INTELLIGENCE AUTHORIZATION ACT FOR FISCAL YEAR 1999

59 006

105 th Congress

Report

HOUSE OF REPRESENTATIVES

2d Session

105 508

INTELLIGENCE AUTHORIZATION ACT FOR FISCAL YEAR 1999

May 5 , 1998.--Committed to the Committee of the Whole House on the

State of the Union and ordered to be printed

Mr. Goss , from the Permanent Select Committee on Intelligence,

submitted the following

REPORT

[To accompany H.R. 3694]

[Including cost estimate of the Congressional Budget Office]

The Permanent Select Committee on Intelligence, to whom was referred

the bill (H.R. 3694) to authorize appropriations for fiscal year 1999

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.

CONTENTS

The bill as reported 2

Purpose 5

Overall perspective on the intelligence budget and committee inte6

Scope of committee review 6

Committee findings and recommendations 7

Areas of Special Interest

The National Security Agency Budget, Culture, Method

of Operation

National Reconnaissance Program

The National Imagery and Mapping Agency (NIMA)

Imagery Archiving

Automated Intelligence Data Fusion

Imagery Server Systems

Defense Counterintelligence

Intelligence Congressional Justification Books

Joint Military Intelligence Program

Tactical Intelligence and Related Activities

Section-by-Section Analysis of the Bill as Reported

Title I--Intelligence Activities

Section 101--Authorization of Appropriations

Section 102--Classified Schedule of Authorizations

Section 103--Personnel Ceiling Adjustments

Section 104--Community Management Account

Title II--Central Intelligence Agency Retirement

and Disability System

Section 201--Authorization of Appropriations

Title III--General Provisions

Section 301--Increase in Employee Compensation and Benefits

Authorized by Law

Section 302--Restriction on Conduct of Intelligence Activities

Section 303--Application of Sanctions Laws to Intelligence Activities

Section 304--Sense of Congress on Intelligence Community Contracting

Title IV--Central Intelligence Agency

Section 401--Extension of CIA Voluntary Separation Pay Act

Section 402--Enhanced Protective Authority for CIA Personnel and

Family Members

Section 403--Technical Corrections

Title V--Department of Defense

Section 501--Extension of Authority to Engage in Commercial

Activities as Security for Intelligence Collection Activities

Committee position

Findings and recommendations of the Committee on Government Reform

and Oversight

Oversight findings

Fiscal year cost projections

Congressional Budget Office estimates

Committee cost estimates

Specific Constitutional authority for Congressional enactment of this

legislation

Changes to existing law

The amendment is as follows:

Strike out all after the enacting clause and insert in lieu thereof

the following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title.--This Act may be cited as the ``Intelligence

Authorization Act for Fiscal Year 1999''.

(b) Table of Contents.--The table of contents for this Act is as

follows:

Sec. 1. Short title; table of contents.

TITLE I--INTELLIGENCE ACTIVITIES

Sec. 101. Authorization of appropriations.

Sec. 102. Classified schedule of authorizations.

Sec. 103. Personnel ceiling adjustments.

Sec. 104. Community management account.

TITLE II--CENTRAL INTELLIGENCE AGENCY RETIREMENT AND DISABILITY SYSTEM

Sec. 201. Authorization of appropriations.

TITLE III--GENERAL PROVISIONS

Sec. 301. Increase in employee compensation and benefits

authorized by law.

Sec. 302. Restriction on conduct of intelligence activities.

Sec. 303. Application of sanctions laws to intelligence activities.

Sec. 304. Sense of Congress on intelligence community contracting.

TITLE IV--CENTRAL INTELLIGENCE AGENCY

Sec. 401. Extension of the CIA Voluntary Separation Pay Act.

Sec. 402. Enhanced protective authority for CIA personnel and

family members.

Sec. 403. Technical amendments.

TITLE V--DEPARTMENT OF DEFENSE INTELLIGENCE ACTIVITIES

Sec. 501. Extension of authority to engage in commercial

activities as security for intelligence collection activities.

TITLE I--INTELLIGENCE ACTIVITIES

SEC. 101. AUTHORIZATION OF APPROPRIATIONS.

Funds are hereby authorized to be appropriated for fiscal year 1999

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 the Treasury.

(8) The Department of Energy.

(9) The Federal Bureau of Investigation.

(10) The National Reconnaissance Office.

(11) The National Imagery and Mapping Agency.

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, 1999, 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. 3694 of the 105th

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 1999 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 1999 the sum of $139,123,000.

Within such amount, funds identified in the classified Schedule of

Authorizations referred to in section 102(a) for the Advanced Research

and Development Committee shall remain available until September 30,

2000.

(b) Authorized Personnel Levels.--The elements within the Community

Management Account of the Director of Central Intelligence is authorized

283 full-time personnel as of September 30, 1999. Personnel serving in

such elements may be permanent employees of the Community Management

Staff or personnel detailed from other elements of the United States

Government.

(1) Authorization of appropriations.--In addition to amounts

authorized to be appropriated for the Community Management Account by

subsection (a), there is also authorized to be appropriated for the

Community Management Account for fiscal year 1999 such additional

amounts as are specified in the classified Schedule of Authorizations

referred to in section 102(a).

(2) Authorization of personnel.--In addition to the personnel

authorized by subsection (b) for elements of the Community Management

Account as of September 30, 1999, there is authorized such additional

personnel for such elements as of that date as is specified in the

classified Schedule of Authorizations.

(d) Reimbursement.--Except as provided in section 113 of the National

Security Act of 1947, during fiscal year 1999, any officer or employee

of the United States or a member of the Armed Forces who is detailed to

the staff of the Community Management Account 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.

(e) National Drug Intelligence Center.--

(1) In general.--Of the amount appropriated pursuant to the

authorization in subsection (a), the amount of $27,000,000 shall be

available for the National Drug Intelligence Center. Within such amount,

funds provided for research, development, test, and evaluation purposes

shall remain available until September 30, 2000, and funds provided for

procurement purposes shall remain available until September 30, 2001.

(2) Transfer of funds.--The Director of Central Intelligence shall

transfer to the Attorney General of the United States funds available

for the National Drug Intelligence Center under paragraph (1). The

Attorney General shall utilize funds so transferred for the activities

of the National Drug Intelligence Center.

(3) Limitation.--Amounts available for the National Drug

Intelligence Center may not be used in contravention of the provisions

of section 103(d)(1) of the National Security Act of 1947 (50 U.S.C. 403

3(d)(1)).

(4) Authority.--Notwithstanding any other provision of law, the

Attorney General shall retain full authority over the operations of the

National Drug Intelligence Center.

(f) Transfer Authority for Funds for Security Requirements at

Overseas Locations.--

(1) In general.--Of the amount appropriated pursuant to the

authorization in subsection (a), the Director of Central Intelligence

may transfer funds to departments or other agencies for the sole purpose

of supporting certain intelligence community security requirements at

overseas locations, as specified by the Director.

(2) Limitation.--Amounts made available for departments or agencies

under paragraph (1) shall be--

(A) transferred to the specific appropriation;

(B) allocated to the specific account in the specific amount, as

determined by the Director;

architectural and engineering support expenses at overseas locations;

and

(D) available only for the same purposes, and subject to the same

terms and conditions, as the funds described in subparagraph (C).

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 1999 the sum of

$201,500,000.

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.

Section 905 of the National Security Act of 1947 (50 U.S.C. 441d) is

amended by striking out ``January 6, 1999'' and inserting in lieu

thereof ``January 6, 2000''.

SEC. 304. SENSE OF CONGRESS ON INTELLIGENCE COMMUNITY CONTRACTING.

It is the sense of Congress that the Director of Central Intelligence

should continue to direct that elements of the intelligence community,

whenever compatible with the national security interests of the United

States and consistent with operational and security concerns related to

the conduct of intelligence activities, and where fiscally sound, should

competitively award contracts in a manner that maximizes the procurement

of products properly designated as having been made in the United

States.

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 (Public Law 103 36, 50 U.S.C. 403 4 note) is amended by striking

out ``September 30, 1999'' and inserting in lieu thereof ``September 30,

2001''.

SEC. 402. ENHANCED PROTECTIVE AUTHORITY FOR CIA PERSONNEL AND

FAMILY MEMBERS.

Section 5(a)(4) of the Central Intelligence Agency Act of 1949 (50

U.S.C. 403f(a)(4)) is amended by striking out ``and the protection of

Agency personnel and of defectors, their families'' and inserting in

lieu thereof ``and the protection of current and former Agency personnel

and their immediate families, and defectors and their immediate

families''.

SEC. 403. TECHNICAL AMENDMENTS.

(a) Central Intelligence Agency Act of 1949.--(1) Section 5(a)(1) of

the Central Intelligence Agency Act of 1949 (50 U.S.C. 403f(a)(1)) is

amended--

(A) by striking out ``subparagraphs (B) and (C) of section

102(a)(2)'' and inserting in lieu thereof ``paragraphs (2) and (3) of

section 102(a)'';

(B) by striking out ``(c)(5)'' and inserting in lieu thereof

``(c)(6)'';

(D) by inserting ``(c)(6), (d)'' after ``403 3''; and

(E) by inserting ``(a), (g)'' after ``403 4''.

(2) Section 6 of such Act (50 U.S.C. 403g) is amended by striking out

``(c)(5)'' each place it appears and inserting in lieu thereof

``(c)(6)''.

(b) Central Intelligence Agency Retirement Act.--Section 201(c) of

the Central Intelligence Agency Retirement Act (50 U.S.C. 2011(c)) is

amended by striking out ``(c)(5)'' each place it appears and inserting

in lieu thereof ``(c)(6)''.

TITLE V--DEPARTMENT OF DEFENSE INTELLIGENCE ACTIVITIES

SEC. 501. EXTENSION OF AUTHORITY TO ENGAGE IN COMMERCIAL

ACTIVITIES AS SECURITY FOR INTELLIGENCE COLLECTION ACTIVITIES.

Section 431(a) of title 10, United States Code, is amended by

striking out ``December 31, 1998'' and inserting in lieu thereof

``December 31, 2001''.

PURPOSE

The bill would:

(1) Authorize appropriations for fiscal year 1999 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, 1999 for the

intelligence and intelligence-related activities of the U.S. Government

and permit the Director of Central Intelligence to authorize personnel

ceilings in Fiscal Year 1999 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;

(3) Authorize $27 million for the National Drug Intelligence Center

in Johnstown, Pennsylvania;

(4) Extend the authority of the President to defer the imposition of

sanctions through January 6, 2000, when to proceed without delay would

seriously risk the compromise of an intelligence source or method, or an

ongoing criminal investigation;

(5) Extend the CIA's authority to offer ``early out'' incentives to

employees to enable the CIA to meet the intelligence personnel needs of

the next century;

(6) Enhance the CIA's ability to provide personal protection to its

employees and defectors and the families of such protectees in

situations presenting specific or credible threats of physical harm; and

(7) Extend the current Department of Defense authority to engage in

commercial activities as security for intelligence collection.

OVERALL PERSPECTIVE ON THE INTELLIGENCE BUDGET AND COMMITTEE INTENT

The classified annex to this public report includes the classified

Schedule of Authorizations and its associated language. The committee

views the classified Annex as an integral part of this legislation. The

classified Annex contains a thorough discussion of all budget issues

considered by the committee, which underlies the funding authorization

found in the Schedule of Authorizations. The committee intends that all

intelligence programs discussed in the classified Annex to this report

be conducted in accord with the guidance and limitations set forth as

associate language therein. The classified Schedule is incorporated

directly into this legislation. The classified Annex is available for

review by all Members of the House of Representatives, subject to the

requirements of clause 13 of rule XLIII of the House.

SCOPE OF COMMITTEE REVIEW

U.S. intelligence and intelligence-related activities under the

jurisdiction of the committee include the National Foreign Intelligence

Program (NFIP), and the Tactical Intelligence and Related Activities

(TIARA) and the Joint Military Intelligence Program (JMIP) of the

Department of Defense.

The 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 Departments of the Army, Navy, and Air Force; (5) the

Department of State; (6) the Department of the Treasury; (7) the

Department of Energy; (8) the Federal Bureau of Investigation; (9) the

National Reconnaissance Office; and (10) the National Imagery and

Mapping Agency.

The Department of Defense 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, include 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

Committee on National Security in the House of Representatives has joint

oversight and authorizing jurisdiction of the programs comprising TIARA.

The 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 (e.g., Signals Intelligence (SIGINT), Imagery

Intelligence (IMINT)), or function (e.g., satellite support, aerial

reconnaissance). The following aggregations are included in the JMIP:

(1) the Defense Cryptologic Program (DCP); (2) the Defense Imagery and

Mapping Program (DIMAP); (3) the Defense General Intelligence

Applications Program (DGIAP), which itself includes (a) the Defense

Airborne Reconnaissance Program (DARP), (b) the Defense Intelligence

Tactical Program (DITP), (c) the Defense Intelligence Special

Technologies Program (DISTP), (d) the Defense Intelligence Counterdrug

Program (DICP), and (e) the Defense Space Reconnaissance Program (DSRP).

COMMITTEE FINDINGS AND RECOMMENDATIONS

The committee completed its review of the President's fiscal year

1999 budget, carrying out its annual responsibility to prepare an

authorization based on close examination of intelligence programs and

proposed expenditures. The review reflected the committee's continuing

belief that intelligence activities must be examined by function as well

as by program. Thus, the committee's review was structured across

program lines and intelligence disciplines and themes. The committee

held seven full committee budget-related hearings on budgetary issues,

including: acquisition of overhead collection systems, SIGINT issues,

IMINT issues, Human Intelligence (HUMINT) issues, Analysis and

Production, and Covert Action. A specific hearing was also held that

dealt with the Future Imagery Architecture, and two hearings were held

at which the Director of Central Intelligence (DCI) testified, in order

to understand his views and plans for the future of intelligence and the

Intelligence Community (IC). The committee also held six full-committee

briefings on areas such as commercial mapping technology, collection

management, and the status of the space reconnaissance programs, in

particular, and the status of IC acquisition processes, in general.

There were, in addition, numerous individual briefings of Members and

over 100 staff briefings on programs, specific activities, and budget

requests.

The committee continued to place heavy emphasis on understanding and

addressing the future needs of the IC, and the several distinct roles

that it plays in national security. For the past three years, the

committee has discussed the fact that our national security is affected

by a set of issues more broad than those emphasized for the past 50

years. Heretofore, some of these issues have not been identified so

readily with our global interests. Throughout our continuing review,

there has been a constant theme: the threats that face our nation demand

that the IC be vigilant on both the strategic and tactical levels and

the IC must maintain a world-wide view, with a highly flexible set of

resources.

The committee is struck by what can be characterized as a growing

sense of apathy toward our national security and intelligence. Because

the threats are less obvious and untraditional, many inside and outside

of government believe that our nation has fewer worries and is somehow

safer. That we can dramatically reduce our intelligence and defense

resources, because we are at peace, is a concept that many endorse,

especially when weighing such expenditures against those needed

domestically. Unfortunately, our nation is no less at risk now than

during the Cold War. What has changed is the nature of the threat. The

likelihood of a major nuclear confrontation has receded. But other

aspects of our security are at greater risk, including the growing

possibility that a rogue nation will attack United States' interests, or

even the United States itself, with a nuclear device or some other

weapon of mass destruction.

Two specific incidents occurred recently that have shown light on how

much at risk, and how ill-prepared, we are. First is the most recent

confrontation with Iraq. Yet again, the United States faced a dilemma in

how to deal with Saddam Hussein, a dictator possessing weapons of mass

destruction and a demonstrated will to use them, who has consistently

threatened stability of a critically important, strategic region. The

real issues in this situation could be boiled down to two--did we have a

policy, and did we have the intelligence that would not only support a

policy decision and its implementation, but would also provide the

information necessary to develop options? Regarding the latter, the

answer was a resounding ``no.''

The second incident is related to our nation's vulnerability to

technological attack. In February 1998, Department of Defense computer

systems fell victim to systematic, coordinated attacks by individuals

who, luckily, appeared to be driven by the challenge of conducting such

attacks rather than by malicious intent. Regardless of intent, the

attack again demonstrates that information technology has become this

nation's strength as well as its Achilles' heel. Consequently, high

priority must be placed on developing our abilities to warn, detect and

defend against such attacks, as well as to be positioned to conduct such

attacks when necessary. The committee stresses that this is a national

security issue that encompasses the entirety of our nation's

infrastructure, not just that of Defense or of the government. Likewise,

this issue must be faced in terms of threat and attack, not just in

terms of law enforcement. At the end of the day, we must be vigilant in

ensuring that the IC is positioned to address this new challenge.

Our intelligence capabilities have dwindled since the breakup of the

Soviet Union, and we have failed to build new capabilities that will

become increasingly critical. This is especially true in the areas of

espionage, covert action, and in our toughest SIGINT activities. We, as

a nation, cannot continue this course. The world is such that

individuals and groups will continue to disrupt our foreign policy

objectives and threaten our national security. The only thing that will

change will be that their resources will increase and their capabilities

will grow ever more fearsome. We must be prepared, by having the

intelligence resources we need, well before a crisis occurs, and

preferably in a fashion that might allow us to preempt it. We can do no

less.

As a result of these demands, the committee evaluated the budget

submission with an eye toward looking at future needs and capabilities.

Specifically, five major themes came out of this evaluation:

We must invest in a recapitalization and modernization of our SIGINT

capabilities;

We must invest in re-establishing and rebuilding our clandestine

espionage or HUMINT infrastructure;

We must continue to invest in all-source analysis, establishing a

``global,'' strategic outlook that will allow for proper indications and

warning for the policymakers and key decision makers throughout

government;

We must rebuild covert action capabilities; and,

We must invest in advanced research and development in all programs

within the IC.

Likewise, the committee's review brought to light some fundamental

questions that are partially addressed in this budget, and will be

specifically pursued over the next year. These include:

Will the growing cost of the National Reconnaissance Program (NRP)

continue unabated, and how is this affecting the other programs within

the NFIP?

Are we placing the proper requirements on the development of our

future overhead systems? In essence, are we structuring it only to

monitor and surveil known targets, or do we want to develop systems that

focus on reconnaissance and uncovering truly secret information?

Is financial management within the IC, specifically within the NRP

and the National Imagery and Mapping Program, rigorous enough that the

DCI can make needed tradeoffs?

Is the balance of investment between overhead systems and other

methods of collection correct, given the types of information that is

needed for national security and foreign policy planning?

Are we properly emphasizing and investing in areas such as

processing, analysis and distribution, the activities that make useful

the massive amounts of data that is anticipated with new technical

collection systems?

Is the IC approaching information operations in a fashion that

properly positions us to face the future challenges?

Are we investing properly in the right types of research and fully

exploiting commercially available technologies?

These are questions that must be addressed. They will be the focus of

the committee's future oversight and actions.

AREAS OF SPECIAL INTEREST

THE NATIONAL SECURITY AGENCY BUDGET, CULTURE, METHOD OF OPERATION

The committee has concluded that very large changes in the National

Security Agency's culture and method of operations need to take place,

including changes in its budget methodology. NSA should be given credit

for many changes already introduced, but the committee believes that the

results have not gone far enough, and that NSA will not meet its Unified

Cryptologic Architecture (UCA) goals without tackling head-on some very

fundamental internal obstacles.

Additions to the Consolidated Cryptologic Program (CCP) budget are

being used as leverage to effect some of the internal reforms urgently

needed. This is being done in several ways. First, the committee is

funding and mandating external management reviews. Second, the committee

is attempting to infuse fresh thought, needed expertise (especially in

systems engineering), and greater fairness by insisting that significant

portions of certain categories be contracted out and that outside

proposals and expertise be solicited, notably in systems engineering,

advanced research and development, and in development activities

conducted by the Advanced Technology Centers. Third, fences have been

placed on portions of the budget, with the prospect that a considerable

amount of money could be reprogrammed for other IC needs if NSA does not

develop detailed strategic and business planning.

These steps are taken partially because the committee has been

frustrated in attempts to start needed reforms during fiscal year 1998.

Outside management reviews, budget cuts and adds to reduce acquisition

cycle time, plus cuts to lower the budget percentage allocated to

support, were initiated in the fiscal year 1998 authorization process,

but all have met resistance and have been deflected from their intended

purpose. Subsequently, the committee also found unreceptiveness to

development of cost effectiveness analyses that could direct the

agency's and SIGINT community's investment priorities. It also found

that fiscal year 1998 and fiscal year 1999 investments of money and

personnel in categories critical to the future, continue to be

minimized, at best, and that NSA often cannot track allocations for

critical functions that cross the old program and bureaucratic lines,

much less enforce implementation of DIRNSA policy priorities.

Therefore, the committee concludes that a far more radical revision

of the budget process than presently contemplated is necessary. Just as

the military must train the way it will fight, NSA must budget according

to the critical categories of a new and completely different

architecture and mode of operations. Further, the old budget categories

have provided little insight into and fulfillment of the old

architecture.

Most difficult of all, NSA must develop a new culture in which all

team together on a new architecture, rather than bubbling up disparate

ideas and programs from across NSA and expending much of its energy on

probable duplication. This challenge cannot be minimized, because much

of NSA's past strength has come from its localized creativity and

quick-reaction

capability, which enabled it to rise when necessary to

overcome the stultifying effect that the bureaucracy of such a large

organization can have.

It has often been said, by both Congress and the administration, that

the IC neglects processing and the entire ``downstream'' area in favor

of more exotic and interesting collection programs, and that this trend

has worsened in recent years. The committee requests that, after

receiving this bill, the Community Management Staff (CMS) organize an

effort to provide statistics on trends for investment in collection as

opposed to processing or downstream areas. Even if comparable data
cannot be found to document the balance over the past ten years, we

should establish a 1997 baseline, if practicable, and keep track

thereafter. Eventually, we may be able to establish some rule of thumb

for the amount of downstream investment required to use efficiently our

investments in collection, although this could be subject to changing

technology and the effect on costs at either end. The CMS is asked to

explore this possible system for tracking SIGINT investment, in

conjunction with NSA, which has thought about potential methodologies.

CMS participation appears necessary because much SIGINT collection and

processing crosses program boundaries and accumulation of the data would

require access to information outside NSA, as well as the presence of an

objective arbiter.

For the same reasons, CMS is also asked to undertake immediately the

establishment of meaningful metrics to evaluate henceforth the cost

effectiveness of various SIGINT collection programs. NSA has resisted

this on grounds that meaningful metrics cannot be found, but the

committee believes they must be found and that NSA and other community

programs must be run more like a corporation that systematically

evaluates the productivity of various lines of operation, terminates or

downgrades some accordingly, and switches available dollars to those

that produce the most return or have the greatest promise. Such data is

needed across the IC to determine where our funds should be placed, and

should have been developed to help guide the UCA deliberations. It can

still have a major impact on UCA implementation plans. There are many

other potential uses, including for decisions on the elimination of

legacy systems within NSA and for DCI and DoD consideration of

cross-program trades.

Finally, the committee has requested that an independent panel assess

community-wide Electronic Intelligence (ELINT) planning and budgeting.

National Reconnaissance Program

For several years, the committee has been concerned with the

increasing costs of several major National Reconnaissance Office (NRO)

programs and the NRP's growing share of the NFIP budget. Not seeing any

relief from the tight fiscal environment, the committee has sought to

find technological innovations and managerial reforms in the NRP that

could reduce costs. This goal lay behind the committee's push to shift

to larger numbers of smaller satellites, which the committee thought

also would provide better performance against hard targets, reduce

satellite vulnerability, and help to counter foreign denial and

deception practices.

The committee had hoped that acquisition reform and a shift in

strategy to smaller satellites would control if not reduce costs in the

near-term, and enable the DCI to increase investment elsewhere in the

NFIP and the NRO to invest new technologies, in support of new or higher

priority missions, like counter-proliferation. So far, however, this

hope has not been fulfilled, but the committee still believes that this

strategy, if properly enforced, will produce results in time. The

committee is now exploring also the benefits of cost caps, believing

with the DCI that they may help to discipline the acquisition system.

The committee, in summary, is not satisfied that all appropriate

measures have been taken to reduce or control costs in the NRP or to

adequately measure the cost-effectiveness of all overhead collection

activities. The committee believes that the DCI needs to exercise much

more knowledgeable and diligent oversight of NRO programs, with an eye

to freeing up funds for investment elsewhere, wherever possible. This

oversight must extend from requirements tradeoffs, to cost estimating,

to acquisition oversight. The DCI also needs to acquire the expertise

necessary to make tradeoffs across the major NFIP programs. The DCI can

no longer afford to rely on the major program managers to police their

organizations and budgets. The committee has recommended additional

funds for the DCI to accelerate the development of these capabilities.

The National Imagery and Mapping Agency (NIMA)

The committee is very concerned about incidents which cause it to

question the adequacy of financial management at NIMA. Although the

committee appreciates the extra information given in the CBJB addenda

and found the data to be helpful in tracking general costs, it has been

almost impossible to get consistent budget information from NIMA on

detailed questions. There have been numerous instances over the past few

months where NIMA has provided conflicting data on major programs and

has been unable to reconcile the different numbers. Committee inquiries

aside, these are basic questions that NIMA must be able to answer

internally in order to function.

Of further concern, the committee learned the evening before the

committee mark that NIMA is facing a shortfall in fiscal year 1999 in

its civilian pay, similar to that faced last year. Although the

committee understands the difficulty in forecasting civilian pay, most

agencies' problems occur during a fiscal year when promotions or new

hiring outpaces attrition. The committee does not understand why NIMA is

already forecasting a shortfall for fiscal year 1999, especially since

the agency lost hundreds of employees in fiscal year 1998.

The committee is also concerned about the internal reallocation of

funds that NIMA has implemented, thus far, in fiscal year 1998. Although

the committee understands that NIMA took its share of unallocated cuts,

this does not fully explain the movement of money between programs, nor

why reprogramming requests were not received. Further, the apparent

ambiguity associated with these actions, the apparent fungibility of the

accounts, and the fact that, on occasion, NIMA had difficulty explaining

such actions, draws into question whether the management at NIMA has the

ability or desire to force analytic rigor over the budget process.

The committee is concerned that NIMA either simply does not want to

tell Congress of its dealings, or it simply doesn't know how money is

being spent and managed. Neither option

is good. Generally, the committee is skeptical regarding

whether NIMA has the ability to forecast, manage, and execute its

budget.

Two factors weigh in NIMA's favor, however. First, the new Director

of NIMA has indicated his understanding that changes, and some difficult

decisions, must be made. He has also indicated his willingness and

desire to work with the committee to take on these challenges. Second,

the committee is aware of the DCI's budget task force on NIMA (within

the Community Management Staff) and strongly supports this effort. The

committee encourages the Director of NIMA to fully utilize the task

force resources to provide concrete steps in getting NIMA on track. Put

simply, NIMA must make significant changes in the way it executes and

manages its budget, and relates this information to Congress, in order

to establish any credibility.

Imagery Archiving

The committee believes there is a need for a long-term, cohesive

strategy for preserving the Nation's investment in space and airborne

reconnaissance imagery (including all formats: film-based,

electro-optic, infrared, radar and video). Currently, the responsibility

of archiving imagery belongs to various organizations, including the

NIMA, the Defense Intelligence Agency (DIA), and the National Archives.

Each maintains literally millions of images in various formats.

The committee is concerned that these archiving efforts are

disjointed and do not provide an indefinite, cost-effective retention

solution. Although much of the value associated with investments in

imagery relates to short-term, national defense requirements, the future

value to scientific and domestic requirements cannot be adequately

estimated. The life expectancy of archived imagery, however, is

dependent on the various storage media; some of these media may not

survive even for longer-term national defense use. The committee

believes recent technological developments in the commercial sector can

provide economical and extremely long-life mass imagery storage. These

technologies also provide an opportunity for developing and instituting

a cohesive long-term strategy for archiving imagery.

The committee directs the Secretary of Defense and the DCI to

develop, and report to the congressional defense and intelligence

committees not later than February 28, 1999, a cohesive and coordinated

set of practices and procedures for storing and archiving all

imagery--both U.S. reconnaissance and, to the extent necessary,

commercially-procured imagery. This report will include a recommendation

for consolidating these responsibilities under a single organization.

Further, the report will include the new processes and technologies

necessary for maintaining imagery ``on-line'' for national and military

use and the processes for subsequently archiving all U.S. government

imagery indefinitely and at the lowest cost. The committee recommends

that the Administration investigate the latest data storage technologies

that are capable of indefinitely maintaining data quality to determine

whether their application will decrease archival costs by allowing,

among other things, higher density storage, longer-term (hundreds of

years) storage between restorations, and less stringent

storage-environment requirements.

Automated Intelligence Data Fusion

The committee is disturbed by the number of requests in the

Congressional Justification Books (CJBs) that are justified by the

development and fielding of data ``fusion'' algorithms, systems, and

processes. Although the committee fully supports the need to assist

human analytical processes with automated capabilities, the committee

believes there is no intelligence community leadership coordinating

these various developments and activities to ensure that the proper

fusion efforts are being undertaken and that there are no, or at least

minimal, duplications of effort.

Further, the committee notes that the very notion of data fusion is

enigmatic to the point that ``correlation'' and ``fusion'' become

interchangeable, and the very definitions preclude a holistic view of

the issue. There have been no agreed goals regarding what fusion is to

provide, what it is to accomplish or what products it is to create.

Simply put, there is no way the Congress can fully understand the issues

of intelligence data fusion because the IC does not seem to understand

it.

The committee believes that community-wide emphasis is necessary to

address the many issues surrounding ``fusion.'' Therefore, the committee

requests that the Deputy Director of Central Intelligence for Community

Management (DDCI/CM) and the Assistant Secretary of Defense (Command,

Control, Communications, and Intelligence)(ASD(C\3\I)) provide the

intelligence committees with a long-term strategy and plan for

coordinating and developing the various intelligence data fusion

efforts. The committee believes that this plan should include the

establishment of community-wide definitions, required products and

services of fusion developments, a highly visible insight as to the

numerous projects to promote interoperability and coordination of

developments, and a detailed funding plan for community-wide fusion

needs. The committee requests this plan be provided no later than April

15, 1999.

Imagery Server Systems

In response to a critical need for imagery dissemination, the Office

of Special Technologies, ASD (C\3\I), sponsored a U.S. Pacific Command

project to put digitized imagery on a server-based network. This project

became known as the Demand Driven Direct Digital Dissemination System,

or 5D. This system was meant as an interim solution, to eventually be

incorporated into NIMA's Imagery Product Archive/Imagery Product Library

(IPA/IPL) server system.

The committee understands that, despite expectations, the 5D imagery

server system will not be replaced soon by NIMA's libraries program. The

reasons for this are numerous, and range from slow software development

for the IPA and the initial version of the IPL, to obsolete 5D hardware

that cannot run the new IPL software. This latter issue is particularly

problematic since it means that replacement of 5D systems requires new

hardware procurement that is not funded in NIMA's current Libraries

budget. In fact, there are many 5D terminals not included in the IPL

systems currently funded in NIMA's budget.

The committee notes that NIMA will soon field the national-level

Library and expects that 5D users will want to be able to interface with

it immediately. As stated before, this may not be possible with current

5D hardware. The committee believes that 5D systems should be replaced

as soon as possible, but that current users cannot afford a lapse in

image product availability. Finally, the committee notes that NIMA funds

the maintenance of the 5D but that the ASD(C\3\I) sponsors the system,

and that both have informed the committee that there are limited funds

available to keep 5D fully functional. These problems must be solved.

The committee requests that ASD(C\3\I) and the Director of NIMA

provide the committee a report on the background, status, direction, and

cost of both the 5D and IPL systems. Further, the committee requests

that during the preparation of the fiscal year 2000 budget request, a

plan be prepared for correcting the funding and system fielding problems

outlined above.

DEFENSE COUNTERINTELLIGENCE

For several years, the committee has raised concerns about downsizing

Department of Defense Counterintelligence (CI) personnel and funding at

the same time that Defense CI is being asked to take on additional

responsibilities and cope with an unprecedented increase in operations

tempo. For example, the FCIP has been challenged to improve its

counterterrorism and force protection capabilities. The revised DoD CI

strategic plan suggests that future FCIP budgets may reflect further

shifts in resources to support military commanders in these areas. At

the same time, the FCIP must continue its traditional counterespionage

activities, provide protection to U.S. military acquisition activities,

better analyze and detect anomalies that might detect espionage

activities and, most recently, develop a computer intrusion

investigations capability and training regimen. The downsizing of CI

seems to take place almost absent analysis of the importance of the CI

contribution, for example, to the intelligence effort supporting

deployed commanders. Feedback from recent deployments indicates that CI

and HUMINT have been preeminent intelligence disciplines and, in fact,

have been described by G2s and commanders as the disciplines of choice

within the Defense Department. Yet, in the competition for funding

within the Defense Department and across the National Foreign

Intelligence Program, the FCIP's resource needs, in the committee's

opinion, are frequently shortchanged.

The program elements that fund counterintelligence within the Defense

Department are complex and spread across the Department. In addition to

the FCIP, CI programs can be found in the Tactical Intelligence and

Related Activities budget. Dispersed CI funding has value in that

tactical CI elements maintain close operational relationships with their

assigned units, both in terms of presence and resources. Totally

centralized management of CI might diminish these operational

relationships and the responsiveness of the elements to unique Service

requirements. However, the limited authority that the Office of the

Secretary of Defense (OSD) focal point for CI has to oversee and

evaluate the various CI programs within the Department has made it

difficult to develop or sustain a comprehensive CI capability for

Defense. This is particularly evident in the apparently limited ability

of OSD to influence resource allocation decisions concerning the

Department's aggregate CI capabilities.

The committee understands that efforts are underway to centralize and

improve OSD's focus on significant CI activities government-wide which

have an impact on the Department. This is a step in the right direction.

Yet, there may be need for more to be done. For example, many have been

concerned that limited procurement dollars in the FCIP and other CI

programs can make even modest equipment acquisition or modernization

programs almost impossible. Repeatedly, Congress has had to increase

funding lines so that reasonable levels of modernization or equipment

purchases could occur. The intelligence committees have acted to repair

shortages in funding for operational and investigative activities in the

last few FCIP budget submissions, and they have expressed concern about

the impact of continued manpower downsizing on the CI program.

INTELLIGENCE CONGRESSIONAL JUSTIFICATION BOOKS

In the committee report on H.R. 1119 (H. Rept. 105 132), the

committee directed that the Congressional Justification Books (CJB) and

the Congressional Budget Justification Books (CBJB) accompanying the

intelligence budget request must contain all direct costs of a program,

including the costs of operating and maintaining the systems or project.

The committee notes the very good progress the Intelligence Community

made in this respect with the fiscal year 1999 CBJBs, but that the

materials received were still not complete with the information

required. For example, in the CJBs, the operations and maintenance costs

of some intelligence aircraft systems show the direct operating costs,

but do not reflect the direct depot maintenance costs. Numerous service

systems show procurement costs, but do not reflect the operations costs

for fielded systems nor the personnel required to man them. In the

CBJBs, there were large gaps in necessary budget crosswalks from past

years to the current year. In fact, some of the fiscal year 1999 CBJBs

had less budget information on programs than was available in the fiscal

year 1998 CBJB. At best, these gaps make understanding the total costs

of a program difficult; at worst, this is suggestive of an attempt to

hide total program costs.

The committee directs, beginning with the fiscal year 2000 budget

request that the Secretary of Defense and the Director of Central

Intelligence include all associated costs of an intelligence program or

project within the justification materials. The committee will monitor

progress carefully over the next year and will consider stronger

measures as necessary.

JOINT MILITARY INTELLIGENCE PROGRAM

ES 3A,-$3.2 million

The budget request contained $3.2 million in research and

development, Defense-Wide, for continued upgrade of the SIGINT systems

on the ES 3A aircraft.

The committee has been informed that the Navy has decided to

terminate this aircraft. The committee, therefore, recommends no funding

for the requested upgrades.

Tactical Control and Analysis Center, Transfer $800,000

The budget request included $800,000 in research and development,

Defense-Wide, for continued development of the Marine Corps Tactical

Control and Analysis Center (TCAC).

The committee believes the development of an analytical center for

Marine Corps tactical operations is more appropriately a Marine Corps

responsibility rather than a National Security Agency, Defense

Cryptologic Program activity. Therefore, the committee recommends the

budget request in research and development, Marine Corps, line 170.

Information production, -$10.0 million

The committee understands that NIMA is testing and evaluating COTS

applications as part of the USIGS migration and firmly approves of this

approach. However, it also appears that NIMA continues to do a

substantial amount of proprietary development. Therefore, the committee

authorizes a reduction to this account by $10.0 million and recommends

that NIMA decrease its development of proprietary applications.

Information production: Product generation, -$15.0 million

Information production: Product outsourcing, +$15.0 million

Information production: Integrated product cells, +$5.0 million

The budget request contains $740.6 million for National Imagery and

Mapping Agency (NIMA) operations, including $391.5 million for

geospatial information production.

The committee is very supportive of NIMA's efforts to outsource the

acquisition of a global feature foundation database. Because of this,

the committee believes that NIMA should not wait to develop the most

manpower intensive of the production functions--NIMA's standard

products--within the private sector. The committee authorizes an

additional $15 million to the geospatial information production request

to be used to begin demonstrations with industry similar to the process

whereby NIMA-qualified contractors produce its feature foundation data.

The committee has also been impressed with the efficiencies gained in

NIMA's integrated production cells, now called NIMA Production Cells.

NIMA is only projecting an increase of about five new cells per year

over the FYDP. The committee authorizes an additional $5.0 million over

the budget request, to allow NIMA to acquire more cells in fiscal year

1999.

As indicated above, the committee is interested in seeing NIMA's

efficiencies increase through the use of more modern technologies and

outsourcing. NIMA faces a funding shortfall in its civilian pay accounts

and also must modernize its infrastructure to effectively produce

products in a timely fashion. NIMA can no longer afford a

disproportionate portion of its budget going to civilian pay and

maintenance of legacy systems. NIMA must move more of its funds to

investment. By outsourcing, NIMA will be able to leverage leading-edge

commercial imaging and mapping technologies and production capabilities.

To further encourage NIMA to address this issue in the near term, the

committee decreases the overall amount requested in operations and

maintenance by $15.0 million. This decrease may be applied as NIMA

judges most appropriate, except that no reductions should be made to the

funds authorized and appropriated for outsourcing or for NIMA Production

Cells, and no more than half of the decrease may be applied to

personnel. The committee will evaluate any potential impacts this

reduction may have on NIMA as it prepares for conference. NIMA is

encouraged to develop options and impact assessments for this purpose.

Information Applications & Systems/National Technology

Alliance (NTA), +$5.0 million

The committee continues to believe that NIMA must pursue commercial

alternatives to its legacy systems. The National Technology Alliance

(NTA) has developed an alternative approach to the Defense Dissemination

System (DDS) and the Enhanced Processing Segment (EPS) in response to

the Navy's concern over high operations and maintenance costs for the

DDS system. Therefore, the committee authorizes $5.0 million within the

US Imagery and Geospatial Information System line for the NTA to

demonstrate this capability with the Navy. The committee requests a

progress report on this activity by January 31, 1999, including an

evaluation by the Navy's N6 organization and NIMA.

Sustaining capabilities, -$14.0 million

The committee does not understand why the Joint Military Intelligence

Program (JMIP) portion of sustaining capabilities is only reduced by

$4.2 million between fiscal years 1998 and 1999. NIMA lost the lease on

the old DMA headquarters building when it consolidated at the Bethesda

facility. Also, the Philadelphia distribution center is being closed as

well as other Washington, DC facilities as described in the

Congressional Justification Book. Further, the committee is confused as

to why this activity has increased its personnel by 65 people (all in

the civilian workforce) during this same period, when NIMA lost about

800 people in fiscal year 1998. The committee assumes that, with less

people in the workforce, corporate affairs, and management and

administration would also need less personnel and should see a

corresponding reduction, not an increase. Finally, the committee

assumes, with the implementation of the Peoplesoft software that

automates many of the functions of the human resources (HR) area, NIMA

would be able to downsize its HR department. Given all of this, the

committee would expect to see a larger reduction in the O&M of NIMA's

sustaining capabilities segment and, therefore, recommend a reduction to

this account of $14.0 million.

Geospatial database integration and display, no budgetary change

In two studies, NIMA has concluded that the commercial sector has

already developed innovative, high quality, affordable software products

to integrate and display NIMA's digital geospatial databases. However,

the services and defense agencies continue to invest substantial funds

in government-developed, custom products that cost the government more

than they should, inhibit achieving a common operating picture, and

complicate training. The committee is particularly concerned that the

Defense Information Systems Agency (DISA) is funding a custom software

development program for the Joint Mapping Tool Kit (JMTK) module of the

Global Command and Control System (GCCS), even though commercial

products already exist that can meet the need and even though NIMA, the

functional manager with expertise in this area, has recommended against

this acquisition strategy.

The committee notes that NIMA is trying again to convince DISA of the

wisdom of a commercial procurement. The committee recommends that no

funds authorized and appropriated to NIMA be made available for the JMTK

module for GCCS until the Assistant Secretary of Defense for Command,

Control, Communications and Intelligence certifies that DISA will

procure this module commercially, or reports to the Congressional

intelligence and defense committees as to why a commercial procurement

does not make sense. The committee requests that the Assistant Secretary

also establish a defense-wide policy for acquiring geospatial database

integration, display, and visualization capabilities. As part of this

policy review, the Assistant Secretary should examine individual service

and defense agency acquisition programs to ensure that they are

cost-effective, and not duplicative.

In addition, although NIMA is itself utilizing commercial

visualization tools internally, the committee is concerned that NIMA is

not aggressively taking steps to ensure that such database integration

and display capabilities are available for procurement, or licensing, by

its customers, apart from the JMTK module in GCCS. These capabilities,

after all, are a central part of NIMA's mission and provide a primary

means by which NIMA's customers can understand and exploit the

underlying data and products that NIMA provides. The committee notes

that the recent Defense Science Board study of DoD mapping urged that

NIMA rapidly develop or acquire such capabilities. The committee

recommends that NIMA begin to acquire the ability to make these products

available to its customers in fiscal year 1999 from within available

resources, and develop a plan to expand and sustain this effort in

fiscal year 2000 and beyond.

Geospatial database production, no budgetary change

The mapping strategy of the Defense Mapping Agency had been to meet

as many of its customers' requirements for detailed, comprehensive

mapping products in as many areas of the world as possible. Since

resources were quite limited, however, this strategy meant that only a

small portion of overall requirements could be met, and large parts of

the world were not mapped at all or the products that were available

were terribly out of date.

NIMA's strategy is to try to produce a minimal set of mapping data

for the world, or most of it, and enhance that data as rapidly as need

arises. This strategy requires NIMA's customers to accept less detail

and comprehensiveness in some geographic areas--presumably high priority

ones--in exchange for a higher overall readiness level in much larger

geographic areas.

The key issues facing NIMA as it tries to implement this strategy are

these:

Will NIMA require additional funding up front to create the

foundation level data base, or can it generate the necessary resources

through internal reforms, competitive outsourcing, process

modernization, and shifts in priorities?

Once created, is this data base inexpensive to keep current, since it

is less detailed than the standard products NIMA produces today and

since much of it is automated? In other words, would the investment

needed to create the data base above NIMA's planned budgets truly be a

non-recurring expense?

If additional funding is required, will the Defense Department agree

that the requirement competes favorably with other defense priorities?

If not, could less than global coverage for the foundation level data

base be acceptable? Alternatively, is it acceptable for NIMA to achieve

the desired level of geographic coverage for its foundation level data

base over a longer period of time, without causing the data base to

become stale?

At what pace will NIMA's customers allow it to cut back on the

production of standard products now to shift resources to building the

foundation level data base? How far can NIMA go in the near-term in

shifting resources to this function, given that NIMA will have to retain

the ability to surge to enhance the foundation data base to support

ongoing operations, potential major and minor contingencies, and other

crises (since the commercial sector does not yet possess much capacity

for this function)?

How much efficiency will NIMA gain by modernizing its production

processes under the so-called ``USIGS Migration'' program? Can these

gains be realized in time to help with the near-term creation of the

foundation level data base?

How much will NIMA be able to reduce the time required to enhance the

foundation data base to support crises, through equipment and process

modernization and through outsourcing? Will it be enough to support the

overall strategy?

The answers to these questions will determine the pace by which NIMA

can competitively procure a foundation level data base. The committee

believes that these issues must be addressed as part of the preparation

of the fiscal year 2000 Future Years Defense Program budget. The

committee requests the DCI and the Deputy Secretary of Defense assign

these issues to the Intelligence Program Review Group and Expanded

Defense Resources Board, or some other suitable forum, for resolution.

In any event, the committee requests the NIMA

Director to prepare answers to these questions and report to

the Congressional intelligence and defense committees by March 1, 1999.

Endurance unmanned aerial vehicle, No budgetary change

The budget request contained $178.7 million in PE 35205D8Z for

endurance unmanned aerial vehicles, and included $40.6 million for the

Dark Star stealthy high altitude endurance (HAE) unmanned aerial vehicle

(UAV), $90.1 million for Global Hawk HAE UAV, and $48.0 million for the

common ground segment.

The committee is aware that Global Hawk has made its first flight,

but that continuing problems with the Dark Star development has

prevented its continued flight test. The committee is concerned by

continuing delays in the Dark Star testing, reportedly caused by a lack

of redundancy of the aircraft's systems and a continuing series of

hardware and software failures. Further, the committee is aware that

there has been a tendency to describe existing advanced concept

technology demonstration (ACTD) aircraft such as Dark Star and Global

Hawk as systems that may, in part, replace manned reconnaissance

aircraft. Though noting that ACTD aircraft may form the basis for a

future capability, the committee has been informed by operational users

that the new HAE UAVs must undergo a thorough user evaluation to

determine military utility. Such demonstration aircraft are not, nor

were they designed to be, operational aircraft. Potential users note

that subsequent to evaluation, the ACTD aircraft design must be

modified, as necessary, based on information gathered, to meet an

operational requirement. Based on service requirements, they then must

be procured using the established acquisition process. Predator, the

first ACTD UAV to transition to production has followed this process.

The committee reminds the Secretary of Defense that the ACTD program is

not to be used to circumvent established acquisition procedures.

The committee strongly supports continued development of HAE UAVs as

potential replacements for manned reconnaissance aircraft, and

recommends $178.7 million only for HAE UAV and common ground segment

development.

Joint signals intelligence avionics family, No budgetary change

The budget request contained $80.4 million in PE 35206D8Z for the

joint signals intelligence avionics family (JSAF).

The committee continues to be concerned by problems with JSAF

developments. While the committee is encouraged by progress in design of

the low band subsystem (LBSS), it is concerned by schedule delays and

cost increases that have forced reduction of system performance to

remain within budget. Further, the committee remains doubtful that the

high band subsystem (HBSS) development can successfully meet its cost

and performance goals. The committee's concerns are heightened by the

fact that the JSAF development is the only planned upgrade for future

airborne SIGINT reconnaissance. If JSAF fails to provide the needed

capabilities, users ranging from theater tactical forces to national

policy makers will be severely impacted.

Executive Order 12333 charges the Director of the National Security

Agency (NSA) to conduct ``research and development to meet the needs of

the United States for signals intelligence * * *''. To ensure proper

joint oversight of JSAF development, the committee recommends the budget

request be authorized in PE 35885G, the Defense Cryptologic Program. The

committee believes this will allow the Air Force, as the executive agent

for JSAF, to continue to execute the program, while providing joint

oversight by NSA.

Tactical unmanned aerial vehicles, Funding transfers

The budget request contained $75.6 million in PE 35204A and $37.2

million in PE 35204D8Z for tactical unmanned aerial vehicles (UAV).

The committee notes that the Under Secretary of Defense for

Acquisition and Technology recently provided the Congressional defense

and intelligence committees with the Department's plan to implement

legislative direction included in the National Defense Authorization Act

for Fiscal Year 1998 (P.L. 105 85) for reorganization of the Defense

Airborne Reconnaissance Office (DARO) and commends the Department for

its prompt response. The National Defense Authorization Act for Fiscal

Year 1998 (P.L. 105 85) contained further direction that the Department

of Defense review commercial solutions for the various UAV requirements.

The committee notes that the Navy is now conducting a three-phase

competitive demonstration of vertical takeoff or landing (VTOL) UAVs to

meet the Navy and Marine Corps VTAL UAV requirements. The committee

continues to support this approach and urges the Navy to continue the

multiple-participant competitive demonstration through the shipboard

phase prior to final selection using the funds provided.

The committee notes the proposed plan for transfer of DARO funding

included in the fiscal year 1999 request to appropriate service accounts

and recommends the following adjustments: $49.6 million in PE 35204A for

Army tactical UAV, a decrease of $26.0 million; $18.0 million in PE

35204N for VTOL UAV; $37.2 million in PE 35204N for ongoing common

tactical control system development previously managed by the Joint

Program Office; and $8.0 million in PE 35204M for the Marine Corps'

close range tactical UAV.

Defense airborne reconnaissance program management,-$4.7 million

The budget request contained $15.7 million for Defense Airborne

Reconnaissance Program (DARP) integration and support in PE 35209D8Z.

The committee notes that, subsequent to development of this year's

budget request, the Defense Airborne Reconnaissance Office (DARO) has

been eliminated and its functions absorbed within the reorganized office

of the Deputy Assistant Secretary of Defense for Command, Control,

Communications, Intelligence, Surveillance, and Reconnaissance and

within the military services. The committee supports actions that adhere

to the Department's stated objective of maintaining a very small cadre

oversight organizations within the Office of the Secretary of Defense

(OSD), focused solely on policy level guidance to ensure reconnaissance

system interoperability and architectural compliance. The

Department has indicated that it plans to request reprogramming

authority to shift DARO funding for DARP integration and support from PE

35209D8Z to program elements within the Air Force and other DoD

agencies, as well as Defense-wide operations and maintenance.

The committee supports this transfer of funding, and, therefore

recommends $7.0 million in Operations & Maintenance, Defense-wide, $1.0

million in PE 35208F, $1.0 million in PE 35208BQ, $1.0 million in

35208G, and $1.0 million in PE 35208L, a total decrease of $4.7 million.

18 reconnaissance capable, -$1.0 million, transfer $42.4 million

The budget request included $43.4 million for developing the Super

Hornet Advanced Reconnaissance Pod (SHARP).

The committee continues to fully support the development of a podded

tactical reconnaissance capability for use by fighter aircraft and has

supported the concept that a podded reconnaissance capability should not

be focused strictly on the E/F 18 aircraft. The Navy has agreed with

this broader concept and has decided to change the name SHARP to the

Shared Reconnaissance Pod to reflect the change in approach.

Due to this decision, the committee believes the funds should be more

appropriately reflected in the Joint Military Intelligence Program,

within the Navy's Manned Reconnaissance line. Therefore, the committee

recommends $42.4 million in P.E. 35207N for this purpose.

Advanced synthetic aperture radar system improvement program,

+$8.0 million

The budget request contained $5.0 million in PE 35207D8Z for the

Advanced Synthetic Aperture Radar System (ASARS) Improvement Program

(AIP) for the U 2 aircraft. As a result of the termination of the

Defense Airborne Reconnaissance Office, the Deputy Secretary of Defense

for Acquisition and Technology sent a letter to the Congress

recommending specific redistribution of Defense Airborne Reconnaissance

Program funding in fiscal year 1999. Included in this recommendation was

an additional $2.5 million for AIP research and development. Further,

the Air Force has requested a transfer of AIP procurement funding into

the research and development account.

The AIP program will dramatically increase the U 2's radar system

with significantly improved synthetic aperture radar imagery, a highly

capable moving target indicator tracking capability, and integral

onboard processing functions. Unfortunately, the AIP has suffered cost

growth and has a fiscal year 1999 shortfall of over $18.0 million. Some

of this growth is due to contractor overruns and schedule slips caused

by late deliveries of commercial processors. Some of this growth is due

to a decision to postpone certain Global Hawk High Altitude Unmanned

Aerial Vehicle radar developments that were cost sharing with AIP. This

growth has forced the Air Force to make decisions to slip the AIP,

thereby further increasing costs. In order to deliver the AIP when

required, the Air Force has stated a need to reprogram funding from

procurement to research and development in fiscal year 1999. However,

such a step would have a significant procurement funding impact in

fiscal year 2000.

The committee recommends an authorization of $13.0 million, an

increase of $8.0 million for AIP development.

Electro-optic framing technologies, +$8.0 million

The budget request contained $5.4 million in PE 35207D8Z for

electro-optic (EO) framing technology.

The committee continues to support the state-of-the-art EO framing

with on-chip forward motion compensation (FMC). This technology is

proving itself in operationally deployed systems.

The committee recommends $13.4 million, an increase of $8.0 million

in PE 35206N for the purposes of furthering the EO with on-chip FMC

technologies. Specifically, these additional funds are to be used for

continued development of the ultra-high resolution focal plane array and

conformance with JPEG 2000 compression standards. These developments

should produce form/fit operational insertions into currently deployed

CA 260 framing cameras. Further, these funds are to be used to develop

infra-red EO framing technologies and image intensified EO framing

sensors with FMC for operational insertion into existing Air National

Guard tactical reconnaissance aircraft and other aircraft as

appropriate.

Unmanned aerial vehicle systems integration laboratory, No

budgetary change

The budget request contained $5.0 million in PE 35204D8Z for the U.S.

Army's Unmanned Aerial Vehicle (UAV) Systems Integration Laboratory

(SIL), and included $3.0 million for continued development of the

Multiple UAV Simulation Environment (MUSE).

The committee supports the SIL's joint UAV developmental work and it

is concerned that the reorganization of Defense Airborne Reconnaissance

Program will leave the SIL without a sponsor, thereby possibly losing a

valuable joint UAV integration organization and jeopardizing continued

evolution and improvement of the MUSE tool. While SIL is clearly a

service organization, it provides joint support that may well be

overseen directly by the new Deputy Assistant Secretary of Defense

(DASD) for Command, Control, Communications, and Intelligence,

Surveillance and Reconnaissance.

Therefore, the committee directs the Assistant Secretary of Defense

(Command, Control, Communications and Intelligence) to provide the

congressional defense and intelligence committees a plan, which includes

a funding profile, for the continued operation of the SIL, no later than

March 31, 1999.

Multi-function self aligned gate technology, +$4.0 million

The budget request contained $32.1 million for continued development

of the unmanned aerial vehicle (UAV) tactical control system (TCS).

The committee notes that the TCS will provide interoperability and

commonality for mission planning, command and control, communications,

and data dissemination for the current and future family of tactical and

medium altitude endurance UAVS. The multi-function self aligned gate

(MSAG) technology developed as part of the TCS development has been

successfully demonstrated and is now ready for larger scale testing. The

committee supports MSAG and recommends $36.1 million, an increase of

$4.0 million for fabrication and testing of prototype MSAG active array

antennae for TCS UAVS.

Finally, the committee is aware that after the field tests of the AAA

in fiscal year 1998, there are no plans to continue to develop, produce

or test this technology. The committee believes this technology has the

potential for many applications, including use as highly reliable

satellite communications antennas with no mechanical parts. Therefore,

committee requests the Assistant Secretary of Defense (Command, Control,

Communications, and Intelligence) to provide the defense and

intelligence committees a plan for moving forward with, and possibly

fielding, this technology. This plan should include a spend plan for the

fiscal year 1999 funding, potential users--including National Foreign

Intelligence Program users--and schedule. The committee requests the

plan be provided no later than 31 January 1999.

Integrated imagery planning, No budgetary change

The committee believes that the numerous, but separate, Department of

Defense and Intelligence Community (IC) imagery programs should be

closely coordinated and integrated to maximize their collective

capabilities. Better planning of visible and multi-spectral imagery,

synthetic aperture radar (SAR), moving target indicator (MTI) radar, and

video collection could improve support to military operations and save

resources.

Moving target indicator (MTI) radar provides a real-time acquisition

and can provide continuous tracking capability, but has limited

abilities for target identification. Electro-optic (EO) and SAR imagery,

in contrast, are excellent for target classification and identification,

but are exploited by humans and do not provide a continuous tracking

capability. It would appear that the two types of imagery are highly

complementary, and that their individual strengths offset their

individual deficiencies. For example, if proper MTI coverage of an area

could be maintained, EO or SAR imagery, even with significant latencies,

could be used to identify immediate targets without additional imaging.

Logically, the need for repeatedly imaging those targets with high

resolution sensors might be reduced, as would associated communications

requirements. Unfortunately, these complementary types of imagery have

been managed, and moreover, tasked, in isolation.

DoD is, for example, acquiring a host of unrelated MTI capable

systems. With few exceptions, these systems are not interoperable. If

adequate numbers of systems could be fielded and their data streams

integrated, however, overall performance could be far greater than the

sum of their parts, improving the chances for continuous and precise

tracking. Similarly, the DoD and IC are operating and acquiring a host

of imagery systems. Although the products may be interoperable in many

cases, there is reason for concern that we have not yet determined the

right relationship and balance between these systems to best combine

their total capabilities.

Finally, every imagery requirements analysis has concluded that two

foot resolution is necessary for imagery analysts conducting wide-area

search. Many sensors do not meet this standard--particularly those being

planned for the unmanned aerial vehicles. Meeting such requirements, and

absorbing the costs associated, may not be necessary if the various

forms of ``imagery'' can be combined into a holistic information effort.

The committee believes that there is a compelling need to carefully

examine ways to integrate imagery and MTI systems to not only make

requirements, cost and capability tradeoffs across programs, but,

moreover, to take fullest advantage of the totality of all our

information capabilities. This will require better mission planning and

tasking, more robust connectivity between sensors, fusion developments,

and analysis interactions. Further, it will require a removal of

stovepiped management processes.

The committee directs DoD and the IC to conduct a study on the issues

discussed above, using the study of MTI technical issues and

requirements mandated by Congress last year as a model. The committee

expects the technical assessment portion of the study to be led jointly

by ASD(C3I) in coordination and the Community Management Staff, with

appropriate participation of NIMA, NRO, DARPA, the services, and the

joint staff. The committee directs that this study be completed and the

results conveyed to the congressional defense and intelligence

committees no later than March 1, 1999.

Defense imagery program, Funding transfers

The budget request included $29.4 million in research and

development, defense-wide, line 150 for the Common Imagery

Ground/Surface Station (CIGSS) and $1.9 million for development of the

standards for the Distributed Common Ground Station (DCGS). The

committee believes there is a need for the National Imagery and Mapping

Agency (NIMA) to create from within existing resources a management

structure analogous to the National Security Agency's Defense

Cryptologic Program (DCP). The DCP is responsible for coordinating and

providing funding for advanced research and development of signals

intelligence capabilities that have applicability across all services.

This structure requires close coordination with the services as they

develop, field, and evolve tactical systems, with the service needs

driving the leading edge developments. The committee believes that, just

as the Director, NSA is responsible for coordinating research and

development to meet the tactical needs of the U.S. Cryptologic System,

so should the Director, NIMA for the U.S. Imagery System.

Therefore, the committee recommends these funding requests be

authorized in research and development, defense-wide, line 138A.

Further, the committee directs NIMA to create a management structure to

provide a Defense Imagery Program within the Defense Imagery and

Mapping Agency Program of the Joint Military Intelligence

Program. No additional billets are authorized for this management.

Integrated architecture plan, +$3.0 million

The budget request contained $6.1 million for the Command, Control,

Communications, Computers, Intelligence, Surveillance, and

Reconnaissance (C4ISR) Integrated Architecture Plan (CIAP).

CIAP has been strongly endorsed by the Assistant Secretary of Defense

for Command, Control, Communications, and Intelligence as well as the

commanders-in-chief of the nine unified commands. The CIAP developments

have included the highly successful C4ISR Architecture Framework for the

Department of Defense, the Command C4ISR Architectures for the regional

Commanders in Chief, and the initiation of the C4ISR Architectures for

the Warfighter (CAW) effort at selected unified commands. The committee

believes this later effort should be extended to all nine unified

commands.

The committee believes these architectural developments will provide

a cohesive and more cost effective strategy for developing and procuring

the proper intelligence support systems for the users. The committee

recommends $9.1 million for the continuation of these efforts and

extension of the CAW to all unified commands.

Joint reserve intelligence program, +$3.0 million

The budget request contained $9.4 million in operations and

maintenance, defense-wide, for continued reserve component man days for

the conduct of the Joint Reserve Intelligence Program (JRIP).

The committee is favorably impressed by the intelligence production

mission load the JRIP has been able to accommodate in support of the

active forces. This has been particularly true of the JRIP support to

the European Joint Analysis Center (JAC) from the Fort Sheridan,

Illinois, Joint Reserve Intelligence Center. This world-wide support has

included direct personnel support via temporary duty assignments as well

as support from the continental United States via virtual connectivity

whereby reservists can drill with their gaining units without having to

leave their home area. Further, this support, in excess of 34,000 man

days, has provided the active components with critical intelligence

augmentation to conduct collection operations, process backlogs, and

produce targeting materials, final reports and studies--all without

having to use the presidential selected reserve call-up authority.

The committee believes this program should be expanded and its

benefits maximized to the extent possible. The committee recommends

$12.6 million, an increase of $3 million for these purposes.

Joint inter-agency task force west, -$3.5 million

The budget request included $4.2 million for operating an all-source

intelligence analysis cell for the Joint Inter-Agency Task Force (JIATF)

West. This cell is focused on coordinating tactical and operational

intelligence support to U.S. Embassy Country Teams performing

counter-drug operations in the Southeast Asia and Southwest Asia areas.

The committee notes that JIATF-West is attached to PACOM, but appears

to have little command support. Further, the Drug Enforcement Agency,

the Crime and Narcotics Center, and other JIATFs have indicated to the

committee that this cell offers little value for the funds expended and

has not produced any actionable tactical intelligence or strategic

analysis. Therefore the committee recommends an authorization of

$700,000 for this intelligence function, and recommends an evaluation to

terminate it altogether.

Defense support program office training and exercise, -$7.8 million

The budget request contained $7.8 million for Defense Support Program

Office (DSPO) training and exercise support.

The Secretary of Defense has informed the committee that the DSPO is

being abolished and its functions consolidated within the National

Reconnaissance Office (NRO). The committee understands that the National

Military and Operations Support Office within the NRO is also charged

with, and funded for, training and exercise support. Therefore, the

committee believes the DSPO training and exercise support funding is no

longer required and recommends no authorization for this purpose.

TACTICAL INTELLIGENCE AND RELATED ACTIVITIES

Tactical exploitation of national capabilities, -$4.6 million

The budget request contained $44.7 million in PE 64766A for Army

tactical exploitation of national capabilities (TENCAP).

The committee notes that the amount requested represents nearly a

$26.0 million increase from the level approved for fiscal year 1998. The

committee is concerned that the Army may be using the TENCAP program as

a means for bypassing the ``normal'' acquisition process allowing it to

procure and operate combat systems associated with space sensors. The

committee is supportive of TENCAP efforts for short-term, high-pay

concepts and initiatives that improve the use of national space sensors

and systems. The committee will not, however, support TENCAP funded

development and production of entire weapons systems. Therefore, the

committee directs that future TENCAP requests be limited to space

exploitation initiatives and projects that are of short-duration and

high payoff.

The committee recommends $40.1 million for the Army's TENCAP program

in fiscal year 1999, a reduction of 4.6 million in PE 64766A.

Ground based common sensor (GBCS), -$9.7 million

The budget request contained $25.4 million for the GBCS-Light system,

of which $1.5 million is for the Common Module Electronics Intelligence

System (CMES).

The committee notes that $1.5 million for CMES procurement is

requested twice. Consequently, the committee recommends a reduction of

$1.5 million.

Additionally, the committee notes that the GBCS-L system has had

numerous technical difficulties and experienced a fielding delay as a

result of a two-year slip in initial operational test and evaluation

(IOT&E). This delay has resulted in the Department twice having used

GBCS as a source of funds for reprogramming requests.

Just as the committee was marking up the fiscal year 1999 request, it

learned that, due to continuing integration problems, the GBCS-L IOT&E

will not be conducted again in fiscal year 1998. This third and latest

slip is very disturbing and signals to the committee that there are more

problems with this system than the Army is admitting. As a result of the

program's past and current performance, it believes that all of the

requested funding will not be executable in fiscal year 1999 and it

recommends a reduction of $9.7 million for GBCS-L hardware. Finally, the

committee notes that the Department of Defense has requested nearly $500

million for this relatively small and low complexity program. This

committee finds this cost excessive for the capability required, and

therefore requests the Secretary of Defense to conduct an Inspector

General audit of the GBCS program; its costs, its technical approach,

and management.

All source analysis system (ASAS), +$2.0 million

The budget request contained $28.1 million in PE 64321A for the ASAS

intelligence support system.

The committee recommends $30.1 million, an increase of $2.0 million

in PE 64321A, to continue the development of situation display fusion

algorithms, to transfer these algorithms to the other service

intelligence support systems, and to achieve ASAS Block II

interoperability with the Defense Intelligence Agency's Modernized

Integrated Data Base.

Distributed surveillance system, +$6.7 million

The budget request contained $42.0 million in PE 64784N for advanced

deployable system (ADS) engineering and manufacturing development.

The committee recommends $48.7 million, including an increase of $6.7

million to continue the planned introduction of automation and data

fusion capability for the ADS demonstration system.

Navy joint surveillance and target attack radar system

(JSTARS), +$3.0 million

The budget request included no funding for completing the

developments for integrating a capability on U.S. Navy surface vessels

to receive processed JSTARS MTI data over UHF satellite communications

and Link 16.

In the National Defense Authorization Act for Fiscal Year 1998,

Congress provided $5.0 million for the Navy to begin integrating the

Link 16 data into the Joint Maritime Command and Control System (JMCIS)

and the Global Command and Control System (GCCS). The committee has

learned that the Link 16 integration into GCCS will satisfy many DoD

data dissemination requirements, including the JSTARS. Therefore, the

committee recommends an additional $3 million for these purposes within

the Navy's JMCIS line.

Also, as noted elsewhere in this report, the committee is convinced

that the Navy will require access to the full range of JSTARS'

capabilities to support Navy targeting requirements. Such full access

will require a wide-band data link capability between the aircraft and

the surface vessels. The wide-band Common Data Link (CDL) is DoD's

standard, high-rate data link that will be installed on nearly thirty

Navy aircraft carriers, amphibious, and command ships early in the next

decade. The committee believes that it would be illogical for the Navy

to install another expensive, unique data link such as the low data rate

Secure Common Data Link (SCDL), currently employed on the JSTARS, on its

major combatants. Instead, the committee believes it is necessary to add

as soon as possible a data broadcast capability based on the CDL

standard to the JSTARS fleet. Also as noted elsewhere, the Navy clearly

needs a CDL capability on the P-3 fleet to take full advantage of the

range of radar, SIGINT, and imagery capabilities planned or programmed

for the various elements of that fleet.

If the Navy's requirement for CDL-compatible wide-band airborne data

links turns out to be the recently demonstrated Tactical CDL (TCDL), the

committee believes it would be wise for the Navy to consider modifying

its currently planned CDL installations, to be compatible with both the

CDL and TCDL, before or as they are installed. The committee will be

reluctant to approve purchase of TCDL ground stations without first

receiving a solid Navy commitment to modify all of its shipboard CDL

systems to be compatible with both.

Based on the above, the committee directs the Secretary of the Navy

to report to the congressional defense and intelligence committees, by

March 1, 1999, on the Navy's requirements and plans for

CDL/TCDL-compatible data links.

Fleet air reconnaissance, -$5.2 million

The budget request contained $5.2 million for ES 3A modification kits.

The Navy has informed the committee that it intends to terminate the

ES 3 program in fiscal year 2000. Based on this decision, the committee

sees no need for modifying these aircraft prior to their removal from

the fleet. The committee, therefore, recommends no funding for these

modifications.

Marine Corps electronic warfare support system, Fence $16.4 million

The budget request contained $16.4 million for acquiring two Marine

Corps Electronic Warfare Support Systems (MEWSS).

The committee directs that none of the authorized and appropriated

funding be obligated or expended until completion of a successful

initial operational test and evaluation (IOT&E). The committee

understands the development and IOT&E of the MEWSS is directly tied to

the Army' Ground-Based Common Sensor (GBCS) system. The committee

believes, however, that IOT&E success or failure, and, therefore,

subsequent procurement decisions, should be based on the individual

system merits based on their operational concepts. Therefore, the

committee does not see a specific need to make a successful IOT&E of

MEWSS contingent on a successful IOT&E of GBCS.

Marine Corps tactical intelligence equipment, +$1.0 million

The budget request contained no funds for purchasing and evaluating

commercial imagery display tools, or modern printer technologies.

The committee is aware of the highly successful Marine Corps use of

the Remote Replication System (RRS). The RRS allows the Marine

Expeditionary Force (MEF) to deploy with automated equipment that

provides the capability to ``reach back'' to National Imagery and

Mapping Agency data bases and ``pull forward'' data in order to

construct mapping and imagery products. The committee believes this

concept has the potential to reduce drastically the paper products with

which the MEF currently deploys. Despite the success of the RRS concept,

however, the committee understands that there has been little attention

paid to providing modern display and printing technologies. Therefore,

the committee recommends $1.0 million in procurement, Marine Corps, for

purchasing and evaluating commercial imagery manipulation tools,

state-of-the-art display devices, and high quality large format printers

for field use.

Air Force/NRO partnership, -$2.6 million

The budget request contained $17.6 million in research and

development, Air Force, for the joint Air Force, National Reconnaissance

Office, and Defense Advanced Research Projects Agency advanced space

technology demonstrator.

The partnership funding for this demonstration is an equal share of

one third each. The fiscal year 1999 Air Force request exceeds its

share. Therefore, the committee recommends an authorization of $15

million, or a reduction of $2.6 million.

Joint tactical terminal, +$8.0 million

The budget request contained $6.5 million in other procurement, Army,

and $4.2 million in other procurement, Air Force, for the Joint Tactical

Terminal intelligence broadcast transceivers.

These radios are an integral part of the Integrated Broadcast Service

that the committee fully supports. The committee is concerned that,

because of contract protests that have resulted in delays in final

contract award, the fielding of these radios has slipped, leaving

operational users without the ability to receive tactical intelligence

data broadcasts. In order to correct this problem, the committee

recommends $11.5 million and $7.2 million, an increase of $5.0 million

for the Army and $3.0 million for the Air Force, respectively, for

accelerating the purchase and fielding of these radios.

``Senior Scout,'' No budgetary change

The budget request contained $14.3 million in operations and

maintenance, Air National Guard, partially for the continued operation

of the Senior Scout tactical reconnaissance system. Senior Scout is a C

130-employed, roll-on/roll-off, reconnaissance capability operated by

the Air National Guard. It provides an airborne reconnaissance

collection capability that is complementary to other airborne collection

systems operated by the active component.

The committee perceives a lack of direction and support for Senior

Scout, noting that on several occasions, the Air Force has nearly

terminated the program, that the system has not been well supported in

terms of upgrades or sensor improvements, and that it has certainly not

maintained technological pace with the RC 135 Rivet Joint aircraft or

other similar reconnaissance platforms. Consequently, the committee does

not believe continuing the Senior Scout to be either cost or mission

effective. The committee believes, however, that the Air National Guard

linguists currently operating the Senior Scout are vital to the overall

national

reconnaissance effort. The committee perceives a critical need

to retain these Guard reconnaissance personnel and training them on more

modern equipment.

In fiscal year 1997, Congress authorized and appropriated funding for

two additional RC 135 Rivet Joint aircraft. The committee has learned

that the Air Force is having difficulty fully manning these aircraft.

The committee believes that since the Guard personnel are currently

tasked to supplement active component RC 135 operations, providing at

least one of these aircraft on a rotational basis to the Air National

Guard would both resolve the manpower problem and take greater advantage

of an available resource.

Therefore, the committee directs the Secretary of the Air Force to

provide the congressional defense and intelligence committees a plan for

phasing out the Senior Scout reconnaissance system and replacing it with

an RC 135 alternative no later than October 1, 1999.

``Pacer Coin,'' -$2.4 million

The budget request contained $2.4 million in aircraft spares and

repair parts for the transfer of mission equipment from retiring Pacer

Coin aircraft to the non-dedicated, follow-on C 130 reconnaissance

aircraft. The committee notes that a fiscal year 1998 reprogramming

action stated that all funds for the C 130 follow-on program were

included in that request.

Furthermore, the committee does not agree that $2.4 million of

procurement funding is required to transfer equipment from one aircraft

to another. Therefore, the committee recommends no funding for this

purpose.

Joint surveillance and target attack system, Fence $40.2 million

The budget request included $123.8 million in research and

development for the Joint Surveillance and Target Attack System

(JSTARS), including $5.6 million for studies and miscellaneous efforts.

The committee recommends a total of $118.2 million for these purposes.

The committee is concerned by the extraordinary costs of the JSTARS

program. The committee understands each aircraft must undergo a

forty-one month, $110 million, refurbishment effort to restore the old

707-based airframes to flying condition before the aircraft begins its

modification to JSTARS configuration. This is more than triple what the

aircraft cost new, and is more expensive than purchasing a new 757

aircraft. Further, current projections show that the JSTARS latest

improvement program will cost the U.S. taxpayer well in excess of a

billion dollars to upgrade only a limited number of the thirteen JSTARS

aircraft. While the committee may fully support necessary upgrades to

this important system, there needs to be a significant effort to curb

costs.

Therefore, the committee requests the Secretary of the Air Force to

provide a report of audit on the costs of the JSTARS aircraft: the basic

airframe costs, the modification costs, and the costs of the upgrade

programs. This audit should be provided to the defense and intelligence

committees no later than 31 March 1999.

Finally, the committee has been asked in the President's budget

request to authorize the full request of the radar technology

improvement program. The Department of Defense has not agreed to brief

Members of the committee on all aspects of this upgrade, or even on how

the requested funding will be spent. Therefore, the committee directs

that no funding for the RTIP upgrade be obligated or expended until the

committee is fully briefed on this program.

Special operations intelligence systems, +$5.0 million

The budget request contained $1.8 million in PE 1160405BB for the

special operations systems development.

The committee notes that the special operations forces intelligence

vehicle (SOF IV) is an evolutionary ongoing effort that requires

additional funding to complete development. The committee recommends

$6.8 million, an increase of $5.0 million for SOF IV in PE 1160405BB.

SECTION-BY-SECTION ANALYSIS OF THE BILL AS REPORTED

INTELLIGENCE AUTHORIZATION ACT FOR FISCAL YEAR 1999

Title I: Intelligence activities

Section 101--Authorization of appropriations

Section 101 lists those elements of the United States Government for

whose intelligence and intelligence-related activities the Act

authorizes appropriations for fiscal year 1999.

The Drug Enforcement Administration (DEA) has been listed in section

101 of past Intelligence Authorization Acts. The DEA, however, does not

receive appropriations authorized by this legislation. Thus, the

committee does not include DEA in section 101.

The fact that DEA is no longer included, however, should not be

understood by either the DEA or any element of the intelligence

community as a reason to reduce the level of cooperation that currently

exists between the DEA and the various elements of the community. The

committee expects and demands a continuation of the very beneficial

working relationship that has developed between the community and the

DEA. The committee recognizes the efficacy of the DEA's partnership with

the intelligence community on the extremely serious national security

issue of international drug trafficking. It is the committee's

expectation, in spite of the removal of the DEA from section 101 of the

Intelligence Authorization Act for Fiscal Year 1999, that this

partnership will remain solid and continue to develop in the best

interests of the people of the United States.

The committee similarly insists upon a continuation of the level of

close communication between the committee and the DEA, with respect to

notification of developments, successes, failures, or compromises of the

foreign counternarcotics activities of the United States. The committee

will not countenance any attenuation of its ability to ensure that the

intelligence community is working together with law enforcement, where

necessary and appropriate, to advance our national security interests.

Section 102--Classified schedule of authorizations

Section 102 incorporates by reference the classified Schedule of

Authorizations. That schedule sets forth the specific amounts authorized

to be appropriated for specific intelligence and intelligence-related

activities and personnel ceilings for fiscal year 1999 for those United

States government elements listed in section 101. The details of the

Schedule are explained in the classified annex to this report. The

Schedule of Authorizations correlates to the President's budget request,

which was submitted to Congress, and remains, in classified form.

Section 103--Personnel ceiling adjustments

Section 103 authorizes the Director of Central Intelligence, with the

approval of the Director of the Office of Management and Budget (OMB),

in fiscal year 1999, to exceed the personnel ceilings applicable to the

components of the intelligence community under section 102 by an amount

not to exceed two percent of the total of the ceilings otherwise

applicable under section 102. The Director may exercise this authority

only when 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 hiring needs that are consistent with the authorization of

personnel strengths in this legislation. In no case is this authority to

be used to provide for positions otherwise denied by Congress.

Section 104--Community management account

Section 104 details the amount and composition of the Community

Management Account (CMA) of the Director of Central Intelligence.

Subsection (a) of section 104 authorizes appropriations in the amount

of $139,123,000 for fiscal year 1999 for the staffing and administration

of various components under the CMA. Subsection (a) also authorizes

funds identified for the Advanced Research and Development Committee and

the Environmental Intelligence and Applications Program to remain

available for two years.

Subsection (b) authorizes a total of 283 full-time personnel for

elements within the CMA for fiscal year 1999 and provides that such

personnel may be permanent employees of the CMA element or detailed from

other elements of the United States Government.

Subsection (c) explicitly authorizes the classified portion of the CMA.

Subsection (d) requires that personnel be detailed on a reimbursable

basis, with certain exceptions.

Subsection (e) authorizes $27,000,000 of the amount authorized for

the CMA under subsection (a) to be made available for the National Drug

Intelligence Center (NDIC) in Johnstown, Pennsylvania. Subsection (e)

requires the Director of Central Intelligence to transfer the

$27,000,000 to the Department of Justice to be used for NDIC activities

under the authority of the Attorney General, and subject to section

103(d)(1) of the National Security Act.

Subsection (f) earmarks funds that are allocated for the CMA under

subsection (a) and authorizes those funds to be made immediately

available to the Department of State for the express purpose of

supporting intelligence community requirements related to the security

of overseas facilities. This subsection authorizes a one-time-only

immediate transfer of funds by the Director of Central Intelligence from

the CMA's Center for Security Evaluation to the Department of State to

ensure that architectural and engineering services related to several

overseas locations in fiscal year 1999 can begin immediately. These

funds shall only be available for the same purposes, and subject to the

same terms and conditions, as the funds in the appropriation accounts to

which these funds will be transferred.

The committee understands that an agreement among the departments or

agencies affected has been reached with respect to the specific amounts

and locations involved.

Title II: Central Intelligence Agency retirement and disability system

Section 201--Authorization of appropriations

Section 201 authorizes appropriations in the amount of $201,500,000

for fiscal year 1999 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 this Act for

salary, pay, retirement and other benefits for federal employees may be

increased by such additional or supplemental amounts as may be necessary

for increases in such compensation or benefits authorized by law.

Section 302--Restriction on conduct of intelligence activities

Section 302 provides that the authorization of appropriations within

the Act does not constitute authority for the conduct of any

intelligence activity that is precluded by the Constitution or other

laws of the United States.

Section 303--Extension of application of sanctions laws to

intelligence activities

Section 303 amends section 905 of the National Security Act of 1947,

which authorizes the President to delay the imposition of an economic,

cultural, diplomatic, or other sanction upon a foreign government based

on his determination that proceeding with such sanction could compromise

an ongoing criminal investigation or an intelligence source or method.

Section 905 was first enacted as part of the Intelligence Authorization

Act for Fiscal Year 1996. This authority has been extended every year

since for one year intervals.

Section 303 extends this authority until January 6, 2000. The

committee finds that there is a continuing need for this authority

because the immediate imposition of sanctions, without some delay,

could, in particular cases, seriously jeopardize a criminal

investigation or sources and methods of intelligence collection.

The committee reaffirms, without restating here, the position

asserted in its report accompanying the Intelligence Authorization Act

for Fiscal Year 1998 (Rpt. No. 105 135, part I), with respect to this

section.

Section 304--Sense of Congress regarding intelligence

community contracting

Section 304 expresses the sense of Congress that the DCI should

continue to direct elements of the intelligence community to award

contracts in a manner that would maximize the procurement of products

produced in the United States, when such action is compatible with the

national security interests of the United States, consistent with

operational and security concerns, and fiscally sound.

Title IV: Central Intelligence Agency

Section 401--Extension of the CIA Voluntary Separation of

Pay Act provisions

Section 401 amends section 2(f) of the Central Intelligence Agency

Voluntary Separation Pay Act (P.L. 103 36)(50 U.S.C. 403 4 note) to

extend the Agency's authority to offer ``early-out'' incentives until

September 30, 2001. Without this amendment, the Agency's authority to

offer such incentives would expire on September 30, 1999.

Although, CIA's ``early out'' incentive has been an effective

workforce reduction tool, the Agency must continue to address skills mix

issues, and ensure that personnel reductions are not undertaken simply

for the sake of reduction. The net impact of the six CIA early-out

exercises thus far, along with normal attrition and reduced hiring, has

been a significant drop in the Agency's on-duty strength since the

separation incentive program began in fiscal year 1993. The committee is

concerned that such reductions could result in gaps of coverage,

especially in critical areas.

The committee acknowledges that the CIA has worked hard over the past

decade to streamline and refocus its workforce to address critical,

cutting-edge national security issues. The Agency should be commended

for its efforts to reengineer its business processes, hire personnel

with new and vital skills, expand the capabilities and experiences

within the Agency workforce, and acquire new technologies to meet the

demands of today's collection requirements.

Voluntary Separation Incentive Pay authority should only be used for

specific, targeted populations and is intended to help the CIA achieve

its skill mix goals without resorting to involuntary separations in

certain occupational categories.

The committee believes that without this continued authority

separation rates would decline. This would limit the Agency's ability to

keep pace with rapidly expanding technologies and the dynamic

geopolitical realities that we face. The ability to adapt to such

dynamic changes is central to the Agency's mission.

Section 402--Enhanced protective authority for CIA personnel

and family members

Section 402 of the Act amends section 5(a)(4) of the Central

Intelligence Agency Act of 1949 (``CIA Act''). This provision will

enable the Agency to use firearms to protect current and former Agency

personnel and their immediate families, as well as defectors and their

immediate families, who are in the United States. This authority is

granted for those situations when the Director of Central Intelligence

determines such protection is necessary for the performance of the

authorized functions of the Central Intelligence Agency.

Current Section 5(a)(4) of the CIA Act permits the CIA to use

firearms within the United States to protect only certain categories of

individuals limited to Agency personnel, defectors, and the families of

defectors, and other persons in the United States under Agency auspices.

This provision does not limit or amend any aspect of this authority.

Protection may sometimes be appropriate for former Agency personnel

because the distinction between former and current CIA personnel will be

of little consequence to terrorists seeking to harm CIA. In addition,

prudence dictates that if former or current CIA personnel are threatened

with harm, the protection provided to them should, in appropriate

circumstances, be extended to their immediate families as well. The

committee intends that the authority provided by this amendment will be

used only when the Director determines that there are specific and

credible threats to the protectees while in the United States and that

those threats arise from the protectee's affiliation with the CIA. The

committee expects that the Director will advise the intelligence

committees when this authority is exercised.

Similarly, the committee believes the Agency must advise the Attorney

General when such specific and credible threats against a protected

individual occurs. In this way, the United States government's

prosecutorial rights that could result from such criminal activity will

be protected.

The committee does not anticipate that the authority provided by

section 402 will be used to provide protectees with armed security

protection when threatened with harm that arises for reasons unrelated

to an individual's current or former affiliation with CIA (e.g.,

domestic violence or general threat of criminal violence in the area of

a CIA employee's residence in the United States).

In the wake of the 1993 assassination of CIA employees, the CIA

discussed the protection issue with local jurisdictions. These local law

enforcement agencies indicated that they did not have the resources,

training, or charter to provide such protection. More recently during

and after the trial of Mir Aimal Kasi, the need for this enhanced

authority was established. The immediate families of those killed or

injured provided a target for threats, causing additional anguish for

them.

The committee notes that this additional grant of protective

authority is not without precedent. The United States Marshals Service

(USMS) provides protection to the families of certain personnel under

certain circumstances. The USMS has the authority to provide protection

to any USMS employee, officer, or witness or anyone involved in judicial

process who is deemed by the USMS Director to be under threat. Such

examples include federal judges, prosecutors, witnesses, jurors, and any

of their family members against whom a threat has been directed.

The committee understands that the CIA is a target or recipient of a

large volume of unsolicited calls, letters, and visits by potentially

hostile individuals. Many of these contacts are the work of disturbed

individuals, some of whom make threats and then ``close the gap'',

actually appearing at the CIA Headquarters compound (or other Agency

facilities). Implicit in this kind of potential threat is the chance

that hostile or aggressive behavior may be directed against the families

of CIA personnel.

The amendment made by section 402 would not extend or expand, in any

way, the carefully limited law enforcement authority and jurisdiction

provided to the Agency in section 15 of the CIA Act. Simply put, it

authorizes the Agency to protect Agency employees, current and former,

and their families, in the United States, in the same manner as they are

authorized to protect defectors in the United States.

Section 403--Technical corrections

Section 403 makes technical corrections to section 5(a)(1) and

section 6 of the Central Intelligence Agency (CIA) Act of 1949 and

section 201(c) of the CIA Retirement Act. The cross-reference in section

5(a)(1) of the CIA Act to subparagraphs (B) and (C) of section 102(a)(2)

of the National Security Act is no longer current or accurate, and

should cite instead to subsections (a)(2) and (a)(3) of section 102.

Section 805(a) of the Intelligence Authorization Act for Fiscal Year

1997 (P.L. No. 104 293) changed what had been sections 102(a)(2) (B) and

that Act. Similarly, the cross-references in section 5(a)(1) and section

6 of the CIA Act to ``subsection (c)(5) of section 103'' and to

``section 103(c)(5) of the National Security Act of 1947 (50 U.S.C. 403

3(c)(5))'', respectively, are no longer current or accurate. The

cross-reference in section 201(c) of the CIA Retirement Act to that same

provision of the National Security Act is also outdated. Section

807(a)(2) of the Intelligence Authorization Act for Fiscal Year 1997

changed what had been section 103(c)(5) of the National Security Act (50

U.S.C. 403 3(c)(5)) to section 103(c)(6) (50 U.S.C. 403 3(c)(6)).

Section 401 of the present legislation simply updates the

cross-references in section 5(a)(1) and section 6 of the CIA Act and

section 201(c) of the CIA Retirement Act to the pertinent provision of

the National Security Act.

Title V: Department of Defense

Section 501-- Extension of authority to engage in commercial

activities as security for intelligence collection activities

Section 501 amends section 431(a) of title 10 to continue current

Department of Defense authority to engage in commercial activities as

security for intelligence collection activities beyond December 31,

1999, which is the date on which the current statutory authorization

expires. The Committee has extended this provision for an additional

three years through and until December 31, 2002.

COMMITTEE POSITION

On April 29, 1998, in open session, a quorum being present, the

Permanent Select Committee on Intelligence, by a recorded vote of 12

ayes to 0 noes, approved the bill, H.R. 3694, as amended by an amendment

in the nature of a substitute. By that vote, the committee ordered the

bill, as amended, reported favorably to the House. On that vote, the

Members present recorded their votes as follows:

Mr. Goss (Chairman)--aye; Mr. Shuster--aye; Mr. McCollum--aye; Mr.

Castle--aye; Mr. Boehlert--aye; Mr. Bass--aye; Mr. Gibbons--aye; Mr.

Dicks--aye; Mr. Skaggs--aye; Ms. Harman--aye; Mr. Skelton--aye; Mr.

Bishop--aye.

FINDINGS AND RECOMMENDATIONS OF THE COMMITTEE ON GOVERNMENT REFORM AND

OVERSIGHT

With respect to clause 2(l)(3)(A) 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 seven full-committee

hearings, as well as six full-committee briefings, on the classified

budgetary issues raised by H.R. 3694. Testimony was taken from the

Director of Central Intelligence, the Director of the National Security

Agency, the Director of the Defense Intelligence Agency, the Deputy

Director of Central Intelligence, the Deputy Directors for Operations

and Intelligence, numerous program managers, and various other

knowledgeable witnesses on the activities and plans of the intelligence

community covered by the provisions and authorizations, both classified

and unclassified, of the Intelligence Authorization Act for Fiscal Year

1999. 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) of rule XIII of

the Rules of the House of Representatives, to ascertain the outlays that

will occur in fiscal year 1999 and the five years following if the

amounts authorized are appropriated. These estimates are contained in

the classified annex and are in accordance with those of the executive

branch.

CONGRESSIONAL BUDGET OFFICE ESTIMATES

In compliance with clause 2(l)(3)(B) and (C) of rule XI of the Rules

of the House of Representatives, and pursuant to sections 308 and 403 of

the Congressional Budget Act of 1974, the committee submits the

following estimate prepared by the Congressional Budget Office:

U.S. Congress,

Congressional Budget Office,

Washington, DC, May 5, 1998.

Hon. Porter J. Goss, 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. 3694, the Intelligence Authorization Act

for Fiscal Year 1999.

If you wish further details on this estimate, we will be pleased to

provide them. The CBO staff contact is Dawn Sauter.

Sincerely,

June E. O'Neill, Director.

Enclosure.

H.R. 3694--Intelligence Authorization Act for Fiscal Year 1999

Summary: H.R. 3694 would authorize appropriations for fiscal year

1999 for intelligence activities of the United States government, the

Community Management Account, and the Central Intelligence Agency

Retirement and Disability System (CIARDS).

This estimate addresses only the unclassified portion of the bill. On

that limited basis, CBO estimates that enacting H.R. 3694 would result

in additional spending of $139 million over the 1999 2003 period,

assuming appropriation of the authorized amounts. CBO believes that

section 401 of the bill, which would extend the authority of the CIA to

offer incentive payments to employees who voluntarily retire or resign,

would increase direct spending by $1 million or more in at least one

year during the 2000 2003 period. However, CBO cannot give a precise

estimate of the increase in spending because data to support a cost

estimate are classified. Because the bill would raise direct spending,

pay-as-you-go procedures would apply.

The Unfunded Mandates Reform Act of 1995 (UMRA) excludes from

application of the act legislative provisions that are necessary for the

national security. CBO has determined that all of the provisions of this

bill either fit within that exclusion or do not contain

intergovernmental or private-sector mandates as defined by UMRA.

Estimated cost to the Federal Government: The estimated budgetary

impact of the unclassified portions of H.R. 3694 is shown in the

following table. CBO is unable to obtain the necessary information to

estimate the costs for the entire bill because parts are classified at a

level above clearances held by CBO employees. The costs of this

legislation fall within budget function 050 (national defense).

The bill would authorize appropriations of $139 million for the

Community Management Account. In addition, the bill would authorize $202

million for CIARDS to cover retirement costs attributable to military

service and various unfunded liabilities. The payment to CIARDS is

considered mandatory, and the authorization under this bill would be the

same as assumed in the CBO baseline.

CBO believes that section 401 of the bill would increase direct

spending by $1 million or more in at least one year during the 2000 2003

period. Section 401 would extend the authority of the CIA to offer

incentive payments to employees who voluntarily retire or resign. Under

current law this authority expires on September 30, 1999. Section 401

would extend this authority starting in fiscal year 2000 until September

30, 2001. This extension would induce some employees to retire earlier

than under current law, thereby increasing federal outlays for

retirement benefits. CBO cannot give a precise estimate of the increase

in spending because data to support a cost estimate are classified.

[By fiscal year, in millions of dollars]

1998 1999 2000 2001 2002 2003

SPENDING SUBJECT TO APPROPRIATION

Spending under current law for the community management account: 94 0 0 0 0 0

Proposed changes: 0 139 0 0 0 0

Spending under H.R. 3694 for the community management account: 94 139 0 0 0 0

CHANGES IN DIRECT SPENDING

Estimated budget authority 0 0 (\2\) (\2\) (\2\) (\2\)

Estimated outlays 0 0 (\2\) (\2\) (\2\) (\2\)

\1\The 1998 level is the amount appropriated for that year.

\2\CBO believes that H.R. 3694 would increase direct spending by $1 million or
more in at least one year over the 2000 2003 period. However, CBO cannot give
a precise estimate because data to support a cost estimate are classified.

For purposes of this estimate, CBO assumes that H.R. 3694 will

be enacted by October 1, 1998, and that the full amounts authorized will

be appropriated for fiscal year 1999. Outlays are estimated according to

historical spending patterns for intelligence programs.

Pay-as-you-go considerations: Section 401 of the bill would affect

direct spending, and therefore the bill would be subject to

pay-as-you-go procedures. The estimated pay-as-you-go impact would be $1

million or more in at least one year over the 2000 2003 period.

Intergovernmental and private-sector impact: The Unfunded Mandates

Reform Act of 1995 (UMRA) excludes from application of the act

legislative provisions that are necessary for the national security. CBO

has determined that all of the provisions of this bill either fit within

that exclusion or do not contain intergovernmental or private-sector

mandates as defined by UMRA.

Estimate prepared by: Federal costs: Dawn Sauter; Impact on State,

local and tribal governments: Teri Gullo; Impact on the private sector:

Bill Thomas.

Estimate approved by: Robert A. Sunshine, Deputy Assistant Director

for Budget Analysis.

COMMITTEE COST ESTIMATES

The committee agrees with the estimate of the Congressional Budget

Office.

SPECIFIC CONSTITUTIONAL AUTHORITY FOR CONGRESSIONAL ENACTMENT OF THIS

LEGISLATION

The intelligence and intelligence-related activities of the United

States government are carried out to support the national security

interests of the United States, to support and assist the armed forces

of the United States, and to support the President in the execution of

the foreign policy of the United States. Article I, section 8, of the

Constitution of the United States provides, in pertinent part, that

``Congress shall have power * * * to pay the debts and provide for the

common defence and general welfare of the United States; * * * ``; ``to

raise and support Armies, * * * ``; ``to provide and maintain a Navy; *

* * `` and ``to make all laws which shall be necessary and proper for

carrying into execution * * * all other powers vested by this

Constitution in the Government of the United States, or in any

Department or Officer thereof.'' Therefore, pursuant to such authority,

Congress is empowered to enact this legislation.

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 italic, existing law in which

no change is proposed is shown in roman):

SECTION 905 NATIONAL SECURITY ACT OF 1947

APPLICATION

Sec. 905. This title shall cease to be effective on January 6, 1999

January 6, 2000 .

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, 1999 September 30, 2001

* * * * * * *

CENTRAL INTELLIGENCE AGENCY ACT OF 1949

* * * * * * *

GENERAL AUTHORITIES

Sec. 5. (a) In the performance of its functions, the Central

Intelligence Agency is authorized to--

(1) Transfer to and receive from other Government agencies such sums

as may be approved by the Office of Management and Budget, for the

performance of any of the functions or activities authorized under

subparagraphs (B) and (C) of section 102(a)(2) paragraphs (2) and (3) of

section 102(a) , subsections (c)(5) (c)(6) and (d) of section 103,

subsections (a) and (g) of section 104, and section 303 of the National

Security Act of 1947 (50 U.S.C. 403(a)(2), (3), 403 3 (c)(6), (d) , 403

4 (a), (g) , and 405), and any other Government agency is authorized to

transfer to or receive from the Agency such sums without regard to any

provisions of law limiting or prohibiting transfers between

appropriations. Sums transferred to the Agency in accordance with this

paragraph may be expended for the purposes and under the authority of

this Act

without regard to limitations of appropriations from which transferred;

* * * * * * *

(4) Authorize personnel designated by the Director to carry firearms

to the extent necessary for the performance of the Agency's authorized

functions, except that, within the United States, such authority shall

be limited to the purposes of protection of classified materials and

information, the training of Agency personnel and other authorized

persons in the use of firearms, the protection of Agency installations

and property, and the protection of Agency personnel and of defectors,

their families and the protection of current and former Agency personnel

and their immediate families, and defectors and their immediate families

, and other persons in the United States under Agency auspices;

* * * * * * *

Sec. 6. In the interests of the security of the foreign intelligence

activities of the United States and in order further to implement

section 103(c)(5) (c)(6) of the National Security Act of 1947 (50 U.S.C.

403 3(c)(5) (c)(6) ) that the Director of Central Intelligence shall be

responsible for protecting intelligence sources and methods from

unauthorized disclosure, the Agency shall be exempted from the

provisions of sections 1 and 2, chapter 795 of the Act of August 28,

1935 (49 Stat. 956, 957; 5 U.S.C. 654), and the provisions of any other

laws which require the publication or disclosure of the organization,

functions, names, official titles, salaries, or numbers of personnel

employed by the Agency: Provided, That in furtherance of this section,

the Director of the Office of Management and Budget shall make no

reports to the Congress in connection with the Agency under section 607,

title VI, chapter 212 of the Act of June 30, 1945, as amended (5 U.S.C.

947(b)).

* * * * * * *

SECTION 201 OF THE CENTRAL INTELLIGENCE AGENCY RETIREMENT ACT

SEC. 201. THE CIARDS SYSTEM.

(a) * * *

* * * * * * *

of the foreign intelligence activities of the United States and in order

further to implement section 103(c)(5) (c)(6) of the National Security

Act of 1947 (50 U.S.C. 403 3(c)(5) (c)(6) ) that the Director of Central

Intelligence shall be responsible for protecting intelligence sources

and methods from unauthorized disclosure, and notwithstanding the

provisions of chapter 7 of title 5, United States Code, or any other

provision of law (except section 305(b) of this Act), any determination

by the Director authorized by this Act shall be final and conclusive and

shall not be subject to review by any court.

SECTION 413 OF TITLE 10, UNITED STATES CODE

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, 1998 December 31, 2001 .

* * * * * * *