reductions reflected a changed perspective in the
Intelligence Community and the Committee on the personnel
skills mix needed to meet a radically different threat. It was
the Committee's hope that these personnel reductions would also
make funds available for critically needed capital investment
as well as permit hiring fresh talent.
The Community has been successful over the last three years
in meeting its overall reduction goals. It has been helped
significantly by Congressionally authorized voluntary
separation incentives. Were it not for these incentive
programs, the agencies concerned would have had considerably
less leeway both to hire needed new personnel and to stay
within their mandated personnel ceilings. The Committee views
these programs as useful personnel management tools and urges
their continued application. Indeed, the Committee bill extends
the CIA Voluntary Separation Pay Act through Fiscal Year 1999
to ensure that the Director of Central Intelligence has this
essential tool available as he manages and directs long-term
downsizing. The Committee also realizes that the effectiveness
of early retirement programs has decreased since the pool of
likely candidates has dwindled because of incentive offerings
over the past three years. As a result, the Committee has
pushed the community to develop new proposals and submit them
for consideration. One of these was adopted in the Committee
bill.
There is consensus in the Intelligence Community that
serious personnel, issues remain unaddressed. The Committee has
addressed them at hearings, in correspondence and,
exhaustively, in Committee report language. Yet, senior
community managers still appear unwilling to make admittedly
difficult choices. The Acting Director of Central Intelligence
formed a personnel task force to review community personnel
policies. -It would have been useful if it had been completed
prior to the beginning of this year's budgetary cycle.
In keeping with the IC21 examination of the needs of the
Intelligence Community in the year 2000 and beyond, the
Committee believes it is vital for each NFIP agency to conduct
a full skills mix study (as only NSA has done) to determine
what its personnel requirements will be at the end of the
downsizing period. Employees currently in the work force should
be given effective career counseling to enable them to
determine their relevance to future intelligence missions, the
likelihood that they will make a significant contribution to
them, and whether they are currently on a positive career
track. Outplacement assistance should be improved at some
agencies. The Committee notes once again that the Intelligence
Community has failed overall to establish a personnel
evaluation system that objectively evaluates the performance
and contribution of each of its employees. There is no
systematic ranking of employees. Therefore, should the
Intelligence Community have to make selective involuntary
personnel cuts, most managers do not have objective criteria
with which to weed out those who are underachievers. The
Committee recognizes that the current personnel system is very
successful in finding, hiring and retaining well qualified and
highly motivated personnel. Nonetheless, there are poor
performers who remain entrenched in the system. A better
evaluation system coupled with annual rankings would help to
remedy this problem. Therefore, the Committee expects in next
year's budget request that the Intelligence Community will
present a personnel program designed to evaluate all
Intelligence Community employees on an annual basis, ranking
them to identify the high achievers and under-performers.
Further, the Committee expects that CIA and DIA will conduct a
full skills mix study to identify the appropriate personnel
complement that should exist at the conclusion of the mandated
personnel reductions on October 1, 1999.
Recognizing that NSA has a particularly severe problem with
the size, age, skills and make-up of its workforce, and in
consideration of the work that NSA has already completed in
this area, the Committee bill requires the Secretary of Defense
to establish a temporary program to permit the Director of NSA
to offer, on a one time basis, an opportunity for eligible
employees in the Civil Service Retirement System at NSA to take
early retirement and receive unreduced annuities. This program
will address skills mix problems at NSA and permit the
retention of newly hired employees who represent the diverse
employee environment that the NSA and our nation demands.
The Committee continues to watch carefully hiring and
promotion practices at CIA, DIA and NSA pertaining to
minorities and women. The representation of minorities at these
agencies lags behind the percentage of minority employees
throughout the federal sector. Women are also under-
represented, although not to the same degree as minorities.
The Committee believes that the United States' diverse work
force is not being tapped fully to bring to the Intelligence
Community the very best minds. Many citizens have native
fluency in languages other than English and intimate knowledge
of diverse and different cultures. Although they may have
recently gained their U.S. citizenship, they should not be
excluded from employment simply because they were born abroad.
Accordingly, the Committee will be holding another hearing on
diversity hiring practices later this session to continue the
same focus on these issues as in past years.

Terrorism

Even as the conspiracy trials of the New York City bomb
plotters continued, the United States was rocked again by a
terrorist bombing. This time, the alleged perpetrators of the
destruction of the Oklahoma City Federal Building were of
domestic origin. Regardless, the horrific dimensions of the
blast and the vulnerability of our nation to these acts were
utmost in everyone's minds. In the wake of that event,
increased attention has focused on how the U.S. Government is
addressing the terrorist threat, what the nature of the threat
is, and how the government can develop more effective means of
deterring and investigating terrorist activities. The
Committee, in its mark, has provided added support to the
Intelligence Community programs focused on the terrorist
threat.
The Committee has a long-standing interest in anti-
terrorism program issues, resources levels and interagency
cooperation. Recently, the Committee also has seen a strong
need to define appropriate intelligence support to law
enforcement that may be required in some terrorist cases. The
new DCI has indicted that he recognizes the importance of the
interplay between intelligence and law enforcement; and the
Committee looks forward to working with him on this issue.
Overall, the Committee believes that the work of the U.S.
intelligence agencies against terrorism has been an exemplar of
effective coordination and information sharing. Areas may
remain, however, where information sharing processes may need
continued improvement. Generally, the Committee is reluctant to
see any one agency assume new authorities over the others with
regard to counterterrorism intelligence gathering or
operations. Each agency brings unique capabilities and a unique
focus with responsibilities and programs that frequently cannot
or should not be undertaken by its counterparts. That being
said, the sharing of information in a timely and meaningful way
is vitally important; the Committee will be looking into this
in greater detail in the coming months.
Satellite architecture

The Committee's major departure from the Administration's
NFIP request this year occurred in the satellite area. The
significance is most apparent in terms of long-term policy.
Although the National Reconnaissance Program (NRP) received 99
percent of the amount requested, funds were significantly
redistributed, primarily from base accounts, in order to
address areas that we consider urgent.
In taking money from National Reconnaissance Office (NRO)
support base accounts or, at the NRO's optional, from program
funding, the Committee insists that support costs must be
reduced and that the agency must become more streamlined,
turning back toward its roots, when personnel, paperwork,
studies and unproductive expenditures were minimized. Although
the NRO remains relatively streamlined compared to the rest of
DOD in this regard, it has drifted from its founding philosophy
and practices. Fortunately, this need has become apparent even
as the ``faster, cheaper, better'' approach has gained
respectability, momentum and inroads within other space
organizations. Management attention to this issue should be a
very high priority.
Program costs also must be curbed. The NRO must learn to
balance technical elegance with cost-efficient solutions. Ever
rising program costs no longer can be tolerated. There are
other options and we believe that, with creativity and cost
consciousness, most requirements can be met for far less money.
This year, we concentrated on the imagery area, where many
exciting developments in the commercial arena point the way
toward large potential cost savings in national security
programs. Over the past ten years, there have been major
technology advances that reduce spacecraft weight, volume and
power requirements. Since launch has been a primary cost
driver, these potential weight reductions, coupled with new
launch options, present the possibility of substantial savings
even while largely retaining or even increasing spacecraft
capabilities, especially when combined with shortened schedules
and the management reforms discussed above. These developments
have been particularly fruitful in the imagery area, where U.S.
companies are marketing high performance systems, with
resolutions of one-to-three meters, at costs much reduced from
those to which we have become accustomed.
Esclating denial and deception by target countries also is
an urgent problem that the Intelligence Community must address
without delay. Our very success in developing various types of
worldwide surveillance, and the growing public and foreign
knowledge of that success, has spawned a widespread drive by
potential targets to ``go underground,'' both literally and
figuratively. The Intelligence Community must meet the new
challenge though more innovative collection, exploitation and
analytical techniques. It has been slow in so doing.
Accordingly, the Committee has initiated a number of new
departures to address this problem.

Aerial reconnaissance

Defense Airborne Reconnaissance Office
The Committee is concerned that the Defense Airborne
Reconnaissance Office's (DARO's) organizational subordination
to the Under Secretary of Defense (Acquisition and Technology)
does not provide a dedicated intelligence focus and may lead to
fractured management of programs within the Joint Military
Intelligence Program (JMIP). Therefore, the Committee strongly
urges the Department to realign DARO under the Assistant
Secretary of Defense for Command, Control, Communication and
Intelligence (C\3\I). The Committee's view is that a C\3\I
management structure will provide better JMIP stability and
better long-term focus on the intelligence and reconnaissance
support requirements of the Community.
HUNTER joint tactical unmanned aerial vehicle
The Committee remains concerned about continuing technical
development and management problems within the HUNTER joint
tactical unmanned aerial vehicle's (UAV) program. Also, the
Committee is deeply troubled by the apparent willingness of the
Department to restructure a fixed-price contract, particularly
since several other major programs have been canceled to avoid
this. Further, the Committee is not convinced by the Army's
argument that tactical reconnaissance support requires physical
ownership of air vehicles at all combat echelons. The Committee
believes that are alternatives to the HUNTER that bear
considerable review. Specifically, the PREDATOR medium altitude
endurance UAV offers a potential for fulfilling the medium
altitude and short/close range missions. This option appears
viable, assuming a shift in operational concepts. Indeed, this
bill specifically authorizes $20 million in fiscal year 1995
monies that had been previously appropriated but not authorized
to augment the Predator fleet by ten aircraft. However, because
of the significant ``sunk costs'' in infrastructure and the
apparent progress toward overcoming the technical problems, the
Committee believes that is sufficient merit in continuing the
HUNTER program until a thorough evaluation of the system can be
accomplished.
Therefore, the bill authorizes DOD to continue research and
development (R&D) of the HUNTER UAV. However, no fiscal year
1996 procurement funds of additional/ attrition HUNTER air
vehicles or systems may be expended until the DARO conducts,
and reports back to the Committee on, a joint-service objective
field test and evaluation of both the HUNTER and the Predator
systems at operation units. This evaluation should determine
and compare the capabilities of both, and determine whether a
single air vehicle can be selected to fulfill both missions as
well as the close-range mission. This evaluation should also
include the infrastructure--training, logistics and
maintenance--necessary to compare the two systems on an equal
basis. This comparison should provide an analysis of the
current level of electronics/imagery processing capabilities
for each system and their upgrade potential. In addition, the
report should provide the Department's rationale for changing
the terms of a fixed-price contract if the Department wants to
proceed with HUNTER. The Department shall provide its
recommendations to the Committee no later than February 1, 1996
Predator MAE UAV
The bill authorizes $45.9 million for continuing R&D of the
PREDATOR UAV, $25.9 million over the amount requested. This
additional funding is to be used to develop and test a sea-
based version of the PREDATOR (at least four air vehicles) and
a single sea-based ground station.
LO HAE UAV
The bill authorizes $83.0 million for the Low Observable
High Altitude Endurance (LO HAE) UAV program. This addition of
$35.0 million over the Department's request is to be used for
the early development and procurement of air vehicles three and
four. The Committee believes there is merit, both from
industrial base and cost savings perspectives, in accelerating
procurement of these two planned additional air vehicles. The
Committee believes that moving this procurement forward will
allow for a more coherent and meaningful customer demonstration
phase.
Additionally, the Committee is concerned that the unique
capabilities of the LO HAE will not be fully realized because
of the imposed $10 million per vehicle cost limitations.
Therefore the Committee directs the Department to investigate
the potential for increasing the LO HAE's edurence and payload
capabilities. The Committee requests that the Department
provide a report before the fiscal year 1996 authorization
conference. The report should provide an assessment of what
intelligence support capability improvements can be realized by
increasing the vehicle's fly-away cost to no more than $20.0
million.
U-2/Conventional HAE
The Committee believes the Tier II+, or Conventional High-
Altitude Endurance (CONHAE) UAV, duplicates the capabilities,
concepts of operation, and some of the missions of the U-2.
Developing a follow-on to the U-2 would be reasonable if the U-
2 were nearing the end of this useful life or if the proposed
follow-on offered substantially better performance and/or
significantly lower life-cycle costs. Other than increased
endurance, the Department has not made the case than any of
these conditions exist. In fact, DOD has not advanced any of
these arguments, and has failed to recognize and acknowledge
that the CONHAE duplicates the mission of the U-2.
DOD will have invested approximately $500 million in the U-
2 fleet by the end of the decade to preserve its viability for
at least another 30 years. The proposed CONHAE is designed to
have much longer endurance that the U-2, but the U-2 carries
almost three times the payload, as well as multiple sensors
simultaneously. Although the CONHAE is being designed for low
aircraft unit costs, development and acquisition costs will not
be trivial, whereas the cost of developing and acquiring the U-
2 has already been borne. In terms of operating costs, no data
are available to demonstrate that a CONHAE fleet will be less
expensive to operate than the U-2 fleet for a given set of
operational capabilities--much less that a CONHAE fleet's
operating costs will be so low as to more than compensate for
the cost of its development and procurement.
Developing a CONHAE fleet also would be justified if the
number of U-2s was clearly insufficient to meet the needs of
the two-MRC strategy. Again, however, DOD has provided no data
to the Committee that would support such an assertion. Indeed,
the Department has yet to seek funds to procure even a
reasonably full complement of sensors for the U-2 fleet,
suggesting that the existing fleet is under-utilized and that
additional capability could be acquired faster and cheaper by
buying additional sensors for the U-2 than by procuring newly
designed aircraft and sensors.
Since defense modernization funds are extremely scarce, the
Committee is hard passed to endorse the need for the CONHAE
system at this time. At the same time, the Committee is
reluctant to terminate this innovative program without giving
the Department an opportunity to make a better case.
Accordingly, the Committee expects that not more than 25
percent of the funds authorized and appropriated for the CONHAE
program for fiscal year 1996 will be obligated for the CONHAE
program until thirty days after the Department submits a report
to this Committee and the House National Security Committee
that provides:
(1) an independent cost analysis of the life-cycle
costs of the U-2 and the proposed CONHAE based one
equal operational performance;
(2) the number of U-2, CONHAE, or a mix of both
systems (including sensor numbers and types) required
to support the combatant commanders in peacetime and
wartime and the costs of each approach; and,
(3) recommendations and a program plan for the
Secretary of Defense for high-altitude, endurance
airborne reconnaissance systems.
If the Secretary of Defense decides that the CONHAE program
cannot be justified at this time, the Secretary may utilize
funds ($117 million) requested for CONHAE to acquire additional
sensors and a modernized cockpit for the U-2. Specifically, at
least $50 million is used for competitive acquisition of a
total of 12 long-range electro-optical cameras, with multi-
spectral and targeting-quality geolocation systems, to enable
the U-2 to carry multiple imaging sensors as well as other
intelligence payloads simultaneously. Achieving this would, in
effect, free up a sizable number of aircraft for additional
duties in a two-MRC (major regional conflict) scenario. If the
Secretary determines that the CONHAE should be continued, the
plan should include a U-2 retirement profile and provide for a
transition of the CONHAE from an advanced concept technology
demonstration to a formal procurement program.
RC-135 rivet joint
The bill authorizes $37.0 million above the Department's
request, and intends for the Air Force to modify one existing
C-135 aircraft into an RC-135 RIVET JOINT configuration. The
Air Force is also directed to develop this aircraft using
existing RIVET JOINT baseline equipment to the maximum extent
possible. The Air Force, however, is directed to make the
infrastructure modifications necessary to make this
implementation compliant with Joint Airborne SIGINT
Architecture (JASA) standards. The Committee's intent is to
make this the first JASA implementation aircraft.
SR-71
The resurrection of the SR-71 program has been
controversial. The Committee opposed this action in fiscal year
1995. Although the Department has made no request for the SR-71
program for fiscal year 1996, the Committee specifically denies
authorization of any funds for SR-71 R&D, procurement, or
operations. The Department is to use remaining fiscal year 1995
funds to terminate the program.
Joint airborne SIGINT architecture
The Committee remains extremely interested in the evolving
concept and development of the Department's Joint Airborne
SIGINT Architecture (JASA). The Committee commends the
Department's efforts to comply with Congressional direction to
move to a common architecture with associated, enforceable
standards applicable to all airborne SIGINT platforms. The
Committee is also pleased that the Directors of the National
Security Agency and the Defense Airborne Reconnaissance Office
have elevated JASA to a ``top priority'' initiative and have
established the Joint Airborne SIGINT program office (JASPO) to
oversee implementation of competitive solutions.
The Committee is concerned, however, about the funding
available over the Future Year Defense Program (FYDP) and
beyond to effectively implement the architecture in all major
airborne SIGINT platforms. The Department's Joint Airborne
SIGINT System (JASS) approach to providing a scalable,
commercial-off-the-shelf (COTS)-based, open architecture has
the potential for reducing service duplication of effort in
acquiring and supporting new airborne SIGINT systems. The
Department, however, acknowledges this approach may be, at
least initially, more costly than previous individual service
efforts. Further, this apparent funding shortfall is made
substantially worse because the Navy has apparently contributed
almost nothing to the common pool of funds created to field
JASA. Without additional funding, the Department could be
forced to recommend a reduction in SIGINT platform force
structure. Indeed, the Department has initiated a force mix
study, in part to address this issue.
The Committee is concerned about the prospect of
significantly changing the force mix for several reasons.
First, airborne SIGINT force structure reductions would be
completely inconsistent with the Department's report to
Congress on the RC-135/EP-3 tradeoff study. Second, all the
major airborne SIGINT systems are experiencing high OPTEMPO
rates, and the Air Force is requesting additional RC-135s.
Third, the Department's decision to use an EP-3 aircraft as the
lead Joint Airborne SIGINT System (JASS) integration effort
suggests that the Navy will, in effect, be rewarded for failing
to contribute monetarily to the joint program. The force mix
study leads the Committee to question the Department's
commitment to manned tactical airborne SIGINT support to the
warfighter.
Further, the Committee is most concerned about sustaining
current operational systems and eliminating the potential for
an airborne SIGINT modernization gap prior to fielding JASA
components. This particular concern is most important when
viewed against the explosion of commercial communications
technologies. The funding shortfall discussed above would be
compounded by any near-term improvements needed to ensure that
operational capabilities are adequately maintained during the
transition to JASA. The need for such improvements depends both
on the pace of advances in commercial communications
technologies, and on an assessment of the cost, schedule and
technical risk in the JASA program.
After in-depth review, and based on the Department's
assurances of open competition, the Committee remains guardedly
optimistic concerning the JASS approach. Specifically, the
Committee is very interested in the Department's management of
technical risk in developing a single common system solution;
its ability to respond to near and mid-term threats; its
capitalization of previous investments in currently fielded
collection exploitation technologies; and its approach to fully
exploiting the commercial sector's ability to rapidly evolve
technology. In light of the above, the Committee requests the
following actions:
(1) The Under Secretary of Defense for Acquisition and
Technology (USD (A&T)) is to conduct an independent cost and
capability analysis comparing the FYDP and life-cycle costs of
the JASS program to an evolutionary product-improvement
approach. The comparison should be made on the basis of
equivalent system performance. The analysis should evaluate
cost and schedule risk as well. The Committee requests an
interim report prior to conference on the Fiscal Year 1996
Defense Authorization Act. The report should also include the
Department's assessment of its ability to predict both the
future threat and technology environments. Not more than 25
percent of the funds authorized for the JASS program may be
obligated until a final report is submitted to this Committee
and the House National Security Committee.
(2) to ensure there are no airborne SIGINT capability gaps
during the transition to JASA, DARO shall determine and
implement necessary quick-reaction and evolutionary
improvements to existing airborne systems. The Committee's
intent is to provide a balanced approach to JASA development by
allowing the services to program funds for such evolutionary
upgrades, provided they comply with an overall migration to the
JASA architecture. These upgrades should comply with JASA
standards, and should not be service-unique. These upgrades
should be funded through the service DARP accounts. DARO should
submit a report on any service proposals, and DARO's
recommendations thereon, along with future fiscal year budget
submissions. The Committee is encouraged by DARO's preliminary
plans to incorporate NSA-developed quick reaction capabilities
across multiple platforms, as well as to improve the U-2 in
compliance with JASA.
The Committee concurs with the Department's position that
the Joint Airborne SIGINT Program Office (JASPO) become the
single focal point for all research and development efforts to
field new airborne SIGINT capabilities. The JASPO should ensure
that all other non-developmental, procurement and integration
efforts comply with JASA standards. DARO should make maximum
practical use of existing subsystems and capabilities in the
transition to the JASA architecture, and ensure that open
competition is applied to hardware and software acquisitions
wherever possible.
Finally, the Committee rejects DARO's decision to use an
operational EP-3 platform as the first JASA integration. There
is inherent risk in this course of action, and the Committee
believes there is a more appropriate option. As noted
elsewhere, the Committee authorizes $37 million to modify an
existing C-135 aircraft into an RC-135 RIVET JOINT platform.
This aircraft will use existing RC-135 equipment and
technologies to the maximum extent possible consistent with
implementation of the JASA infrastructure and new capabilities.
The Committee believes this balanced approach is consistent
with the development of an advanced joint airborne SIGINT
architecture that satisfies 21st Century defense needs while
preserving today's warfighting readiness.
PACER COIN
The Committee denies all of the requested $25.0 million for
continuation of the Air Force's PACER COIN program. PACER COIN
currently supports only Southern Command's missions. The
Committee understands the Air Force plan is to turn the mission
over to the Air National Guard in fiscal year 1996, supporting
SOUTHCOM on a rotational basis. The Committee believes that
service support for, and the operational utility of, this
counterdrug-focused mission has been steadily declining,
indicating a need to either expand its mission or terminate
this marginally employed system. The Committee does not see
support for an expanded mission and, therefore, recommends
termination. However, the Committee strongly recommends that
the Department of the Navy consider modifying the PACER COIN
aircraft to become REEF POINT mission capable and evaluate
assuming operational control of the aircraft. The Navy should
provide an evaluation of this recommendation to the Committee
prior to the fiscal year 1996 authorization conference.
JSTARS communications
The Committee recommends authorization of an additional
$20.0 million for the joint surveillance and target attack
radar system (JSTARS). The baseline JSTARS program does not
include satellite communications to permit command and control
information to be exchanged with the platform beyond line of
sight or to disseminate JSTARS moving target indicator (MTI)
radar data to a remote air operations center. This capability
is ranked highly on the Air Force priority list for future
improvements to the aircraft, but no funding has been
programmed. Similarly, the Army has an unfunded requirement for
JSTARS to disseminate target track data directly to attack
helicopters, and has successfully tested an improved data modem
(IDM) for use with existing voice radios for this purpose. The
Committee believes that both of these proposals are critically
important and should be pursued expeditiously. The Committee
recommends that $15.0 million of the additional funds be
allocated for satellite communications, and that the remainder
be applied to developing an IDM capability. the IDM effort
should investigate the feasibility and cost of integrating the
IDM data link into the JSTARS workstation to provide automated
target updates rather than requiring an operator to prepare
manually and transmit target updates.
The Committee is encouraged by the recent contract award to
complete development of message formats for the JSTARS Joint
Tactical Information Dissemination System (JTIDS) subsystem to
enable operators to disseminate ground target tracks to any
JTIDS-equipped user in near-real time. This long overdue effort
is essential for our tactical air forces to exploit JSTARS
effectively and attack moving ground forces with precision-
guided weapons. However, a comprehensive JTIDS capability on-
board JSTARS is worth little unless the Services procure and
install JTIDS data links on tactical aircraft and heavy
bombers. Although the Navy appears to be serious about making
this investment, it has not exhibited much interest in, or even
knowledge of, how useful JSTARS could be in improving navy
interdiction capabilities. The Air Force has yet to demonstrate
that JTIDS data links for the ground-attack mission for all its
combat aircraft is even a priority, despite assurances in the
roles and missions debate that battlefield air interdiction is
an important Air Force mission.
The Committee is concerned that the nation's large
investment in intelligence systems able to support targeting,
expensive combat aircraft, and new, advanced conventional
munitions will be substantially cheapened by a failure to
procure simple, but robust, data links.
Battlegroup passive horizon extension system (BGPHES)
The bill authorizes $7.1 million, an increase of $5.0
million, for continuing R&D on the Navy's BGPHES surface
terminal. The Committee directs the Navy to continue
development of the Surface Terminal to process additional
collection system data as well as emitter locations from other
service platforms. The Committee believes these improvements
are critical to ensuring that the Navy can receive and process
reconnaissance data from other service platforms.
Common imagery ground/surface system
The Committee authorizes $182.0 million for the Common
Imagery Ground/Surface System. This increase of $16.0 million
over the Department's request is to help fix a near-term
funding shortfall for DARO's ``migration'' of the various
imagery ground stations to a common architecture. The Committee
believes the Department's shortfall is actually greater, but
also believes it is inherently a DoD action to properly fund
for migration. However, the Committee intends to signal its
support for the Department's move to the Distributed Common
Ground System, that incorporates all intelligence disciplines,
and for which the CIGSS is a necessary first step.

Intelligence broadcasts and receivers

Intelligence dissemination architecture
The Committee is concerned that the Department of Defense
has not developed a coherent near-real time intelligence data
dissemination architecture. Additionally, there appears to be
no single dissemination focal point for ensuring cohesive
development of standards or oversight of hardward/software
procurement. This lack of firm leadership and direction has
forced the various services to develop independently their own
dissemination architectures (TRAP, TIBS, TRIXS, TADIXS-B, TDDS,
etc.) and to build separate tactical receiver equipment (TRE,
MATT, CITT, TRU, QUADNET, etc.). Although these efforts have
developed critical dissemination capabilities, they have led to
service rivalries, competition for hardware development funds
and a general inability to ensure that critical data is made
available to joint consumers. Further, this has forced users to
own, and integrate, multiple radios to ensure receipt of the
various data broadcasts.
The Committee is fully aware of, and appreciates, the
Department's study to ``migrate'' the broadcasts and receiver
efforts, but is not pleased that a formal, implementable plan
has yet to result. This is an issue that has been languishing
for several years. Unique development and acquisition efforts
are continuing, and the Committee believes, had these efforts
been coordinated, authorized funds would have been better spent
ensuring interoperability. Additionally, the Department has
directed a ``migration'' to a common data format (TADIL-J, Link
16), but the Committee is not aware of any enforcement
mechanism for implementation of these various dissemination
capabilities. The Department appears unable or unwilling to
make the tough decisions necessary to eliminate duplication of
effort or to terminate the rivalries between systems and
programs.
Therefore, the Committee requests that no more than 25
percent of fiscal year 1996 authorized and appropriated funds
for intelligence/information data broadcasts and their related
tactical receivers be obligated until 30 days after the
Department provides the Committee formal plans for:
(1) ``migrating'' to a single data broadcast format
and an integrated intelligence broadcast/dissemination
architecture; and,
(2) ``evolving'' to a single, related receiver
family.
Due to its developmental/technical maturity, the Committee
believes the Commanders' Tactical Terminal family of receivers
is a likely candidate for basing a future Joint Tactical
Terminal, and has authorized additional funding to this
program. The Committee is very interested in, and wishes to
remain informed of the future potential of ARPA's SPEAK EASY
radio effort, which may have the potential to evolve into the
future software programmable joint tactical terminal.
The Committee believes a robust architecture does not imply
a single dissemination system, but rather a system of systems
that relies on a common data format. It is not the Committee's
intention to force a specific solution, but rather to promote
an architectural construct that is independent of transmission
media (e.g. UHF SATCOM) and that provides for a wide range of
customers with varying data requirements. This suggests an
implementation that allows for multiple data transmission
rates, varied media (terrestrial and space-based) and multiple
information security levels, but one that is interoperable and
minimizes unique data processing requirements.
Commander's tactical terminal
The bill authorizes $31.4 million for procuring additional
Commander's Tactical Terminals, an increase of $18.7 million
over the Administration's request. The Committee believes that
rapid procurement and fielding of this receiver will improve
tactical intelligence support to operational forces and allow
the community to move forward with the development of the
logical functional basis for the future Joint Tactical Terminal
(JTT). However, the Committee is concerned about the
proliferation of intelligence data broadcasts and associated
tactical receivers. Therefore, the Committee fences $23.5
million of the authorized funds until the Department develops
and submits both a broadcast dissemination architecture and a
plan for ``migrating'' the associated receivers into a single
family development.

Fusion development

The Committee understands that the Army's All Source
Analysis System (ASAS) program office at Ft. Huachuca has been
working with the other services to improve functional
interoperability among the various service intelligence fusion
systems: the Army's ASAS, the Navy's Joint Maritime Command
Information System (JMCIS), the Air Force's Combat Intelligence
System (CIS), and the Marine Corps' Intelligence Analysis
System (IAS). The Committee applauds this long-overdue effort
and recommends an additional $2.0 million to further this
endeavor, with the proviso that the SOCOM SOCRATES system be
included in the integration effort, and that all
recommendations/actions remain Joint Deployable Intelligence
Support System (JDISS)-compatible. The Committee requests that
a memorandum of agreement among the services and a spending
plan be provided to the Intelligence Systems Board for
validation prior to the beginning of the fiscal year, and that
the ISB provide a copy to the intelligence committees and the
defense committees.

Tactical space operations

The bill authorizes $10.0 million, an increase of $5.0
million for the Navy's national imagery support program
element. This additional funding is provided for lease of
commercial satellite communications to continue Challenge
Athena tactical support. The Committee is pleased by the Navy's
successful use of commercial satellite communications to
support intelligence and operations as well as morale and
welfare applications, and urges the Navy to proceed with the
proposed multi-ship demonstration.

Intelligence support to targeting

The Committee has been concerned for some time that
intelligence support to targeting is not being managed in a
coherent manner. The concern has intensified with the
increasing doctrinal reliance upon and development of precision
weapons and munitions. In the hearing on this topic held by the
Technical and Tactical Subcommittee, it was clear that some
progress is being made in addressing intelligence support
issues during the development phase of some weapons systems,
rather than after the fact, through the Joint Warfighting
Capabilities Assessment (JWCA) process and the expanded Joint
Requirements Oversight Council (JROC). Although this is an
improvement, the Committee still sees no viable mechanism or
organization charged with ensuring that national or theater
systems respond, whenever technically and fiscally feasible, to
today's ever more stringent targeting requirements. There is
good work being done in this area on a variety of fronts, but
progress is uneven. In the SIGINT arena, experiments with
cross-platform geolocation using various reconnaissance assets
have been quite successful, but the Committee is concerned
about competing national and tactical architectures and
insufficient management coordination. In the imagery realm,
there is less solid progress and some concern about the United
States Imagery System's (USIS) ability to support real-time
targeting applications in addition to providing imagery
products for intelligence purposes. In its authorization bill
for 1996, the Committee has recommended that $2.0 million be
provided to the Central Imagery Office (CIO) or its successor
organization to look at how the USIS--including all national
and theater imagery collection platforms; all types of imagery
products, including the Defense Mapping Agency's; and all
imagery exploitation software packages--can better support
targeting of precision weapons. The Committee also requests
that the CIO also look at how imagery targeting support could
be enhanced by greater interaction with SIGINT collectors, both
national and theater-level. The Committee requests a report
from the CIO by March 1, 1996, on what actions, in priority
order, could be taken to improve imagery support in this area,
how much they would cost, and who the responsible agency would
be. The Committee requests that the report be coordinated with
the Defense Intelligence Agency, and any dissenting views
noted.
Section-by-Section Analysis of Bill As Reported

title 1--intelligence activities

Section 101--Authorization of appropriations

Section 101 lists the departments, agencies, and other
elements of the United States Government for whose intelligence
and intelligence-related activities the Act authorizes
appropriations for fiscal year 1996.

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 1996 are
contained in a classified Schedule of Authorizations. The
Schedule of Authorizations is incorporated into the Act by this
section. The details of the Schedule are explained in the
classified annex to this report.

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, in fiscal year 1996 to exceed the
personnel ceilings applicable to the components of the
Intelligence Community under section 102 by an amount not to
exceed two percent. The Director may exercise this authority
only when doing so is necessary to the performance of important
intelligence functions. Any exercise of this authority must be
reported to the two intelligence committees of the Congress.
The Committee emphasizes that the authority conferred by
Section 103 is not intended to permit the wholesale raising of
personnel strength in any intelligence component. Rather, the
section provides the Director of Central Intelligence with
flexibility to adjust personnel levels temporarily for
contingencies and for overages caused by an imbalance between
hiring of new employees and attrition of current employees. The
Committee does not expect the Director of Central Intelligence
to allow heads of intelligence components to plan to exceed
levels set in the Schedule of Authorizations except for the
satisfaction of clearly identified personnel needs which are
consistent with the authorization of personnel strengths in
this bill. In no case is this authority to be used to provide
for positions denied by this bill.

Section 104--Community management account

Section 104 authorizes appropriations for the Community
Management Account of the Director of Central Intelligence and
sets the personnel end-strength for the Community Management
Staff for fiscal year 1996.
Subsection (a) authorizes appropriations of $80,713,000 for
fiscal year 1996 for the activities of the Community Management
Account of the Director of Central Intelligence. It also
authorizes funds identified for the Advanced Research and
Development Committee and the Environmental Task Force to
remain available for two years.
Subsection (b) authorizes 247 full-time personnel for the
Community Management Staff for fiscal year 1996 and provides
that such personnel may be permanent employees of the Staff or
detailed from various elements of the United States Government.
Subsection (c) requires that personnel be detailed on a
reimbursable basis except for temporary situations of less than
one year.

title ii--central intelligence agency retirement and disability system

Section 201--Authorization of appropriations

Section 201 authorizes appropriations in the amount of
$213,900,000 for fiscal year 1996 for the Central Intelligence
Agency Retirement and Disability Fund.

title iii--general provisions

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

Section 301 provides that appropriations authorized by the
conference report 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 bill 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.
Section 303--Application of sanctions laws to intelligence activities

Section 303 amends the National Security Act of 1947 to add
a new title IX entitled ``Application of Sanctions Laws to
Intelligence Activities.''
Section 901 of the new title authorizes the President,
notwithstanding any other provision of law, to stay the
imposition of an economic, cultural, diplomatic, or other
sanction or related action by the United States Government when
the President determines that to proceed without delay would
seriously risk the compromise of an ongoing criminal
investigation or an intelligence source or method. The
President is to lift the stay when he determines that it is no
longer necessary to that purpose.
Section 902 of the new title requires that whenever a stay
is authorized, and additionally whenever its duration exceeds
120 days, the President shall promptly report the rationale and
circumstances for the stay to the congressional intelligence
committees in the case of intelligence sources and methods and
to the congressional judiciary committees in the case of an
ongoing criminal investigation.
Sanctions have been useful policy tool in encouraging
behavior consistent with U.S. nonproliferation and other
foreign and security policies. U.S. law requires sanctions to
be imposed for violations of key norms in the area of missile
technology controls; chemical and biological weapons;
terrorism; certain transfers of munition items; proliferation
of nuclear weapons; and transfer of advanced conventional
weapons to Iran or Iraq.
The Committee does not wish to undermine current sanctions
law. However, it does believe there may be cases when it is
necessary to delay temporarily the imposition of sanctions to
protect a sensitive source or method or an ongoing criminal
investigation. In particular, the Committee is concerned that
situations may arise where the imposition of a sanction risks
the life of a sensitive human source supplying information on
activities that trigger sanction actions. The Committee is also
concerned that under current law the imposition of a required
sanction may impede the flow of information that is necessary
to the full imposition of sanctions against all violators
involved.
The Committee wishes to make clear that the stay of the
imposition of a sanction provided under this section is
appropriate in limited cases. It expects that the stay
authority will be used rarely and not to protect generic or
speculative intelligence interest. Although the Committee does
not place a limit on the duration of a stay, the delay should
not be indefinite and the time provided should be used to
resolve sources and methods or law enforcement concerns. The
President must have sufficient information to determine whether
the risk to intelligence sources and methods is significant and
outweighs potential harm to U.S. or other foreign policy or
security objectives nonproliferation. The Committee thus
expects that determinations to invoke a stay authorized under
this section will be preceded by a rigorous interagency review
process in which the recommendations, of all relevant agencies,
together with supporting facts, are made available to the
President. The Committee intends to closely monitor the use of
the authority provided under this section.

Section 304--Thrift savings plan forfeiture

Section 304 adds a new subsection to section 8432(g) of
title 5, United States Code, to provide that the Government's
contribution to the Thrift Savings Plan under the Federal
Employees Retirement System (FERS) and interest earned on that
contribution shall be forfeited if the employee's annuity has
been forfeited under subchapter II of Chapter 83, title 5,
United States Code. This provision closes a loophole that was
created when the FERS was established.
Prior to the enactment of the FERS, an employee's
retirement annuity was based entirely on contributions made by
the employee and by the Government to the applicable retirement
fund. Under subchapter II of Chapter 83, any employee convicted
of various national security offenses, including espionage,
would forfeit his annuity and be entitled to receive only his
monetary contributions to the annuity. A new retirement
benefit, however, was created with the establishment of FERS,
payable under the Thrift Savings Plan.
The Thrift Savings Plan now permits the employee to
contribute into the Government-managed fund and requires that
the Government also contribute to the fund on the employee's
behalf. When FERS was enacted, the forfeiture provisions of
subchapter II were not amended to cover the Government's
contributions to the Plan. This situation clearly undermines
the intent of subchapter II by permitting an employee convicted
of espionage to retain the Government's contributions to the
Plan. Section 304 corrects this anomaly by requiring the
forfeiture of the Government's contribution to the Plan and
earnings attributable to that contribution in situations where
an individual's annuity is forfeited under subchapter II.

Section 305--Authority to restore spousal pension benefits to spouses
who cooperate in criminal investigations and prosecutions for
national security offenses

Section 305 amends section 8318 of title 5, United States
Code, to make the spouse of an individual whose annuity or
retired pay has been forfeited under section 8312 or 8313 of
title 5 eligible for spousal pension benefits if the Attorney
General determines that the spouse fully cooperated in the
criminal investigation and prosecution of the individual.
Enactment of this legislation will help to protect the national
security interests of the United States by encouraging the
spouses of federal employees who know or suspect that their
husband or wife is engaged in espionage activities to inform
the Government and to cooperate in a subsequent criminal
investigation and prosecution. Current law actually discourages
cooperation with the Government, since under current law
pension benefits are lost fully upon conviction and forfeiture
of the husband's or wife's annuity, even if the spouse has
cooperated fully with the Government.

Section 306--Secrecy agreements used in intelligence activities

Section 306 addresses a problem that CIA has experienced
with secrecy agreements in the conduct of authorized
intelligence activities. Beginning with the Treasury, Postal
Service, and General Government Appropriations Act for fiscal
year 1991 and in each year thereafter, Congress has required
that agreements to protect classified information must contain
certain prescribed language to put the executor on notice that
the agreement does not supersede specified laws and Executive
Order 12356. The language is as follows:

These restrictions are consistent with and do not
supersede, conflict with or otherwise alter the
employee obligations, rights or liabilities created by
Executive Order 12356; section 7211 of title 5, United
States Code (governing disclosures to Congress);
section 1034 of title 10, United States Code, as
amended by the Military Whistleblower Protection Act
(governing disclosure to Congress by members of the
military); section 2302(b)(8) of title 5, United States
Code, as amended by the Whistleblower Protection Act
(governing disclosures of illegality, waste, fraud,
abuse or public health or safety threats); the
Intelligence Identities Protection Act of 1982 (50
U.S.C. 421 et seq.) (governing disclosures that could
expose confidential Government agents), and the
statutes which protect against disclosure that may
compromise the national security, including sections
641, 793, 794, 798, and 952 of title 18, United States
Code, and section 4(b) of the Subversive Activities Act
of 1950 (50 U.S.C. section 783(b)). The definitions,
requirements, obligations, rights, sanctions and
liabilities created by said Executive Order and listed
statutes are incorporated into this Agreement and are
controlling.

Notwithstanding that several of the laws cited apply only
to federal employees, the Treasury appropriations acts have
required CIA to include the specified language in nondisclosure
agreements intended to be executed by private parties. The
recitation of numerous statutes in the overbearing but required
``legalese'' has caused confusion, complicated authorized
intelligence activities, and even disrupted them when parties
refused to sign agreements containing provisions that do not
apply to them. The required language is intimidating and has
chilled otherwise promising intelligence relationships.
Consequently, section 306 clarifies that CIA and other
intelligence agencies have the flexibility to tailor
nondisclosure agreements according to the needs of the
intelligence activity at hand, as long as the agreement at a
minimum requires nondisclosure without specific authorization.
The section makes it clear, however, that the prescribed
language must still be included in the nondisclosure agreements
to be signed by federal employees and officers. This section,
when enacted, will permit the use of secrecy agreements stated
in plain and understandable English, that will not intimidate
the layman, and that will not send him in frantic search of his
lawyer. The provision will make it easier for people to
understand their rights and obligations when signing a secrecy
agreement, which will ultimately enhance the protection of
national security information.

Section 307--Limitation on availability of funds for automatic
declassification of records over 25 years old

Section 307 limits the availability of funds to a maximum
of $2,500,000 for each agency of the National Foreign
Intelligence Program for automatic declassification of records
over 25 years old consistent with section 3.4 of Executive
Order 12958. The President is required to submit a request in
the President's fiscal year 1997 budget that specifically
identifies the funds necessary to implement section 3.4. The
Committee believes that the potential costs associated with the
declassification programs required by Executive Order 12958
have not been fully evaluated. This section would permit
preliminary work to be done in FY 1996 to assess the scope and
cost of the declassification program. In the budget submission,
for FY 1997, the President would then provide a detailed
request supported by firm estimates of declassification costs.

title iv--central intelligence agency

Section 401--Extension of the CIA Voluntary Separation Pay Act

Section 401 amends section 2(f) of the CIA Voluntary
Separation Pay Act, 50 U.S.C. Sec. 403-4(f), to extend the
Agency's authority to offer separation incentives until
September 30, 1999. Without this amendment, the Agency's
authority to offer such incentives will expire on September 30,
1997.
CIA's separation incentive program has been an effective
force reduction tool. It is necessary to extend this authority
until September 30, 1999, because CIA, like DoD, will continue
to downsize through that year. Enactment of this provision will
ensure that CIA can more effectively manage downsizing and will
minimize the need to separate employees involuntarily.

Section 402--Volunteer Service Program

Sectoin 402 authorizes the Director to establish a limited
volunteer service program for fiscal years 1996 through 2001,
whereby no more than 50 retirees can volunteer their services
to the CIA to assist the Agency in its systematic or mandatory
review for declassification or downgrading of classified
information under certain Executive Orders and Public Law 102-
526. The provision limits expenditures to no more than
$100,000.
This section authorizes the Agency to pay costs incidental
to the use of the services of volunteers, such as training,
equipment, lodging, subsistence, equipment and supplies. It
also ensures that volunteers are covered by workers
compensation and the Federal Torts Claim Act. Without this
legislation, the CIA would be unable to pay costs incident to
the use of gratuitous services provided by volunteers, such as
training and equipment. The program established under this
section will be temporary and limited.

title v--department of defense

Sectoin 501--Defense intelligence senior level positions

Section 501 amends section 1604 of title 10, United States
Code, by authorizing the Secretary of Defense to establish the
Defense Intelligence Senior Level (DISL) personnel system for
the Defense Intelligence Agency (DIA) and the Central Imagery
Office (CIO). Section 1604 currently authorizes the Secretary
of Defense to establish positions for civilian officers and
employees in DIA and CIO. The rates of basic pay for these
positions, however, are fixed in relation to the rates of basic
pay provided in the General Schedule under section 5332 of
title 5. Section 5332, however, which limits the grades of
employees to GS-15, is insufficient for the needs of DIA and
CIO.
In 1991 two Army field activities were transferred to DIA.
The employees at the Missile and Space Intelligence Center and
the Armed Forces Medical Intelligence Center are high level
technical employees. Their positions do not meet the management
and program criteria for Senior Executive Service (SES)
inclusion, but they do exceed the GS-15 criteria. DIA is also
acquiring the Human Intelligence (HUMINT) resources of the
Military Services. This functional transfer will add over 1,000
civilian and military personnel to DIA's rolls, and there may
be a need to structure at least one senior advisory assignment
as part of the Defense HUMINT Service (DHS) architecture.
Additionally, the increased Defense intelligence leadership
roles of DIA and CIO require increased high level activity in
technical analysis, liaison and advisory services.
The primary purpose of DISL positions will be to provide
technical expertise and advisory services beyond the GS-15
level established by DIA and CIO. Employees in DISL positions
will not be responsible for managerial and program oversight,
which are functions of the SES. DISL positions will include
Defense Intelligence Senior Technical (DIST) and Defense
Intelligence Senior Professional (DISP) assignments. These
positions are classifiable above the DIA and CIO GS-15 level
but do not involve the organizational or program management
functions necessary for the Defense Intelligence Senior
Executive Service.
DIST positions are those that involve research and
development; test and evaluation; or substantive analysis,
liaison, and/or advisory activity focusing on engineering,
physical sciences, computer science, mathematics, medicine,
biology, chemistry, or other closely related scientific and
technical fields; and intelligence disciplines including
production, collection, and operations in close association
with the preceding or related activities.
DISP positions are those that emphasize staff, liaison,
analytical, advisory, or other activity focusing on
intelligence, law, finance and accounting, program and budget,
human resources management, training, information services,
logistics, and other appropriate support fields.
DISL positions will provide DIA and CIO with the
flexibility that is essential to recruit effectively and to
retain highly competent employees with scientific, technical,
or other complex skills. This provision would allow the
Secretary of Defense to establish a basic rate of pay that does
not exceed the rate paid to Executive Level IV. It would also
authorize the Secretary of Defense to provide to DIA and CIO
employees other benefits, allowances, incentives, or
compensation that similarly situated federal employees are
eligible to receive under title 5, United States Code.

Section 502--Comparable benefits and allowances for civilian and
military personnel assigned to defense intelligence functions
overseas

Section 502 amends section 1605 of title 10, United States
Code, and section 431 of title 37, United States Code, to
provide to civilian personnel and members of the armed forces
serving with the Defense HUMINT Service outside the United
States benefits and allowances comparable to those provided by
the Secretary of State to officers and employees of the Foreign
Service.
The Secretary of Defense has the authority to provide to
civilian personnel and members of the armed forces assigned to
the Defense Attache Offices and the Defense Intelligence Agency
Liaison Offices outside the United States benefits and
allowances comparable to those provided by the Secretary of
State to officers and employees of the Foreign Service. This
authority was attained in 1983 (P.L. 98-215) because travel
allowances and related benefits for overseas personnel at the
Defense Attache Offices and the Defense Intelligence Agency
Liaison Offices were different from Foreign Service personnel
assigned overseas.
With the consolidation of Department of Defense human
intelligence into the Defense HUMINT Service, the Defense
Intelligence Agency will be responsible for a significant
number of employees overseas. Although a number of these
employees may be assigned to Defense Attache Offices or Defense
Intelligence Agency Liaison Offices outside the United States,
there will be some assigned to other overseas locations. Since
the Agency's authority to provide benefits and allowances to
overseas employees is limited to the Defense Attache Office and
the Defense Intelligence Agency Liaison Offices, inequities
will once again occur. Section 502 ensures comparable benefits
for civilian and military personnel assigned to the Defense
HUMINT Service overseas.

Section 503--Extension of authority to conduct intelligence commercial
activities

Section 503 would extend for three years, until December
31, 1998, the authority of the Secretary of Defense to initiate
intelligence commercial activities to provide cover security to
intelligence collection activities undertaken abroad by the
Defense Department. This authority permits the Secretary to
waive compliance with certain types of federal laws and
regulations pertaining to the management and administration of
federal entities when he determines that compliance by the
commercial cover activity would create an unacceptable risk of
compliance by the commercial cover activity would create an
unacceptable risk of compromise of an authorized intelligence
collection activity. This authority is similar to the authority
granted to the Central Intelligence Agency and the Federal
Bureau of Investigation.
The Secretary's intelligence commercial cover authority was
originally enacted as part of the FY 1991 Intelligence
Authorization Act (Public Law 102-88) August 14, 1991. However,
the intelligence commercial cover authority did not become
effective until December 2, 1992, after the statutorily
required promulgation and submission to Congress of a directive
from the Secretary governing the implementation of the statute.
Due to a variety of reasons, including the launching of a plan
in 1993 to create a new Defense Humint Service under which all
Defense Department Human intelligence activities are being
consolidated, this intelligence commercial activities authority
has not yet been used.
The Administration's intelligence authorization legislative
proposal sought repeal of the existing ``sunset'' clause, thus
making the Secretary intelligence commercial activities
authority permanent. Senior officials from both the Defense
Department and the Central Intelligence Agency testified to the
continuing and growing need for the Secretary to have this
authority under certain circumstances to provide bona fide
commercial cover that can withstand detailed investigation by
hostile foreign intelligence services as well as domestic
scrutiny. The Committee agreed to the extension of the
authority. However, in view of the lack of a record of use thus
far, Section 503 extends the authority for three years, instead
of the permanent extension originally sought by the
Administration. Three years should provide time for the
development and oversight of a track record on the use of this
authority without encouraging overuse of it, and particularly
its more elaborate and sophisticated applications. At the end
of that time, and based on its oversight of the record, the
Committee can address whether to make this authority permanent,
extend it for a specific period or allow it to lapse.

Section 504--Availability of funds for tier II UAV

The Fiscal year 1995 authorization bill authorized full
funding of the Defense Department's request for the Tier-2
Medium Altitude endurance Unmanned Aerial Vehicle (UAV)
Advanced Concept Technology Demonstration. The Fiscal Year 1995
defense appropriations bill included appropriations $20 million
above the amount authorized for the program. As these
additional funds were not specifically authorized, as required
by Section 504 of the National Security Act of 1947, the
Department of Defense could not spend them. To remedy this
problem, Section 504 of the bill specifically authorizes an
additional $20 million for this program.

Section 505--Temporary program to waive mandatory reductions to
annuities

During the current period of downsizing and reorganization,
NSA has diligently worked to meet Congressionally--mandated
work force reductions with good success. Three Voluntary
Separation Incentive Programs (VSIPs) have been conducted by
NSA to date, resulting in the attrition of almost 1900
employees. Although the VSIPs have enabled NSA to meet the
yearly strength cuts thus far, some disconcerting trends have
emerged. Interest in the program is sagging and smaller
percentages of employees eligible for the retirement separation
incentive are electing to retire. Of particular concern is the
drop in retirements of the early-out eligible population--NSA's
latest VSIP saw a 35 percent reduction in the percentage of
early-out eligible employees who elected to retire. Considering
that almost four times as many employees are eligible for
early-out retirement as compared to regular retirement, this
downward trend will have significant negative consequences for
the success of any future VSIPs. This points to the need for a
more imaginative and aggressive strategy to foster voluntary
attrition in order to forestall more draconian approaches.
To help ensure continued downsizing through voluntary
attrition, Section 505 authorizes the Director of the NSA to
waive the 2 percent retirement annuity reduction penalty
employees normally incur when accepting an early retirement (25
years of service at any age or with 20 years of service at age
50). The annuity reduction penalty is 2 percent for every year
under age 55. For example, if an employee retires at age 50,
with 25 years of service, his or her annuity is reduced 10
percent. This is a major impediment to employees who would
otherwise be willing to consider early retirement.
Although the provision was not cleared by the Office of
Management and Budget (OMB), NSA management strongly supports
this pilot program, a one time 2 percent waiver authorization,
as an innovative approach to downsizing that is not fraught
with the many negative consequences of involuntary reductions.
Working in a highly sensitive and technical arena, with strict
security clearance requirements, NSA is committed to exercising
every option possible to forestall or eliminate the possibility
of an involuntary Reduction-In-Force (RIF). Enhancing voluntary
attrition through the use of a 2 percent penalty waiver
initiative, as opposed to the use of involuntary reductions, is
the clear choice to minimize any negative impact to mission,
morale, and diversity while also reducing the possibility of
security-related problems resulting from a RIF.
Although this authority does not preclude offering both
separation pay under 5 U.S.C. Section 5597 and a waiver of the
penalty under 5 U.S.C. Section 8339(h), the Committee
recommends that the Secretary authorize the Agency to grant
both incentives only if required to achieve the desired
workforce reduction and with prior consultation with both the
House and Senate Intelligence Committees.
Under the program authorized by this section, the waiver of
the annuity reduction may be offered by the National Security
Agency only to employees within such occupational groups or
geographic locations, or subject to similar limitations or
conditions, as the Director of NSA may require and for a period
not to exceed ninety days during the period from 1 October 1995
to 30 September 1996.
The Committee intends under Section 505 for NSA to cover
the net present value of the long-run actuarial cost to the
retirement system of this retirement incentive program. Section
505 requires NSA to remit to the Office of Personnel Management
(OPM) for deposit in the Treasury to the credit of the Civil
Service Retirement and Disability Fund (CSRDF) the amount
equivalent to the additional costs of the unreduced annuities
payable under this section. Since the amount would be
determined by the number of respondents and the particulars of
their retirement circumstances, payment would have to occur
after the penalty waiver window. The Committee intends for this
to be done as soon as feasible, but no later than the end of
fiscal year 1996.
The Committee intends for the payment to be calculated for
the full life cycle of this retirement benefit. Using OPM's
standard inflation and pay growth assumptions and actuarial
tables, a total dollar amount should be determined that would
hold the Civil Service Retirement Fund harmless. This is done
by discounting the annual pension amounts by 7 percent per year
back to the present value of the differences between early and
regular pension payments for each retiree who received a
penalty waiver. These annual payments are also reduced to
reflect deaths in the penalty waiver population using OPM's
mortality tables for pensioners. Pension outlays are projected
into the future far enough to a low for the possibility that
the youngest penalty waiver retiree lives to the age of 109
years. Using the same OPM actuarial table and OMB's discount
rate, the Committee intends that NSA will also compensate OPM
for the 7 percent of salary that each penalty waiver retiree
would have paid to OPM if they had not retired early in
response to the penalty waiver but had instead worked until
they were 55 years of age and could retire without penalty.
The Committee plans to hold a public hearing on this
legislation. Representatives from NSA, the Office of Personnel
Management and others have been invited to address this
legislation. Testimony will be heard both on the effect it will
have at NSA as well as its implications for federal employees
at other agencies and departments that are beginning
congressionally-mandated downsizing.
The Committee commends NSA for seeking authorities that are
not presently available to the Director of the NSA to encourage
downsizing of its workforce while avoiding involuntary
terminations and reductions in force with the problems
associated with such reductions. This a one-time, 90-day
program, and the Committee does not intend to extend it. Should
the workforce at NSA fail to respond to this enhanced
incentive, and any others that the NSA exercises, then
involuntary separations options must be re-examined. If NSA is
forced to resort to involuntary terminations to meet its
workforce requirements, it must have a system of realistic
employee evaluations in place and available as a reference tool
for managers to rank employees and assess their relative skills
and contributions in meeting NSA's present and future mission.

title vi--technical amendments

Section 601--Clarification with respect to pay for Director or Deputy
Director of Central Intelligence appointed from commissioned
officers of the Armed Forces

Section 601 amends section 102(c)(3)(C) of the National
Security Act of 1947 by striking out the parenthetical
reference ``including military pay'' and inserting ``active
duty'' before ``commissioned.'' These technical corrections
clarify that a retired military officer appointed as Director
or Deputy Director of Central Intelligence can receive
compensation at the appropriate level of the Executive Schedule
under 5 U.S.C. Sec. 5313 (Director) or 5 U.S.C. Sec. 5314
(Deputy Director). This clearly reflects the intent of the
drafters of this provision which was included in the
Intelligence Authorization Act for Fiscal Year 1993 to ensure
that an active duty military officer appointed as Director or
Deputy Director only receives his or her military pay, not to
restrict the compensation of a retired military officer
appointed to one of the two positions.

Section 602--Change of designation of CIA Office of Security

Section 602 amends the CIA Information Act of 1984 to
reflect the recent reorganization of the CIA Office of Security
into the Office of Personnel Security and the Office of
Security Operations. The amendment will ensure that the Office
of Personnel Security, where the records intended to be subject
to the Act are kept, will continue to receive the benefit of
the Act's exception from search and review under the Freedom of
Information Act.

title vii

Section 701--Consolidation of watch component of the Bureau of
Intelligence and Research

The State Department's Bureau of Intelligence and Research
(INR) is one of three all-source analytical groups within the
Intelligence Community and the Secretary of State's own
intelligence support agency. Concomitant with these functions,
INR has its own 24-Hour Watch. Reaching this status and
capability has taken INR many years, in particular struggling
to achieve necessary independence from the Secretary's
Operations Center.
Like most other departments and agencies, the State
Department is seeking ways to reduce duplication and costs. The
Committee understands and supports these necessary economies.
As part of this effort, the Secretary of State has agreed to a
proposal that would eliminate INR's 24-Hour Watch and
consolidate its functions with the Secretary's Operations
Center. This reversal of over 30 years of policy calls into
question the future envisioned for INR within the State
Department and the Intelligence community.
The overwhelming priority of the Secretary's Operations
Center is the servicing of the Secretary and his principal
subordinates, and coordinating virtually all Operations Center
activities towards that goal. The Committee has grave doubts as
to the ability and willingness of the Operations Center to
devote to INR on a regular and consistent basis the types of
support it needs to maintain its functions. The Committee is
concerned that INR will be treated as a second-class customer
when it relies on the Operations Center for support.
Moreover, there are functions carried out by the INR 24-
Hour Watch for which the Secretary's Operations Center is not
currently well suited. The Committee is particularly concerned
about the Operations Center's ability to handle the large
amounts of highly sensitive information that regularly flow
into INR's 24-Hour Watch so that this information is properly
safeguarded and is transmitted to INR in a timely manner. The
Committee has learned that tests of the consolidated function
have revealed deficiencies in this area. Addressing these
shortcomings will likely entail costs that will offset the
savings expected to be gained by the consolidation.
The elimination of the 24-Hour Watch makes INR dependent on
the Operations Center for services vital to its functions. ONe
of INR's great strengths has been it close proximity to its
policy customers and its ability to be very responsive to their
needs. An INR that is little more than a subsidiary of the
Secretary's Operations Center is unlikely to be as responsive.
Moreover, an INR that is greatly reduced in function will be
less able to participate in national intelligence products.
Therefore, the Committee has sought a postponement of this
proposed consolidation until 60 days after the submission of a
report from the Secretary of State to this Committee, its
Senate counterpart and the committees with jurisdiction over
the State Department. The Secretary is asked to report on: (1)
steps to be taken within the Operations Center specifically to
support INR under this proposal; (2) steps to be taken to
update the ability of the Operating Center to handle highly
sensitive information and to distribute it in an efficient and
timely manner (this section is to be written in consultation
with the Director of Central Intelligence, given his
responsibility for the protection of intelligence sources and
methods); and (3) a comparison of the savings to be realized by
eliminating the INR 24-Hour Watch versus the costs necessary to
update the Operations Center.
committee position

On May 18, 1995, the Permanent Select Committee on
Intelligence, a quorum being present, approved the bill, as
amended by an amendment in the nature of a substitute, and, by
a recorded vote of 9 ayes to 0 noes, ordered it favorably
reported. On that recorded vote the Members present voted as
follows: Mr. Combest (Chairman)--aye; Mr. Young--aye; Mr.
Lewis--aye; Mr. Goss-- aye; Mr. McCollum--aye; Mr. Castle--aye;
Mr. Dicks--aye; Mr. Dixon--aye; Ms. Pelosi--aye. The Committee,
by voice vote, also authorized and directed the Chairman, or
his designee, to make a motion under rule XX of the House at
the appropriate time to expedite taking the bill to conference
with the Senate.

findings and recommendations of the committee on government reform and
oversight

With respect to clause 2(l)(3)(D) of rule XI of the House
of Representatives, the Committee has not received a report
from the Committee on Government Reform and Oversight
pertaining to the subject of this bill.

oversight findings

With respect to clause 2(l)(3)(A) of rule XI of the Rules
of the House of Representatives, the Committee held 13
hearings, as well as a number of briefings, on the classified
legislative, personnel, programmatic and budgetary issuers
raised by H.R. 1655. Testimony was heard from the Acting
Director of Central Intelligence, the Director of the National
Security Agency, the Director of the Defense Intelligence
Agency, numerous program managers and various other
knowledgeable witnesses on the activities and plans of the
Intelligence Community covered by this intelligence
authorization bill. The bill, as reported by the Committee,
reflects conclusions reached by the Committee in light of that
oversight activity.

fiscal year cost projections

The Committee has attempted pursuant to clause 7(a)(1) of
rule XIII of the Rules of the House of Representatives to
ascertain the outlays that will occur in fiscal year 1996 and
the five years following if these amounts are appropriated.
These estimates are contained in the classified annex and are
in accordance with those of the executive branch.

Congressional Budget Office Estimate

In compliance with clause 2(l)(3)(B) and (C) of rule XI of
the Rules of the House of Representatives, an estimate prepared
by the Congressional Budget Office submitted pursuant to
sections 308 and 403 of the Congressional Budget Act of 1974 is
as follows:
U.S. Congress,
Congressional Budget Office,
Washington, DC, June 12, 1995.
Hon. Larry Combest,
Chairman, Permanent Select Committee on Intelligence,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 1655, the
Intelligence Authorization Act for Fiscal Year 1996, as ordered
reported by the House Permanent Select Committee on
Intelligence on May 18, 1995.
The bill would affect direct spending and thus would be
subject to pay-as-you-go procedures under section 252 of the
Balanced Budget and Emergency Deficit Control Act.
If you wish further details on this estimate, we will be
pleased to provide them.
Sincerely,
James L. Blense,
(For June E. O'Neill).
Enclosure.
congressional budget office--cost estimate

1. Bill number: H.R. 1655.
2. Bill title: Intelligence Authorization Act for Fiscal
Year 1996.
3. Bill status: As ordered reported by the House Permanent
Select Committee on Intelligence on May 18, 1995.
4. Bill purpose: H.R. 1655 would authorize appropriations
for fiscal year 1996 for intelligence activities of the United
States government, the Community Management Staff of the
Director of Central Intelligence, and the Central Intelligence
Agency Retirement and Disability System (CIARDS).
5. Estimated cost to the Federal Government of titles I
(except sections 101-103), II, III (except section 301), IV, V,
and VI:

----------------------------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000
----------------------------------------------------------------------------------------------------------------
DIRECT SPENDING

Direct spending:
Estimated budget authority................ 0 -2 27 30 32 28
Estimated outlays......................... 0 -2 27 30 32 28

SPENDING SUBJECT TO APPROPRIATIONS ACTION

Spending under current law
Budget Authority \1\...................... 291 0 0 0 0 0
Estimated outlays......................... 291 38 22 9 0 0
Proposed changes:
Estimated authorization level \2\......... 0 310 (\3\) 4 5 (\3\)
Estimated outlays......................... 0 279 23 11 7 (\3\)
Spending under H.R. 1655:
Estimated authorization level............. 291 310 (\3\) 4 5 (\3\)
Estimated outlays......................... 291 317 45 20 7 (\3\)
----------------------------------------------------------------------------------------------------------------
\1\ The 1995 figure is the amount already appropriated.
\2\ Because parts of this bill are highly classified, CBO is unable to provide a full accounting of the bill's
costs over the 1996-2000 period and a comparison with the 1995 level.
\3\ Less than $500,000.

CBO was unable to obtain the necessary information to
estimate the costs for Title I (except section 104) and section
301 of Title III of this bill because they are classified at a
level above clearances now held by CBO employees. The estimated
costs in the above table, therefore, reflect only the costs of
section 104 and Titles II, III (except section 301), IV, V, and
VI.
6. Basis of estimate:
For proposes of this estimate, CBO assumed that H.R. 1655
will be enacted by October 1, 1995, and that the full amounts
authorized will be appropriated for fiscal year 1996. Outlays
are estimated according to historical spending patterns for
intelligence programs.

direct spending

CIA separation incentives.--Section 401 would allow the
Central Intelligence Agency (CIA) to offer separation incentive
payments to employees from the end of fiscal year 1997 to the
end of fiscal year 1999. Additional retirement costs would
occur in the near term because employees who retire under this
program would receive their annuities earlier than they would
otherwise. The cost of these annuities would constitute direct
spending. CBO estimates no costs to occur in 1996 and 1997 as a
result of section 401. However, direct spending costs are
estimated to be $2 million in 1998, $3 million in 1999, and $1
million in 2000.
Based on projections from the CIA, CBO estimates that 550
employees would be offered an incentive payment in 1998 and 700
in 1999. The CIA expects that one quarter of those offered an
incentive payment would take the incentive and retire. The
estimate assumes that about 60 percent of the retirees would
have retired anyway, without the incentive. The estimate
assumes that the remaining 40 percent who accept the incentive
would retire one or two years earlier than they would have
otherwise.
Changes in annuities for NSA retirees.--Section 505 would
allow employees at the National Security Agency (NSA) enrolled
in the Civil Service Retirement System (CSRS) who retire before
reaching age 55 to receive unreduced annuities. Under current
law, employees who take early retirement receive a permanent
reduction in their annuity of 2 percent per year for each year
under age 55. Eligibility for benefits under section 505 would
be limited to a 90-day period established by the Director of
the NSA during fiscal year 1996. This section also requires NSA
to deposit to the Civil Service Trust Fund amounts necessary to
cover the cost to the retirement system of this retirement
incentive program. Receipt of these agency contributions would
cause the net impact on direct spending in 1996 to be $2
million. After 1996, the bill would have net direct spending
costs of $27 million in 1997, $28 million in 1998, $29 million
in 1999, and $27 million in 2000.
Since fiscal year 1993, NSA has had the authority to offer
voluntary separation incentive payments of up to $25,000 to
encourage employees to retire or quit. The authority lasts
until the end of fiscal year 1999. According to NSA, the
separation incentive payment program has not been successful in
inducing enough employees who are eligible for early retirement
to leave. NSA offered incentive payments twice and about 6
percent of eligible employees took an incentive during the
first offering and 4 percent took the second offering. Although
the penalty for early retirees under age 55 has never been
waived before, CBO assumes that many more people would be
induced to leave since the penalty has a significant impact on
a retiree's lifetime benefit. For example, employees retiring
at age 50 under current law would receive a permanent reduction
in their annuities of 10 percent. This estimate assumes that 25
percent of NSA employees eligible for early retirement would
retire with unreduced annuities.
Direct spending costs would result for two reasons. First,
some employees (NSA projects about 80) who would have taken
early retirement under current law with reduced annuities would
now retire with larger, unreduced benefits. Second, many
employees under age 55, who would have waited for their normal
retirement age, assumed to be age 58, would accelerate their
retirement. The benefits paid to these estimated 925 retirees
constitute direct spending. Based on data supplied by NSA,
which shows the distribution by age of employees eligible for
early retirement, CBO estimates the average age of an employee
taking advantage of the penalty waiver to be 50.
Section 505 would also require NSA to make special
contributions to the retirement trust fund for each person who
retires before reaching age 55 with an unreduced annuity.
Section 505(d) is intended to require NSA to contribute amounts
necessary to cover the long-run actuarial cost to the
retirement system of this retirement incentive program.
Although CBO believes that the language in the reported bill
does not adequately define cost, the cost estimate is based on
the explanation in the Committee's report and section-by-
section analysis. According to the report, this payment would
occur after the penalty waiver window, but no later than the
end of fiscal year 1996. The payment would recognize the costs
associated with not reducing the advanced benefit payments of
early retirees and forgoing the retirement contributions the
employees would have made had they remained in federal service.
To estimate the contributions required under this section, CBO
used a preliminary Office of Personnel Management (OPM)
analysis, which estimates the actuarial cost of the penalty
waiver. Based on the OPM analysis, CBO estimates that the
average cost is 57 percent of final salary for each person
retiring before reaching age 55 with an unreduced annuity. The
receipt of these payments from NSA into the trust fund would
offset retirement benefit costs.
Thrift savings plan (TSP) forfeiture.--Section 304 would
allow forfeiture of the U.S. government contribution to the TSP
under the Federal Employees Retirement System, along with
interest, if an employee is convicted of national security
offenses. According to the CIA, savings from this provision
would not exceed $35,000 annually.
Spousal pension benefits.--Section 305 would allow
restoration of spousal pension benefits to those spouses who
cooperate in criminal investigations and prosecutions for
national security offenses. According to the CIA, costs from
this provision would not exceed $35,000 annually.

authorizations of Appropriations

Section 104 would authorize appropriations of $80.7 million
for 1996 for the Intelligence Community Management Account of
the Director of Central Intelligence (DCI). Similarly, section
201 specifies an authorization of appropriations for a
contribution to the Central Intelligence Agency Retirement and
Disability Fund of $213.9 million.
In addition to the added retirement costs, section 401
(discussed above under direct spending) would increase
discretionary spending for incentive costs. The cash incentives
would cost $4 million in 1998 and $5 million in 1999. CBO
assumes that the savings in salary and benefits from these
reductions would be incurred under current law as part of the
anticipated reduction in the CIA workforce. Thus, these savings
would not be a result of this bill and would not offset the
cost of incentive payments in this estimate.
Section 502 would extend comparable benefits and allowances
to civilian and military personnel assigned to defense
intelligence functions overseas. According to the Defense
Intelligence Agency, this provision would increase personnel
costs by approximately $200,000 annually.
In addition to the added retirement costs, section 505
would require NSA to make a one-time payment to the CSRS trust
fund to cover the long-run actuarial cost to the retirement
system of this incentive program. CBO estimates that this
payment would total $15 million in 1996.
7. Pay-as-you-go considerations: The Balanced Budget and
Emergency Deficit Control Act of 1985 sets up pay-as-you-go
procedures for legislation affecting direct spending or
receipts through 1998. CBO estimates that H.R. 1655 would have
the following pay-as-you-go impact:

------------------------------------------------------------------------
1995 1996 1997 1998
------------------------------------------------------------------------
Change in outlays................... 0 -2 27 30
Change in receipts.................. (\1\) (\1\) (\1\) (\1\)
------------------------------------------------------------------------
\1\ Not applicable.

8. Estimated cost to State and local governments: None.
9. Estimate comparison: None.
10. Previous CBO estimate: None
11. Estimate prepared by: Wayne Boyington and Elizabeth
Chambers.
12. Estimate approved by:
Robert A. Sunshine
(For Paul N. Van de Water,
Assistant Director for Budget Analysis).

Committee Cost Estimates

The Committee is in overall agreement with the estimate of
the Congressional Budget Office (CBO). Nevertheless, with
regard to that part of the estimate dealing with the limited,
one-time authority for the Director of the National Security
Agency (NSA) to waive the 2 percent per year reduction in the
annuity of Civil Service Retirement System (CSRS) participants
who retire before the age of 55, the Committee would note two
things. First, given the technical rules under which the CBO
must prepare its estimates and the assumptions used, the
Committee understands and accepts the estimate on this
provision. Second, those technical rules do not take into
account as cost saving offsets the salary savings that will
occur to the Government from those NSA employees induced by the
2 percent waiver to retire earlier than they otherwise would
because, unlike the annuity payments, the foregone salary
payments are not direct spending.
However, the cost analysis done by NSA, which takes these
salary savings into account, demonstrates a net life cycle cost
savings to the Government, even after offsetting the cost of
NSA's contribution to the CSRS trust fund to cover the present
value of providing an unreduced annuity to early retirees under
this provision. In fact, based on an assumption that 20 percent
of the eligible NSA population takes advantage of this one-time
early retirement option, NSA estimates that the Government
would realize a net life cycle cost savings of $146.5 million.

Inflationary Impact Statement

Pursuant to clause 2(l)(4) of rule XI of the Rules of the
House of Representatives, the Committee has attempted to
estimate the inflationary impact of enactment of the bill.
The Committee finds no adequate method to identify the
inflationary impact of this legislation. The bill does not
provide specific budget authority but rather authorizations for
appropriations. Thus, any inflationary impact would depend on
the amounts actually appropriated and the effects that supplies
of materials, production capacity or other economic resources
would have on prices and costs in the operation of the national
economy.
Changes in Existing Law Made by the Bill, as Reported

In compliance with clause 3 of rule XIII of the Rules of the
House of Representatives, changes in existing law made by the
bill, as reported, are shown as follows (existing law proposed
to be omitted is enclosed in black brackets, new matter is
printed in italics, existing law in which no change is proposed
is shown in roman):

NATIONAL SECURITY ACT OF 1947
TABLE OF CONTENTS

Sec. 2. Declaration of policy.
* * * * * * *
TITLE IX--APPLICATION OF SANCTIONS LAWS TO INTELLIGENCE ACTIVITIES
Sec. 901. Stay of Sanctions.
Sec. 902. Reports.
TITLE I--COORDINATION FOR NATIONAL SECURITY

* * * * * * *
central intelligence agency

Sec. 102. (a) * * *
* * * * * * *
(c)(1) * * *
* * * * * * *
(3)(A) A commissioned officer of the Armed Forces appointed
[pursuant to paragraph (2) or (3)] to the position of Director
or Deputy Director, while serving in such position--
(i) shall not be subject to supervision or control by
the Secretary of Defense or by any officer or employee
of the Department of Defense;
(ii) shall not exercise, by reason of the officer's
status as a commissioned officer, any supervision or
control with respect to any of the military or civilian
personnel of the Department of Defense except as
otherwise authorized by law; and
(iii) shall not be counted against the numbers and
percentages of commissioned officers of the rank and
grade of such officer authorized for the military
department of which such officer is a member.
(B) Except as provided in clause (i) or (ii) of [paragraph
(A)] subparagraph (A), the appointment of a commissioned
officer of the Armed Forces [pursuant to paragraph (2) or (3)]
to the position of Director or Deputy Director shall in no way
affect the status, position, rank, or grade of such officer in
the Armed Forces, or any emolument, perquisite, right,
privilege, or benefit incident to or arising out of any such
status, position, rank, or grade.
[(C) A commissioned officer of the Armed Forces appointed
pursuant to subsection (a) or (b), while serving in such
position, shall continue to receive military pay and allowances
(including retired pay) payable to a commissioned officer of
the officer's grade and length of service for which the
appropriate military department shall be reimbursed from funds
available to the Director of Central Intelligence.]
(C) A commissioned officer of the Armed Forces on active duty
who is appointed to the position of Director or Deputy
Director, while serving in such position and while remaining on
active duty, shall continue to receive military pay and
allowances. Funds from which such pay and allowances are paid
shall be reimbursed from funds available to the Director.
* * * * * * *

TITLE VII--PROTECTION OF OPERATIONAL FILES OF THE CENTRAL INTELLIGENCE
AGENCY

exemption of certain operational files from search, review,
publication, or disclosure

Sec. 701. (a) * * *
(b) For the purposes of this title the term ``operational
files'' means--
(1) * * *
* * * * * * *
(3) files of the [Office of Security] Office of
Personnel Security which document investigations
conducted to determine the suitability of potential
foreign intelligence or counterintelligence sources;
except that files which are the sole repository of disseminated
intelligence are not operational files.
* * * * * * *
TITLE IX--APPLICATION OF SANCTIONS LAWS TO INTELLIGENCE ACTIVITIES

stay of sanctions

Sec. 901. Notwithstanding any other provision of law, the
President may stay the imposition of an economic, cultural,
diplomatic, or other sanction or related action by the United
States Government concerning a foreign country, organization,
or person when the President determines that to proceed without
delay would seriously risk the compromise of an ongoing
criminal investigation or an intelligence source or method. The
President shall lift any such stay when the President
determines that such stay is no longer necessary to that
purpose.

reports

Sec. 902. Whenever any stay is imposed pursuant to section
901, and whenever the duration of any such stay exceeds 120
days, the President shall promptly report to the Select
Committee on Intelligence of the Senate and the Permanent
Select Committee on Intelligence of the House of
Representatives the rationale and circumstances that led the
President to exercise the stay authority with respect to an
intelligence source or method, and to the Judiciary Committees
of the Senate and the House of Representatives the rationale
and circumstances that led the President to exercise the stay
authority with respect to an ongoing criminal investigation.
----------

TITLE 5, UNITED STATES CODE

* * * * * * *

PART III--EMPLOYEES

* * * * * * *

Subpart G--Insurance and Annuities

* * * * * * *

CHAPTER 83--RETIREMENT

* * * * * * *

SUBCHAPTER II--FORFEITURE OF ANNUITIES AND RETIRED PAY

* * * * * * *

Sec. 8318. Restoration of annuity or retired pay

(a) * * *
* * * * * * *
(e) The spouse of an individual whose annuity or retired pay
is forfeited under section 8312 or 8313 after the date of
enactment of this subsection shall be eligible for spousal
pension benefits if the Attorney General of the United States
determines that the spouse fully cooperated with Federal
authorities in the conduct of a criminal investigation and
subsequent prosecution of the individual which resulted in such
forfeiture.
* * * * * * *

CHAPTER 84--FEDERAL EMPLOYEES' RETIREMENT SYSTEM

* * * * * * *

SUBCHAPTER III--THRIFT SAVINGS PLAN

* * * * * * *

Sec. 8432. Contributions

(a) * * *
* * * * * * *
(g)(1) * * *
* * * * * * *
(5)(A) Notwithstanding any other provision of law,
contributions made by the Government for the benefit of an
employee or Member under subsection (c), and all earnings
attributable to such contributions, shall be forfeited if the
annuity of the employee or Member, or that of a survivor or
beneficiary, is forfeited under subchapter II of chapter 83.
(B) Forfeitures under this paragraph shall occur only if the
offenses upon which the requisite annuity forfeitures are based
happened subsequent to the enactment of this paragraph.
* * * * * * *
----------

SECTION 2 OF THE CENTRAL INTELLIGENCE AGENCY VOLUNTARY SEPARATION PAY
ACT

SEC. 2. SEPARATION PAY.

(a) * * *
* * * * * * *
(f) Termination.--No amount shall be payable under this
section based on any separation occurring after [September 30,
1997] September 30, 1999.
* * * * * * *
----------

TITLE 10, UNITED STATES CODE

Subtitle A--General Military Law

* * * * * * *

PART I--ORGANIZATION AND GENERAL MILITARY POWERS

* * * * * * *

CHAPTER 21--DEPARTMENT OF DEFENSE

INTELLIGENCE MATTERS

* * * * * * *

SUBCHAPTER II--INTELLIGENCE COMMERCIAL ACTIVITIES

* * * * * * *

Sec. 431. Authority to engage in commercial activities as security for
intelligence collection activities

(a) Authority.--The Secretary of Defense, subject to the
provisions of this subchapter, may authorize the conduct of
those commercial activities necessary to provide security for
authorized intelligence collection activities abroad undertaken
by the Department of Defense. No commercial activity may be
initiated pursuant to this subchapter after December 31, [1995]
1998.
* * * * * * *
PART II--PERSONNEL

* * * * * * *

CHAPTER 83--DEFENSE INTELLIGENCE AGENCY AND CENTRAL IMAGERY OFFICE
CIVILIAN PERSONNEL

* * * * * * *

[Sec. 1604. Civilian personnel management

[(a) The Secretary of Defense may, without regard to the
provisions of any other law relating to the number,
classification, or compensation of employees--
[(1) establish such positions for civilian officers
and employees in the Defense Intelligence Agency and
the Central Imagery Office, as may be necessary to
carry out the functions of such Agency;
[(2) appoint individuals to such positions; and
[(3) fix the compensation of such individuals for
service in such positions.
[(b) The Secretary of Defense shall, subject to subsection
(c), fix the rates of basic pay for positions established under
subsection (a) in relation to the rates of basic pay provided
in the General Schedule under section 5332 of title 5 for
positions subject to such Schedule which have corresponding
levels of duties and responsibilities. Except in the case of an
officer or employee of the Defense Intelligence Agency or the
Central Imagery Office serving as a member of the Defense
Intelligence Senior Executive Service, no officer or employee
of the Defense Intelligence Agency or the Central Imagery
Office may be paid basic compensation at a rate in excess of
the highest rate of basic pay contained in such General
Schedule.
[(c) The Secretary of Defense is authorized, consistent with
section 5341 of title 5, to adopt such provisions of such title
as provide for prevailing rate systems of basic pay and to
apply such provisions to positions in or under which the
Defense Intelligence Agency or the Central Imagery Office may
employ individuals described by section 5342(a)(2)(A) of such
title.
[(d) In addition to the basic compensation payable under
subsection (b), officers and employees of the Defense
Intelligence Agency and the Central Imagery Office who are
citizens or nationals of the United States and who are
stationed outside the continental United States or in Alaska
may be paid compensation, in accordance with regulations
prescribed by the Secretary of Defense, not in excess of an
allowance authorized to be paid by section 5941(a) of title 5
for employees whose rates of basic pay are fixed by statute.
Such allowances shall be based on--
[(1) living costs substantially higher than in the
District of Columbia;
[(2) conditions of environment which differ
substantially from conditions of environment in the
continental United States and warrant an allowance as a
recruitment incentive; or
[(3) both the factors described in paragraphs (1) and
(2).
[(e)(1) Notwithstanding any other provision of law, the
Secretary of Defense may terminate the employment of any
civilian officer or employee of the Defense Intelligence Agency
or the Central Imagery Office whenever he considers that action
to be in the interests of the United States and he determines
that the procedures prescribed in other provisions of law that
authorize the termination of the employment of such officer or
employees cannot be invoked in a manner consistent with the
national security. The decisions of the Secretary under this
paragraph are final and may not be appealed or reviewed outside
the Department of Defense. The Secretary of Defense shall
promptly notify the Permanent Select Committee on Intelligence
of the House of Representatives and the Select Committee on
Intelligence of the Senate whenever this termination authority
is exercised.
[(2) Any termination of employment under this subsection
shall not affect the right of the officer or employee involved
to seek or accept employment with any other department or
agency of the United States if he is declared eligible for such
employment by the Director of the Office of Personnel
Management.
[(3) The Secretary of Defense may delegate authority under
this subsection only to the Deputy Secretary of Defense, the
Director of the Defense Intelligence Agency, the Director of
the Central Imagery Office, or all three. An action to
terminate any civilian officer or employee by any such officer
shall be appealable to the Secretary of Defense.]
Sec. 1604. Civilian personnel management

(a) General Personnel Authority.--The Secretary of Defense
may, without regard to the provisions of any other law relating
to the number, classification, or compensation of Federal
employees--
(1) establish such positions for employees in the
Defense Intelligence Agency and the Central Imagery
Office as the Secretary considers necessary to carry
out the functions of that Agency and Office, including
positions designated under subsection (f) as Defense
Intelligence Senior Level positions;
(2) appoint individuals to those positions; and
(3) fix the compensation for service in those
positions.
(b) Authority To Fix Rates of Basic Pay; Other Allowances and
Benefits.--(1) The Secretary of Defense shall, subject to
subsection (c), fix the rates of basic pay for positions
established under subsection (a) in relation to the rates of
basic pay provided in subpart D of part III of title 5 for
positions subject to that title which have corresponding levels
of duties and responsibilities. Except as otherwise provided by
law, an employee of the Defense Intelligence Agency or the
Central Imagery Office may not be paid basic pay at a rate in
excess of the maximum rate payable under section 5376 of title
5.
(2) The Secretary of Defense may provide employees of the
Defense Intelligence Agency and the Central Imagery Office
compensation (in addition to basic pay under paragraph (1)) and
benefits, incentives, and allowances consistent with, and not
in excess of the levels authorized for, comparable positions
authorized by title 5.
(c) Prevailing Rates Systems.--The Secretary of Defense may,
consistent with section 5341 of title 5, adopt such provisions
of that title as provide for prevailing rate systems of basic
pay and may apply those provisions to positions in or under
which the Defense Intelligence Agency or the Central Imagery
Office may employ individuals described by section
5342(a)(2)(A) of such title.
(d) Allowances Based on Living Costs and Environment for
Employees Stationed Outside Continental United States or in
Alaska.--(1) In addition to the basic compensation payable
under subsection (b), employees of the Defense Intelligence
Agency and the Central Imagery Office described in paragraph
(3) may be paid an allowance, in accordance with regulations
prescribed by the Secretary of Defense, at a rate not in excess
of the allowance authorized to be paid under section 5941(a) of
title 5 for employees whose rates of basic pay are fixed by
statute.
(2) Such allowance shall be based on--
(A) living costs substantially higher than in the
District of Columbia;
(B) conditions of environment which--
(i) differ substantially from conditions of
environment in the continental United States;
and
(ii) warrant an allowance as a recruitment
incentive; or
(C) both of those factors.
(3) This subsection applies to employees who--
(A) are citizens or nationals of the United States;
and
(B) are stationed outside the continental United
States or in Alaska.
(e) Termination of Employees.--(1) Notwithstanding any other
provision of law, the Secretary of Defense may terminate the
employment of any employee of the Defense Intelligence Agency
or the Central Imagery Office if the Secretary--
(A) considers such action to be in the interests of
the United States; and
(B) determines that the procedures prescribed in
other provisions of law that authorize the termination
of the employment of such employee cannot be invoked in
a manner consistent with the national security.
(2) A decision by the Secretary of Defense to terminate the
employment of an employee under this subsection is final and
may not be appealed or reviewed outside the Department of
Defense.
(3) The Secretary of Defense shall promptly notify the
Permanent Select Committee on Intelligence of the House of
Representatives and the Select Committee on Intelligence of the
Senate whenever the Secretary terminates the employment of any
employee under the authority of this subsection.
(4) Any termination of employment under this subsection shall
not affect the right of the employee involved to seek or accept
employment with any other department or agency of the United
States if that employee is declared eligible for such
employment by the Director of the Office of Personnel
Management.
(5) The authority of the Secretary of Defense under this
subsection may be delegated only to the Deputy Secretary of
Defense, the Director of the Defense Intelligence Agency (with
respect to employees of the Defense Intelligence Agency), and
the Director of the Central Imagery Office (with respect to
employees of the Central Imagery Office). An action to
terminate employment of an employee by any such officer may be
appealed to the Secretary of Defense.
(f) Defense Intelligence Senior Level Positions.--(1) In
carrying out subsection (a)(1), the Secretary may designate
positions described in paragraph (3) as Defense Intelligence
Senior Level positions. The total number of positions
designated under this subsection and in the Defense
Intelligence Senior Executive Service under section 1601 of
this title may not exceed the number of positions in the
Defense Intelligence Senior Executive Service as of June 1,
1995.
(2) Positions designated under this subsection shall be
treated as equivalent for purposes of compensation to the
senior level positions to which section 5376 of title 5 is
applicable.
(3) Positions that may be designated as Defense Intelligence
Senior Level positions are positions in the Defense
Intelligence Agency and Central Imagery Office that (A) are
classified above the GS-15 level, (B) emphasize functional
expertise and advisory activity, but (C) do not have the
organizational or program management functions necessary for
inclusion in the Defense Intelligence Senior Executive Service.
(4) Positions referred to in paragraph (3) include Defense
Intelligence Senior Technical positions and Defense
Intelligence Senior Professional positions. For purposes of
this subsection--
(A) Defense Intelligence Senior Technical positions
are positions covered by paragraph (3) that involve any
of the following:
(i) Research and development.
(ii) Test and evaluation.
(iii) Substantive analysis, liaison, or
advisory activity focusing on engineering,
physical sciences, computer science,
mathematics, biology, chemistry, medicine, or
other closely related scientific and technical
fields.
(iv) Intelligence disciplines including
production, collection, and operations in close
association with any of the activities
described in clauses (i), (ii), and (iii) or
related activities; and
(B) Defense Intelligence Senior Professional
positions are positions covered by paragraph (3) that
emphasize staff, liaison, analytical, advisory, or
other activity focusing on intelligence, law, finance
and accounting, program and budget, human resources
management, training, information services, logistics,
security, and other appropriate fields.
(g) ``Employee'' Defined as Including Officers.--In this
section, the term ``employee'', with respect to the Defense
Intelligence Agency or the Central Imagery Office, includes any
civilian officer of that Agency or Office.
Sec. 1605. Benefits for certain employees of the Defense Intelligence
Agency
(a)(1) The Secretary of Defense may provide to civilian
personnel [of the Department of Defense who are United States
nationals, who are assigned to Defense Attache Offices and
Defense Intelligence Agency Liaison Offices outside the United
States, and who are designated by the Secretary of Defense for
the purposes of this subsection,] described in subsection (d)
allowances and benefits comparable to those provided by the
Secretary of State to officers and employees of the Foreign
Service under paragraphs (2), (3), (4), (5), (6), (7), (8), and
(13) of section 901 and sections 705 and 903 of the Foreign
Service Act of 1980 (22 U.S.C. 4081 (2), (3), (4), (5), (6),
(7), (8), and (13), 4025, 4083) and under section 5924(4) of
title 5.
(2) The Secretary may also provide to any such civilian
personnel special retirement accrual benefits in the same
manner provided for certain officers and employees of the
Central Intelligence Agency in section 303 of the Central
Intelligence Agency Retirement Act (50 U.S.C. 2153) and in
section 18 of the Central Intelligence Agency Act of 1949 (50
U.S.C. 403r).
(b) The authority of the Secretary of Defense to make
payments under subsection (a) is effective for any fiscal year
only to the extent that appropriated funds are available for
such purpose.
[(c) Regulations issued pursuant to subsection (a) shall be
submitted to the Committee on Armed Services and the Permanent
Select Committee on Intelligence of the House of
Representatives and the Committee on Armed Services and the
Select Committee on Intelligence of the Senate before such
regulations take effect.]
(c) Regulations prescribed under subsection (a) may not take
effect until the Secretary of Defense has submitted such
regulations to--
(1) the Committee on Armed Services and the Select
Committee on Intelligence of the Senate; and
(2) the Committee on National Security and the
Permanent Select Committee on Intelligence of the House
of Representatives.
(d) Subsection (a) applies to civilian personnel of the
Department of Defense who--
(1) are United States nationals;
(2) in the case of employees of the Defense
Intelligence Agency, are assigned to duty outside the
United States and, in the case of other employees, are
assigned to Defense Attache Offices or Defense
Intelligence Agency Liaison Offices outside the United
States; and
(3) are designated by the Secretary of Defense for
the purposes of subsection (a).
* * * * * * *
----------

SECTION 431 OF TITLE 37, UNITED STATES CODE

Sec. 431. Benefits for certain members assigned to the Defense
Intelligence Agency

(a) The Secretary of Defense may provide to members of the
armed forces [who are assigned to Defense Attache Offices and
Defense Intelligence Agency Liaison Offices outside the United
States and who are designated by the Secretary of Defense for
the purposes of this subsection] described in subsection (e)
allowances and benefits comparable to those provided by the
Secretary of State to officers and employees of the Foreign
Service under paragraphs (2), (3), (4), (6), (7), (8), and (13)
of section 901 and sections 705 and 903 of the Foreign Service
Act of 1980 (22 U.S.C. 4081 (2), (3), (4), (6), (7), (8), and
(13), 4025, 4083) and under section 5924(4) of title 5.
* * * * * * *
[(d) Regulations prescribed pursuant to subsection (a) shall
be submitted to the Committee on Armed Services and the
Permanent Select Committee on Intelligence of the House of
Representatives and the Committee on Armed Services and the
Select Committee on Intelligence of the Senate before such
regulations take effect.]
(d) Regulations prescribed under subsection (a) may not take
effect until the Secretary of Defense has submitted such
regulations to--
(1) the Committee on Armed Services and the Select
Committee on Intelligence of the Senate; and
(2) the Committee on National Security and the
Permanent Select Committee on Intelligence of the House
of Representatives.
(e) Subsection (a) applies to members of the armed forces
who--
(1) are assigned--
(A) to Defense Attache Offices or Defense
Intelligence Agency Liaison Offices outside the
United States; or
(B) to the Defense Intelligence Agency and
engaged in intelligence-related duties outside
the United States; and
(2) are designated by the Secretary of Defense for
the purposes of subsection (a).
MINORITY AND ADDITIONAL VIEWS

introduction

We wish to make clear that our support for the bill as
reported does not reflect complete satisfaction with all of its
provisions. We have particular reservations, which we hope will
be addressed in conference, with the Committee's position on
the programs managed by the National Reconnaissance Office
(NRO), the funding level for the Environmental Task Force, and
the implementation of the provision for the automatic
declassification of certain records as required by Executive
Order 12958.
The classified annex to this report contains a thorough
discussion of our concerns about actions the Committee
recommends with respect to certain NRO activities. These
actions involve programs which, because of their classified
status, cannot be discussed even in general terms here. The
actions, however, are predicated on critical conclusions about
the management of the NRO which we do not believe are
justified. We urge that our views be carefully considered
because the Committee's actions represent a significant change
of direction for the NRO. This change has the potential for
sizeable risk and substantial long-term costs and, in our
judgment, the evidentiary basis for it is not compelling.
The classified annex also contains additional views of
Congressman Dicks on a maritime collection program.

declassification

Section 308 of the bill limits each agency of the National
Foreign Intelligence Program to use no more than $2.5 million
to carry out section 3.4 of Executive Order 12958 on Classified
National Security Information. This executive order, signed by
President Clinton on April 17, 1995, prescribes a uniform
system for classifying, safeguarding, and declassifying
national security information. It is intended to protect
information critical to our national security, but recognizes
that the nation's democratic principles require that the
America people be informed of the activities of their
government when it is possible to do so. Section 3.4 requires
that, unless grounds for an exemption exist, classified
information contained in records that are over 25 years old,
and of permanent historical value, shall be automatically
declassified within five years of the order whether or not the
records have been reviewed. Information is exempt from
declassification if, among other reasons, its release can be
expected to reveal the identity of human sources; impair U.S.
cryptologic systems or activities; undermine ongoing diplomatic
activities; or assist in the development of weapon of mass
destruction.
Section 3.4 has proven to be controversial in the
Committee, largely because of concerns about the costs of
reviewing documents to determine whether they contain
information that fits in one of the nine categories for
exemption. In part these concerns are the product of the widely
varying estimates of the costs of compliance generated by
intelligence agencies. As an example, one agency informed the
Committee in writing in 1995 that its costs to comply with
Section 3.4 would be an amount thirty times greater than the
estimate the same agency provided to the Community Management
Staff during the interagency review of the draft executive
order in 1994.
Our lack of confidence in the current estimates of the cost
of compliance are the result of the Community Management
Staff's failure to develop an adequate methodology to account
for the costs of protecting classified information under the
former executive order despite this Committee's repeated
requests that it do so. The Joint Security Commission,
chartered by the Secretary of Defense and the Director of
Central Intelligence to review and recommend changes to
security and classification procedures, also expressed its
frustration with the efforts of the intelligence community to
capture security costs, calling the data produced by National
Foreign Intelligence Program agencies ``incomplete,
inconsistent, and not coherently integrated.'' Nevertheless,
additional information should be available in July when certain
intelligence agencies are required under Section 702 of Public
Law 103-359 to submit a phased plan to implement the
declassification provisions of Executive Order 12958. The plans
are to include an accounting of archived classified materials,
levels of classification, types of storage media and locations,
review methods to be employed, and estimated costs of the
declassification activity itself, as well as an assessment of
the projected costs of classification management activities for
the succeeding five years.
While uncertainties over costs might under some
circumstances be grounds for not proceeding with an activity,
we believe that a carefully proscribed system for declassifying
those documents which remain classified for no reason other
than inertia is long overdue. Accordingly, we are pleased that
the Committee agreed to require the agencies of the National
Foreign Intelligence Program to begin to comply with Section
3.4, while limiting the cost of compliance in fiscal year 1996
to no more than $2.5 million per agency. This should give the
agencies and the Committee a chance to better assess actual
compliance costs rather than speculative ones. It should also,
in combination with the requirement that the President submit a
specific budget request for implementation of Section 3.4 in
the fiscal year 1997 budget request, clarify the extent of the
effort in comparison to other classification management
expenditures in the future.
environmental task force

We are encouraged that the Committee agreed to the
continuation of the Environmental Task Force (ETF), although at
only $5 million for fiscal year 1996. We would have preferred
funding authorized at or near the $17.6 million level requested
by the President and believe the Committee should reconsider
its reduction in the program prior to the conference on the
bill.
The Environmental Task Force (ETF) is a collection of
several efforts designed to make environmental information
derived from intelligence assets more accessible to the general
public, the scientific community, and personnel from federal
agencies that do not currently receive top secret intelligence
products. The information has national security, as well as
environmental, applications. For example, the ETF has helped to
educate senior defense officials of potential dual-use
applications for national technical assets--with particular
benefit for the development of naval warfare doctrine.
The ETF began in 1993 when approximately 60 highly esteemed
hydrologists, geologists, and other environmental scientists
from universities around the country received security
clearances to review the potential application of classified
technologies and data to environmental problems. These
scientists (now known as the MEDEA group) concluded that the
intelligence community's holdings and technologies are unique
and would be valuable for scientific research. This led to
President Clinton signing Executive Order 12951, on February
22, 1995, declassifying the Corona, Lanyard, and Argon
satellites and their associated images, and directing a
complete set of the imagery (a total of 860,000 images
collected between 1960 and 1972) be transferred to the National
Archives and the Department of the Interior. (We understand
that when four of these images were released on the Internet
over 500,000 requests for the data were received the next day.)
In addition, the Environmental Task Force includes an
effort involving intelligence community agencies and civil
environmental agencies in the Departments of Commerce, Defense,
Energy, Interior, Transportation, the National Aeronautics and
Space Administration the Environmental Protection Agency, and
the National Science Foundation to allow the environmental
agencies to utilize data collected by national technical assets
on problems such as disaster relief assessments, environmental
science, and international environmental policy. This effort
has involved developing protocols for tasking systems,
collecting and processing imagery, and disseminating images to
appropriately cleared personnel. A fully operational system
should be in place, if funding is maintained at the requested
level, within four fiscal years. The ETF also involves
reviewing whether slight modifications in planned
reconnaissance technology could bring corresponding benefits to
environmental science.
Furthermore, the ETF has provided support for the first
joint U.S.-Russian Ecological/Environmental Seminar, led by Dr.
D. James Baker, Under Secretary of Commerce for Oceans and
Atmosphere and Administrator of the National Oceanic and
Atmospheric Administration, and Dr. Viktor I. Danilov-Danilyan,
Minister of the Russian Ministry of Environmental Protection
and Natural Resources. This seminar brought together for five
days in Washington senior U.S. and Russian scientists, policy
makers, and military and intelligence officials for an
unclassified exchange of ideas and information including
discussions of areas in which remote sensing and other
methodologies are being used in the U.S. and Russia for
ecological or environmental applications. Further discussions
may lead to joint projects to use remote sensing technologies
for environmental monitoring.
Some have criticized the ETF for engaging in activities
outside the ``normal'' mission of the intelligence community
and have asserted that the civilian agencies should pay for the
information they receive. This argument ignores the fact that
the function of intelligence is to support policymakers.
Processing and disseminating to policymakers information
collected by intelligence assets is at the heart of what
intelligence agencies do, and those agencies are unarguably in
the best position to task the system, exploit the data it
provides, and protect the sources and methods involved. While
there may be merit in developing a system whereby intelligence
consumers are ``billed'' in some way for intelligence products
(in fact, the Committee in the past has advocated pilot
projects to test this concept), such a system should apply to
all consumers. Currently, no consumer is required to pay for
intelligence information. Nevertheless, the ETF envisions that
once the information system it is developing for the
environmental agencies is operational, those agencies will fund
its operation and maintenance.
The Environmental Task Force effort is an important
initiative. It promises to lead to better understanding of
long-term environmental change as well as better management of
crisis situations involving natural and ecological disasters.
The country has made an enormous investment in classified
systems and technologies. For a relatively modest additional
expenditure, these resources can be exploited to benefit
science and the environment for the well-being of future
generations of Americans.
Norm Dicks.
Bill Richardson.
Julian C. Dixon.
Robert G. Torricelli.
Ronald D. Coleman.
Nancy Pelosi.
Greg Laughlin.
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1995 Congressional DocumentsIntelligence and Security

1995 Congressional Documents
Intelligence and Security