S. Hrg. 110-431 GOVERNMENT-WIDE INTELLIGENCE COMMUNITY MANAGEMENT REFORMS ======================================================================= HEARING before the OVERSIGHT OF GOVERNMENT MANAGEMENT, THE FEDERAL WORKFORCE, AND THE DISTRICT OF COLUMBIA SUBCOMMITTEE of the COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS UNITED STATES SENATE ONE HUNDRED TENTH CONGRESS SECOND SESSION __________ FEBRUARY 29, 2008 __________ Available via http://www.gpoaccess.gov/congress/index.html Printed for the use of the Committee on Homeland Security and Governmental Affairs U.S. GOVERNMENT PRINTING OFFICE 41-454 PDF WASHINGTON DC: 2008 --------------------------------------------------------------------- For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866)512-1800 DC area (202)512-1800 Fax: (202) 512-2250 Mail Stop SSOP, Washington, DC 20402-0001 COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS JOSEPH I. LIEBERMAN, Connecticut, Chairman CARL LEVIN, Michigan SUSAN M. COLLINS, Maine DANIEL K. AKAKA, Hawaii TED STEVENS, Alaska THOMAS R. CARPER, Delaware GEORGE V. VOINOVICH, Ohio MARK L. PRYOR, Arkansas NORM COLEMAN, Minnesota MARY L. LANDRIEU, Louisiana TOM COBURN, Oklahoma BARACK OBAMA, Illinois PETE V. DOMENICI, New Mexico CLAIRE McCASKILL, Missouri JOHN WARNER, Virginia JON TESTER, Montana JOHN E. SUNUNU, New Hampshire Michael L. Alexander, Staff Director Brandon L. Milhorn, Minority Staff Director and Chief Counsel Trina Driessnack Tyrer, Chief Clerk OVERSIGHT OF GOVERNMENT MANAGEMENT, THE FEDERAL WORKFORCE, AND THE DISTRICT OF COLUMBIA SUBCOMMITTEE DANIEL K. AKAKA, Hawaii, Chairman CARL LEVIN, Michigan GEORGE V. VOINOVICH, Ohio THOMAS R. CARPER, Delaware TED STEVENS, Alaska MARK L. PRYOR, Arkansas TOM COBURN, Oklahoma MARY L. LANDRIEU, Louisiana JOHN WARNER, Virginia Richard J. Kessler, Staff Director Lisa Powell, Chief Investigative Counsel Jennifer A. Hemingway, Minority Staff Director Thomas Bishop, Minority Legislative Aide Jessica Nagasako, Chief Clerk C O N T E N T S ------ Opening statements: Page Senator Akaka................................................ 1 WITNESSES Friday, February 29, 2008 Hon. David M. Walker, Comptroller General of the United States, U.S. Government Accountability Office.......................... 4 Marvin C. Ott, Professor, National Security Policy, National War College, National Defense University........................... 6 Steven Aftergood, Director, Government Secrecy Project, Federation of American Scientists.............................. 8 Frederick M. Kaiser, Specialist in American National Government, Government and Finance Division, Congressional Research Service 9 Ronald A. Marks, Senior Vice President for Government Relations, Oxford Analytica, Inc.......................................... 11 Alphabetical List of Witnesses Aftergood, Steven: Testimony.................................................... 8 Prepared statement........................................... 58 Kaiser, Frederick M.: Testimony.................................................... 9 Prepared statement........................................... 65 Marks, Ronald A.: Testimony.................................................... 11 Ott, Marvin C.: Testimony.................................................... 6 Prepared statement........................................... 54 Walker, Hon. David M.: Testimony.................................................... 4 Prepared statement........................................... 29 APPENDIX CRS Report entitled ``Congressional Oversight of Intelligence: Current Structure and Alternatives,'' February 11, 2008, submitted for the Record by Mr. Kaiser......................... 71 CRS Report entitled ``Security Classified and Controlled Information: History, Status, and Emerging Management Issues,'' February 11, 2008, submitted for the Record by Mr. Kaiser...... 99 Background....................................................... 135 Post-Hearing Questions for the Record Submitted to the Hon. Slade Gorton from Senator Daniel K. Akaka, January 9, 2007........... 143 Post-Hearing Questions for the Record Submitted to the Hon. Lee H. Hamilton from Senator Daniel K. Akaka, January 9, 2007...... 145 Letter to Senator Akaka from Lee H. Hamilton, dated January 24, 2007........................................................... 147 Letter from Mr. Walker to Senator Akaka, dated March 11, 2008, in response to a question at the hearing.......................... 148 Letter from Mr. Walker to Senator Akaka, dated April 25, 2008, in response to questions at the hearing........................... 149 GOVERNMENT-WIDE INTELLIGENCE COMMUNITY MANAGEMENT REFORMS ---------- FRIDAY, FEBRUARY 29, 2008 U.S. Senate, Subcommittee on Oversight of Government Management, the Federal Workforce, and the District of Columbia, of the Committee on Homeland Security and Governmental Affairs, Washington, DC. The Subcommittee met, pursuant to notice, at 10:03 a.m., in Room SD-342, Dirksen Senate Office Building, Hon. Daniel K. Akaka, Chairman of the Subcommittee, presiding. Present: Senator Akaka. OPENING STATEMENT OF SENATOR AKAKA Senator Akaka. I call this hearing of the Subcommittee on Oversight of Government Management, the Federal Workforce, and the District of Columbia to order. Today's hearing--Government-wide Intelligence Community Management Reforms--will examine how to improve oversight of the Intelligence Community (IC) as it implements extensive government-wide management reforms. Intelligence failures before the attacks of September 11, 2001, spurred the largest restructuring of the Intelligence Community since it was established. The Intelligence Reform and Terrorism Prevention Act of 2004 created a new position--the Director of National Intelligence--to serve as the head of the Intelligence Community and principal advisor to the President on intelligence matters related to national security. The Intelligence Reform Act provides the DNI with centralized authorities significantly more extensive than those formerly held by the Director of Central Intelligence. The Director of National Intelligence oversees and coordinates the intelligence activities of the other members of the IC, which include 16 other components spread throughout much of the Executive Branch. Acting on these authorities, the DNI has proposed a host of management reforms, including changes in IC personnel policies, acquisitions, information sharing, and business practices. Such management reforms would create serious transformational challenges in any organization. The Intelligence Community, with its new, but still decentralized structure, led by a new director with new authorities, faces a daunting task in carrying out these management reforms. While what the DNI is proposing may be new for the Intelligence Community, it is not new for the rest of the Federal Government. Many of the issues being confronted and the solutions posed are ones other Federal agencies have managed already. So it is my strong belief that the Intelligence Community could benefit from the Government Accountability Office's expertise in reviewing organizational transformations and management reforms. My view is shared by others, including Representative Lee Hamilton, who was Vice Chairman of the 9/11 Commission, and Senator Slade Gorton, also a member of the 9/11 Commission. In response to my questions for the record of a January 2007 Senate Homeland Security and Governmental Affair Committee hearing on implementing the 9/11 Commission's recommendations, both stated that GAO should have the same authorities with respect to the Intelligence Community as it does with other Federal Government agencies.\1\ I will place these responses as well as a letter from Representative Hamilton addressing the issue into the record.\2\ --------------------------------------------------------------------------- \1\ The post-hearing questions for the Record submitted to the Hon. Slade Gorton and Hon. Lee Hamilton at the January 9, 2007 hearing from Senator Akaka, appear in the Appendix on pages 143 and 145 respectively. \2\ The letter from Lee H. Hamilton to Senator Akaka, dated January 24, 2007 appears in the Appendix on page 147. --------------------------------------------------------------------------- Senator Akaka. I am disappointed that despite GAO's government-wide mandate to assist Congress in reviews, audits, and investigations, the DNI and the CIA so far have resisted taking advantage of GAO's assistance in the transformation of their business practices. The IC's cooperation with GAO is not simply a matter of making Congress' oversight job easier; it is a matter of making the IC's management reforms smoother, more effective, and more efficient. GAO has expertise in virtually all of the bread-and- butter management challenges that the Intelligence Community is confronting. For example, GAO has done extensive work on how to fix the security clearance process, which is on GAO's high-risk list. Fixing the long delays in the process is an important national security priority. In response to a question for the record from Senator Voinovich from a November 2005 hearing of this Subcommittee on improving the process, GAO stated that it lacked the cooperation needed to ensure progress on this critical issue. Similarly, GAO has done numerous evaluations of government information sharing, and it has provided valuable recommendations on improving information-sharing processes. Nonetheless, DNI refused to comment on GAO's March 2006 report on government sharing of sensitive but unclassified information because of its narrow view of GAO's authority. Moreover, GAO has been a key advisor to Congress in its oversight of the development of new personnel systems at the Departments of Defense and Homeland Security. Given the fact that there are no union representatives to highlight employee concerns or implementation problems with the proposed IC personnel reforms, it is essential that Congress have an independent expert to review how such proposals are working. Congress and the Intelligence Community could benefit from GAO's expertise on all of these topics, as well as from GAO's capacity to do crosscutting, government-wide evaluations in its institutional and political independence. In September 2006, I introduced the Intelligence Community Audit Act, which I reintroduced in the 110th Congress as S. 82. This bill would reaffirm GAO's existing authority to perform audits and evaluations of Intelligence Community financial transactions, programs, and activities, and to obtain the documents needed to do so. At the same time, the bill contains provisions to enhance the protection of classified information, including restricting GAO work and dissemination of GAO reports related to covert actions and intelligence sources and methods, and affirming that GAO staff would be subject to the same penalties for unauthorized disclosure of classified information as IC employees. The Intelligence Community is proposing far-reaching transformational policies. It clearly could benefit from independent analysis and sufficient congressional oversight. But the response of the DNI to Congress is, in effect, ``Trust us, we know what we are doing.'' Unfortunately, history provides numerous examples of intelligence failures that became evident only after it was too late to correct them. The stakes are too high to operate just on trust. Congress must redouble its efforts--that is what we are trying to do--to ensure that U.S. intelligence activities are conducted efficiently, effectively, and with due respect for the civil rights and civil liberties of Americans, and I will work to see that it does. I look forward to hearing from our witnesses on their perspectives of how Congress can improve oversight of the Intelligence Community, in particular the role of the GAO. I want to thank our witnesses for being here today to discuss this very important issue. I want to thank David Walker for nearly a decade of service as the Comptroller General as he prepares to transition to become the President and Chief Executive Officer of the newly established Peter G. Peterson Foundation. Mr. Walker, it has been my pleasure to work closely with you over the years, and I cherish those memories. I wish you well in your new endeavor. I hope that your replacement will be someone who is equally capable and equally dedicated in his or her service to GAO and to Congress and especially to the people of these United States. And so I want to welcome, again, all the witnesses to this Subcommittee hearing. David Walker, Comptroller General of the United States with the Government Accountability Office. Marvin Ott, who is a professor of national security policy at the National War College of the National Defense University. Professor Ott also worked as a CIA analyst and as Deputy Staff Director of the Senate Select Committee on Intelligence under Senator Murkowski, among numerous other positions. Steven Aftergood, Director of the Government Secrecy Project at the Federation of American Scientists. Mr. Aftergood has won numerous awards for his work combating secrecy, including the James Madison Award from the American Library Association. Frederick Kaiser, specialist in American National Government, at the Congressional Research Service. Mr. Kaiser has worked at CRS for more than 30 years and has taught at American University and the University of Maryland as well. Finally, Ronald Marks, Senior Vice President for Government Relations at Oxford Analytica, Founder and Director of the Open Source Intelligence Forum and Adjunct Professor for Intelligence and National Security at the National Defense University. Mr. Marks formerly served as a senior CIA official and as intelligence counsel to former U.S. Senators Bob Dole and Trent Lott. As you know, it is the custom of this Subcommittee to swear in all witnesses, and I would ask all of you to stand and raise your right hand. Do you solemnly swear that your testimony you are about to give this Subcommittee is the truth, the whole truth, and nothing but the truth, so help you, God? Mr. Walker. I do. Mr. Ott. I do. Mr. Kaiser. I do. Mr. Aftergood. I do. Mr. Marks. I do. Senator Akaka. Thank you. Let the record indicate that our witnesses answered in the affirmative. I want our witnesses to know that while your oral statements are limited to 5 minutes, your entire statements will be included in the record. Mr. Walker, please proceed with your statement. TESTIMONY OF HON. DAVID M. WALKER,\1\ COMPTROLLER GENERAL OF THE UNITED STATES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE Mr. Walker. Thank you, Chairman Akaka. Thank you very much for your kind comments in your introductory remarks. Let me note that while I have several other hearings scheduled during the balance of my 2 weeks as Comptroller General, I believe that this will be my last hearing before this Subcommittee, unless something changes. And I just want to let you know that it has been an honor and a pleasure to work with you, with Senator Voinovich and with the other Members of this Subcommittee. And I take great pride in knowing that working together in partnership we made a big difference. --------------------------------------------------------------------------- \1\ The prepared statement of Mr. Walker appears in the Appendix on page 29. --------------------------------------------------------------------------- I also want to let you know that while I am changing my position on the battlefield, I am not leaving the fight. And, in fact, as CEO of the Peter G. Peterson Foundation, I will have more flexibility and more discretionary financial resources to bring on the target--namely, the need to address our sustainability challenges and government transformation needs. So I look forward to continue to work with you, although in a different capacity. With regard to today's hearing, I am pleased to be here in order to be able to address how GAO could assist the Congress and the Intelligence Community in connection with management reform initiatives. As you know, Mr. Chairman, GAO has assisted the Congress for decades in its oversight role, and we have helped a variety of government departments and agencies with very disparate missions to improve their economy, efficiency, effectiveness, ethics, and equity. In addition, GAO's work has also provided very valuable insight as to which type of programs, functions, and activities work and which ones do not, and also foresight as to what some of the current emerging trends and challenges are facing the United States and its position in the world. There are a number of government-wide management transformation challenges that are on our high-risk list, and you are very familiar with that high-risk list, including such items as human capital transformation, acquisition, contracting, information technology, strategic planning, organizational alignment, personnel security clearances, and information sharing. Many of these issues affect a vast majority of Federal agencies, including the Intelligence Community. And I think it is important that I am here today to talk about management reforms, not sources and methods. That is a different issue. But there are basic management challenges that every Federal entity faces, including the Intelligence Community. Second, if the ODNI assumes management of government-wide personnel security clearances, then GAO's ability to continue to review personnel security clearances could be impaired unless greater cooperation is forthcoming from the Intelligence Community. Now, let me stop here to note that I met personally with the Director of National Intelligence on more than one occasion, and he is a very capable individual, and he seems to be very reasoned and very reasonable, and so our relations are improving. And it is not a personal issue here. Frankly, this is an issue that goes back many years based upon access challenges, based upon an opinion from the Justice Department that has been there for a number of decades. So this is not something that is new. It has been longstanding. And my experience with the director has been positive, as well as some of his key staff. And as I say, we have developed and maintain a relatively positive working relationship, which has improved in recent times. But because of this past legal opinion, and because of positions taken by some key players historically in the Intelligence Community, we generally have done little to no work in the Intelligence Community, because as you know, Mr. Chairman, we already have a huge supply and demand imbalance. We have way more requests for GAO to do work than we have resources to do it. And in the absence of receiving requests to do the work, then we are not going to use our limited discretionary resources to do work in this community when Congress is not asking us to do the work. Third, with the support of the Congress and your legislation, S. 82, GAO would be well positioned to provide the Intelligence Community, as well as the appropriate congressional committees, with an independent, fact-based view and evaluation of Intelligence Community management reforms. As you noted in your opening statement, GAO has significant expertise with regard to a broad range of management issues. We have knowledge of best practices as well as lessons learned. And we have, during my tenure, tried to lead by example with regard to a lot of these reforms and really increase the amount of time and effort that we are spending on them to help benefit others in a constructive way, not in a confrontational or traditional audit role way. We support your bill and believe that if it was enacted, GAO would be well positioned to assist the Congress in its oversight functions and that we, frankly, could help the Intelligence Community, too. Ironically, our number one competition for talent is the Intelligence Community. We win, fortunately, on most college campuses, but they do a good job, too. And the fact is that we are both hiring, in large part, highly educated, committed individuals to do analytical work. That is what we do at GAO, and to a great extent, that is what the Intelligence Community does. So in many ways, our own experience at GAO frankly is very applicable to a lot of the challenges, I think, that the Intelligence Community faces. You also have certain affirmation or reaffirmation provisions in the bill that should help to ensure that GAO's audit and access authorities are not misconstrued in the future, and should responsibility for personnel security clearances be transferred to the Director of National Intelligence, to make it clear that we should continue to receive access to that type of information in order to discharge our responsibilities to the Congress and the American people. Thank you, Mr. Chairman. Senator Akaka. Thank you very much, Mr. Walker. Mr. Ott. TESTIMONY OF MARVIN C. OTT,\1\ PROFESSOR, NATIONAL SECURITY POLICY, NATIONAL WAR COLLEGE, NATIONAL DEFENSE UNIVERSITY Mr. Ott. Mr. Chairman, thank you for the opportunity to appear before this Committee on a matter that is of real and concrete importance to U.S. national security. My testimony submitted for the record is brief. My summary comments I will try to make informal and briefer still. --------------------------------------------------------------------------- \1\ The prepared statement of Mr. Ott appears in the Appendix on page 54. --------------------------------------------------------------------------- Let me begin with two, I think, fairly obvious propositions, the first of those being that high-quality intelligence is increasingly critical to the national security of the United States. One way to think about that is to look at the nature of the threats we face and to contrast them with those of the Cold War period when the Soviet threat was military. I think it is fair to say that in a world characterized by an al-Qaeda type of threat, diversifying networks of terrorist groups, not to mention proliferation issues, pandemic issues, and other systemic threats--these are issues that naturally fit the intelligence world in many ways much more exactly than they fit the traditional, conventional military world. So, increasingly, the point of the spear, to borrow a much overused metaphor, for U.S. national security really does reside now in the intelligence world. Second, effective oversight of the intelligence process is, in fact, critical. People at the top of the intelligence business who have been around and are experienced and have judgment on these matters know that effective oversight is critical. It is a force enabler. It is a corrective. It serves as an advocate and a shield. In a whole variety of ways, it is not an adversary to effective intelligence. It, in fact, is an important support. With regard to this, then, the question of how effectively the Congress--and I am focusing particularly on the Senate--has conducted intelligence oversight is very relevant. Now, here a little background is necessary. Mr. Chairman, you cited the fact that Senator John Glenn, introduced a bill in 1987, S. 1458, that sought to do exactly the kind of thing you are talking about today. And that bill was not accepted, and I think the principal argument at the time--and I had a ringside seat, as it were-- was that in the 1980s, when Senator Glenn introduced that bill, the Senate Select Committee on Intelligence had, in fact, become a very effective vehicle for oversight. This was not easy. The match between the open, democratic, public processes of a democratic legislative body, on the one hand, and the secretive, closed, need-to-know world of intelligence--that is an oil-and-water kind of match. And to make that process work, to bring oil and water together, to have effective oversight that is constructive and works in the secret world of intelligence is a very hard thing to do. I would argue that probably no country in the world has done it except this country, and we did it in the 1980s, and I can go into some detail regarding the process that made it work. But suffice it to say, when Senator Glenn introduced his bill at that time, the argument was we are doing effective oversight, not only through the oversight committee, but we are establishing a statutory IG at the CIA, and we have reason to believe that is going to be an effective vehicle. So the argument was we have this problem under control. But things have changed since 1987, and I will just tick off the major points and leave it at that at this point. First of all, the quality and the effectiveness of the oversight process I have just referred to, deteriorated, degraded, and basically disappeared in the 1990s and into the early part of this decade. It is one of the great tragedies of the legislative history of the United States, in my judgment. Second, the community that is being overseen has grown in complexity, diversity, and in size. For example, the office of the DNI, which did not exist in 1987, has become a major bureaucracy. I have in my testimony that it comprises of 1,600 people. I believe that is, in fact, conservative. It is probably closer to 2,000. Nobody, including Director McConnell, knows what is going on inside all the different components of the current Intelligence Community. Moreover, there is a statutory IG at the CIA, but nowhere else in the community. Everybody else, pretty much, is under the DOD IG. That DOD IG has got lots of other things to do on the military procurement side, on the defense side. He is a marginal player when it comes to intelligence oversight. Finally, the diversity and nature of the threats we face-- and I alluded to that at the outset--has multiplied. Bottom line, there is, in my judgment, currently a mismatch, a serious mismatch, between the capabilities to conduct oversight and the vehicles and the instrumentalities for that, on the one hand, and the nature of the Intelligence Community and the nature of the threats, on the other. And GAO is an important potential asset in correcting that mismatch. Senator Akaka. Thank you very much, Mr. Ott. Mr. Aftergood. TESTIMONY OF STEVEN AFTERGOOD,\1\ DIRECTOR, GOVERNMENT SECRECY PROJECT, FEDERATION OF AMERICAN SCIENTISTS Mr. Aftergood. Thank you, Mr. Chairman. Thank you for holding this hearing. Because of the very importance and the sensitivity of the intelligence enterprise, intelligence oversight is a critical function. The public relies on the oversight system to ensure that intelligence activities are conducted in conformance with law, efficiently and effectively. But the task of intelligence oversight has become significantly more difficult in recent years for at least two reasons. One is the enormous growth in the size of the intelligence budget. Ten years ago, the National Intelligence Program was spending on the order of $20 billion a year. Last year, the DNI disclosed the National Intelligence Program budget reached $43.5 billion. So intelligence spending on national intelligence has more than doubled. Intelligence oversight capacity has not doubled. It has not kept pace. --------------------------------------------------------------------------- \1\ The prepared statement of Mr. Aftergood appears in the Appendix on page 58. --------------------------------------------------------------------------- A second complicating factor is the rise in reliance on intelligence contractors. According to an ODNI account that I cite in my written statement, the spending on intelligence contractors has also doubled from 1996 to 2006. There are literally thousands of new contractual relationships between intelligence agencies and commercial entities that the intelligence oversight system is poorly equipped to regulate, oversee, or even verify that they are doing what they are supposed to be doing. For these reasons alone, I think that the government ought to be summoning all the tools at its disposal to carry out the task of intelligence oversight, and that certainly includes the Government Accountability Office. I do not think the GAO can solve the oversight challenge all by itself. To do that it might take an organization the size of the GAO devoted entirely to the Intelligence Community, and that does not seem to be a realistic option. But certainly GAO can make a tangible contribution as it does in almost every other area of government oversight. A couple other quick points. When GAO is excluded from intelligence oversight, not only does Congress miss the benefits of their contribution, but carving out the Intelligence Community actually damages GAO's role in other ways. When GAO does a study of government-wide activities, say, on information sharing or on personnel security, it has to, in effect, come with an asterisk saying this work does not include the activity of the intelligence agencies. And there is no reason for that to be the case. Not only are we not taking maximum advantage of GAO, we are actually tying their hands and reducing the utility of their product. I would also note that the DNI, the CIA, and others in the Intelligence Community have expressed opposition to your legislation, saying that they do not want GAO to get involved. And I would say that while that may be off-putting at first glance, at second glance it is actually a good sign. I would say that if the Intelligence Community did not object to your proposal, that would be perplexing. No one voluntarily seeks out oversight. No one looks for somebody to look over their shoulder to see how they are doing. So if ODNI said, ``Oh, come on, that is fine,'' then I would wonder what is wrong with this legislation. Why aren't they objecting? The fact that they are objecting says that this legislation embodies meaningful change, and I would just urge you and the Subcommittee and the Senate not to be deterred by any such opposition. If you are persuaded, as I am, that a GAO role in intelligence oversight is a good one, then by all means you should pursue it. Senator Akaka. Thank you. Thank you very much, Mr. Aftergood. Mr. Kaiser. TESTIMONY OF FREDERICK M. KAISER,\1\ SPECIALIST IN AMERICAN NATIONAL GOVERNMENT, GOVERNMENT AND FINANCE DIVISION, CONGRESSIONAL RESEARCH SERVICE Mr. Kaiser. Thank you, Mr. Chairman. I thank you and Mr. Voinovich and Members of the Subcommittee for inviting me to participate in this hearing on government-wide Intelligence Community reforms, and with special attention to oversight of intelligence in this evolving field. The Intelligence Community rubric is formally applied to the 16 agencies, as you had mentioned earlier, but there is still another Intelligence Community that might be worth considering. And that is the Homeland Security Intelligence Community (HSIC). It is a much more nebulous and non-statutory organization, but, nonetheless, there is a collective set of intelligence operations and organizations that play a role, especially in your Subcommittee's jurisdiction. Both of these communities require a substantial amount of interagency cooperation and coordination to provide for a sharing of relevant and timely information as well as to engage in multi-agency activities and operations. Ideally, this second or HSIC can overcome the foreign-domestic divide that, according to the 9/11 Commission, hampered effective intelligence gathering, evaluation, and dissemination. --------------------------------------------------------------------------- \1\ The prepared statement of Mr. Kaiser appears in the Appendix on page 65. --------------------------------------------------------------------------- The homeland security Intelligence Community also requires coordination and cooperation with State, local, and tribal organizations, so it has a wider and a different kind of jurisdiction. Oversight of intelligence, as we already heard and as you well know, has always been a daunting challenge to Congress. And it seems to be increasingly so, because of the increase of classified national security information and new categories of controlled information, such as sensitive but not classified information. And this affects a range of activities here on the Hill that limit congressional oversight. It even means that committees cannot cooperate with one another, that there are barriers put in between sharing information from one member to another because of the restrictions that are placed on receiving and responding to classified information. National security concerns also affect other oversight capabilities. Importantly, certain offices of Inspector General are affected by this. The heads of six or seven departments and agencies can prohibit or prevent an IG audit or investigation, and those are largely in the Intelligence Community. The reasons for this prohibition, though, have to be communicated to your Subcommittee as well as the authorizing committees. So it does give your Subcommittee a handle on what has developed or why an audit has not occurred by the Office of Inspector General. That applies to all the entities that I mentioned except for the CIA, which reports directly then to the House and Senate Intelligence Committees. Oversight of intelligence has been consolidated in these select committees, but they do not hold exclusive oversight jurisdiction. In fact, importantly, the establishing resolution of the House and Senate select committees repeat the same language: ``Nothing in this resolution shall be construed as prohibiting or otherwise restricting the authority of any other committee to study and review any intelligence activity to the extent that such activity directly affects a matter otherwise within the jurisdiction of that committee.'' Examples of such oversight extend to, again, your Subcommittee in the past. In the mid-1980s, the Permanent Subcommittee on Investigations looked into the Federal Government security clearance program. Later on, Congress commissioned a review of the Intelligence Community workforce that was conducted by the National Academy of Public Administration. And in July 2001, two Subcommittees of your counterpart at the time, the House Committee on Government Reform, now Oversight and Government Reform, reviewed computer security programs across the board. It relied on a GAO survey that had been conducted earlier, and only one agency was a holdout. That was the Central Intelligence Agency. It declined to participate in the hearings or in the earlier GAO survey. This is an illustration of the difficulties that GAO has had in providing comprehensive oversight of the Intelligence Community. The CIA has taken this position that it is, in effect, off limits. Your bill would go far to remove that characteristic that the CIA has adopted for itself. I might mention in conclusion here that other entities within the Intelligence Community do not take that same stand. The Department of Defense, which houses the largest number of IC units, for instance, instructs its personnel to ``cooperate fully with the GAO and respond constructively to, and take appropriate corrective action on the basis of, GAO reports.'' And so there is this distinction. I might mention, too, as Mr. Ott has said, that in 1987 Senator Glenn from this Subcommittee had introduced legislation along the lines of your bill. An earlier proposal goes back to the mid-1970s, when the Comptroller General then, Elmer Staats, first raised this notion formally before a couple of Select Committees on Intelligence in the House and the Senate. Those two committees, the Pike and Church committees, also approached this subject and advanced proposals to increase GAO's independent audit capabilities. My prepared remarks go into detail on other types of changes that Congress might consider in improving oversight of intelligence. Senator Akaka. Thank you very much, Mr. Kaiser, for your statement. Mr. Marks, I understand that you do not have a prepared statement to deliver, but I would ask you, if you have any remarks you would like to make, you may make them at this time. TESTIMONY OF RONALD A. MARKS, SENIOR VICE PRESIDENT FOR GOVERNMENT RELATIONS, OXFORD ANALYTICA, INC. Mr. Marks. Thank you, Senator. The last one should always be shortest, if at all possible. It is an honor to be here, especially on something I have considered so strongly over the years, dealt with this issue on and off during my years at CIA, probably now 15, almost 20 years. As I was telling my wife this morning, I may not be an intelligence expert, but I live there, so I think I have a pretty good idea of what is going on. The Intelligence Community always views itself in terms of a culture of secrecy, as it should, but that secrecy also produces a certain amount of belief of uniqueness. And in my days at CIA--and I spent some 16 years there--five of them were in Congressional Affairs, two of them were up here as intelligence counsel to Robert Dole and Trent Lott. And throughout that entire process, anytime someone mentioned GAO, I could hear the management on the seventh floor of the Central Intelligence Agency cringing, believing that they already had sufficient oversight from both the Senate and the House Intelligence Committees. I did not necessarily want to argue with them at that time, but I knew of the work that GAO did, and it seemed as though it would be a good idea to introduce it. But low-level officers do not make those kinds of recommendations at the time. The problem I see now in particular, now that I am 10 years outside of the process but still acting as an advisor to the community, is that they have grown so large, so complex, so quickly, that really the problems are well beyond them now. Someone mentioned the contractual problems here before. That is unique to many parts of the community in terms of buying outside contractors, not only to do analytical work for them or other types of engineering work, but actually having people on site, particularly the Central Intelligence Agency, where that is rather unique. Workforce planning. The size of the Intelligence Community has grown hand over fist since 2001, some estimates 40 percent, some estimates 50 percent, but whatever, there is no real plan in place at this point for helping these young people and directing them through their career within the community and hanging onto them. As someone in the private sector, I can tell you from my own experience at this point that unless you lay out a plan for your young people so that they can grow within your organization, you are going to lose them fairly quickly. And this is a group of young people now who are much less patient, perhaps, than I was back in the 1980s. I am particularly concerned on the issue of security and compartmentation. This has been going on for a long period of time, really since the fall of the Berlin Wall, the end of the Cold War. We are still working in many ways with a system that was dealing with a very large Nation State, our opponent, the U.S.S.R., who believed in compartmentation, who believed in security, keeping control over their people. We live in a different age. The open source information contained around the world on the Internet alone is so many times the size, I do not think anybody knows what that all is. Yet we still have a system inside that does not allow those people who are analysts, those people who are operatives to really use that system because it is considered a security threat by virtue of even asking the question. They are hamstringing themselves, they are hamstringing our national security, and I think these are a number of issues that the GAO could help them address because, frankly, the oversight committee process, the IG process at this point will always be viewed as somewhat biased, fair or unfair. But GAO has established itself over the years as a neutral outside organization, and I think it can provide the DNI some real insight into what it is that they are doing for these vast processes that are overseeing the community. On that note, thank you, Senator. I will end my comments. Senator Akaka. Thank you. Thank you very much, Mr. Marks, for your comments. As you know, I have introduced the Intelligence Community Audit Act of 2007, S. 82, which would reaffirm GAO's authority to perform audits and evaluations of financial transactions, programs, and activities of elements of the Intelligence Community. The bill also includes certain provisions to improve protection of the most sensitive intelligence information. For example, specifying that the House or Senate Intelligence Committees or Majority or Minority Leader would have to request any audit or evaluation of intelligence sources and methods or covert actions. Do these provisions adequately address the DNI's concerns with protecting the most sensitive intelligence information? Or are there other steps that should be taken? Comptroller General Walker. Mr. Walker. Thank you, Mr. Chairman. First, I see a clear distinction between management issues and management reforms that apply to virtually every government department and agency, including the Intelligence Community sources and methods. Those are fundamentally different, and obviously the need to try to be able to provide additional restrictions and safeguards dealing with that type of information is clear; it is compelling. Sometimes there can be a gray area where you are dealing with management type issues that could touch on some of these other issues. I think you have to keep that in mind. I think that what you have done is to try to separate between typical management type activities and sources and methods. I will, in the interest of full and fair disclosure, note that as a member of the Board of Directors of the International Auditor Generals Organization, as head of strategic planning for that group, one of the things I have put to my colleagues is to what extent do they do audit and evaluation work in the Intelligence Community, and who do they do it for, and who has access to information. For all the major industrialized nations, they said yes, the counterpart GAO organization does do work, audit and evaluation work, in the Intelligence Community. However, a significant majority of them also said that they typically only do it at the request of their intelligence committees and that the information is typically only provided to their intelligence committees. I am not saying that is the right answer, but I feel compelled to provide the information just for your consideration. Senator Akaka. Mr. Ott. Mr. Ott. Just very briefly, Mr. Chairman, I guess my quick reaction is the kind of carve-out that you have identified in the legislation makes perfect sense, and I am also inclined to say there is a bit of a false dispute here in the sense that, as Mr. Aftergood and Mr. Marks in particular correctly identified, there are huge requirement for effective oversight of management, audit, financial, and contractual activities-- all these kinds of requirements for effective oversight. GAO will have more than enough to do if they are given authority to go into those areas. I frankly do not see any reason why there should be any particular demand to go into the narrow and highly sort of compartmented area of covert action and sources and methods. That strikes me as the logical place for the intelligence committees to work. So it would seem to me that this is, as Mr. Walker has said, a pretty natural division of labor, and to some degree a kind of false problem. It seems to me something that can be worked fairly effectively. Senator Akaka. Mr. Aftergood. Mr. Aftergood. I think the distinction in the bill does make sense, but if your question is will it satisfy the objections of the DNI, I am afraid the answer is no, it will not. And the reason for that is because the Intelligence Community uses the term ``sources and methods'' with great elasticity. I obtained a document showing the CIA budget for 1963. It was a declassified document showing that the budget was $500 million that year. I asked the CIA, ``Well, what was the budget for 1964?'' And they said, ``Oh, we are not going to tell you that because of intelligence sources and methods.'' And so basically it is a catch-all phrase for whatever they do not want to disclose. They do not use it in the same way that you and I might. I would say, though, that addressing the ODNI's concerns may not be the hardest challenge facing this legislation. Candidly, it seems to me that the most difficult political obstacle may be winning the consent of the intelligence oversight committees. Speaking as an outsider, a member of the public, it appears to me that there are turf considerations on the part of the Subcommittee, and that just as the ODNI wants an exclusive relationship with the intelligence oversight committees, the intelligence oversight committees may want that very same exclusive relationship. So there is a tactical question about how do you gain the acquiescence and approval of the intelligence oversight committees to what I think is a proposal that would assist them, if only they could be persuaded of that. Senator Akaka. Mr. Kaiser. Mr. Kaiser. May I add a caveat to all of this? In mid-2001, the examination by two House Government Reform subcommittees looked into computer security programs. They asked GAO to mount a preliminary review. The CIA declined to participate, largely because the CIA insisted this was a matter of sources and methods and could not comply with the GAO or the Subcommittee's request. The Subcommittee even invited the CIA to testify in executive or secret session. The CIA refused to do so. In writing a letter to the Subcommittee explaining why they were not participating, the head of the CIA and DCI at the time said that they would give this information to the intelligence committees, the House Committee on Intelligence, which, as they interpreted, had exclusive oversight jurisdiction for sources and methods. That does not apply to the Senate side, but that was the argument that was being given at the time. And the CIA did point out that they had the concurrence or approval of the intelligence committee chairman. So there is this notion of divided oversight responsibilities, jurisdiction, and of sources and methods; here it was applied to computer security programs, not information that might come from them. Senator Akaka. Mr. Marks. Mr. Marks. Yes. I would urge the Subcommittee very carefully to listen to the arguments made out of the Intelligence Community and CIA. The secrecy flag is often raised when they do not want to necessarily have something examined, and I have always been pleasantly surprised at how carefully they read S. Res. 400, which established the Senate Select Committee on Intelligence. The problem may not come from the DNI office, and the problem may not come from the Director of Central Intelligence. I think both Mr. McConnell and Mr. Hayden are trying to do their best in very difficult jobs. As a friend of mine says, it is not them, it is the iron majors underneath of them. It is those who have grown up in that system at a lower level who are making the recommendations. And those people in many cases still are not convinced that oversight is necessary, again, based on their predilection towards secrecy. And they oftentimes would be willing to hide behind both SSCI and HPSCI, thinking, in fact, that they would get a better deal. And that is why I think you are seeing some of the information that is being sent back. Senator Akaka. Thank you. Mr. Walker. Mr. Walker. If I can, Mr. Chairman, add a couple of things based on these comments. First, I have learned in 9\1/2\ years as Comptroller General that everybody is for accountability until they are the ones being held accountable. I have also learned that when you have information that is not classified but somebody says it is sensitive, you can substitute the words ``probably embarrassing'' for ``sensitive.'' I think we have a situation here where, as has been noted, sources and methods mean different things to different people depending upon the circumstances. And I would argue that is probably one of the reasons why in our counterpart organizations around the world, they have done work and provided that work to the intelligence committees in order to just eliminate that issue. Whether it is management work or whether it is sources and methods work, what is important is that it be done and it be done by somebody who is qualified, who has the confidence of the Congress and the American people, and that it be provided to the appropriate bodies who have the ability to do something with it. Now, candidly, I believe that the Select Committees on Intelligence are part of the problem. There is no question about that. I also believe that no matter how caring they are, no matter how capable they are, the simple fact is, given the growth in the size, complexity, and criticality of this area, more needs to be done, and frankly, they do not have the expertise in the management areas that we are talking about here. So, they do not have the resources, and they do not have the expertise, so as a result, we have a gap. That gap needs to be filled. It is in the national interest for it to be filled. And I think there is a way to bridge these issues. I really do believe so. Senator Akaka. Are there any further comments? [No response.] Let me follow up, and on behalf of GAO, looking at this from the other side of the coin, would S. 82 adequately protect GAO's ability to audit and evaluate elements of the Intelligence Community? Mr. Walker. First, Mr. Chairman, I think it would, but I think we have to reinforce a couple of things. We believe, with very limited exceptions, that GAO already has extensive audit and evaluation authority over intelligence agencies, including the CIA. We absolutely reject the position taken by the CIA and selected others, and I think some of the legislative history that Dr. Kaiser mentioned helps to serve to reinforce the fact that people are trying to reinvent history here with regard to what the intention of Congress was at the time that the Select Intelligence Committees were created. There is an iron triangle here between the Intelligence Community and the intelligence committees, and there is a lot of movement back and forth among key staff there between the communities. They are all very qualified and they are all very capable, but they have a limited capacity, obviously, in that regard. So I think it would, but I want to reinforce the fact that you are careful in some regards in your bill to reaffirm authority that we already believe we have. And I think it is important that nothing be done that could somehow undercut what we believe to already be the case, and that is, we have authority in most of these areas. We just have not had requests, and we have not in some circumstances had cooperation. Most of the Intelligence Community is not the CIA, and in a lot of the Intelligence Community, we have had and we continue to have cooperation. So I think it is important that we not paint with too broad a brush here. We need to use a laser. There are problems with regard to specific entities, but there is not a problem necessarily with regard to the whole community. And Director McConnell, I believe, is a very capable person who hopefully we can work out something with. Senator Akaka. Any other comments? [No response.] Mr. Walker, the DNI has expressed concerns that GAO review of intelligence agencies could compromise intelligence information. Over the years, GAO has done significant work involving classified information and also has written classified reports. I find it a bit troubling that the Intelligence Community trusts private contractors with a great deal of intelligence information, yet it does not trust GAO to safeguard the same information. To your knowledge, has classified information provided to GAO ever been leaked? Mr. Walker. To my knowledge, never in the history of GAO, which goes back to 1921, has there been any classified information leaked from GAO, and that includes a lot of entities other than the Intelligence Community. I find more than a little bit of hypocrisy in the position of the Intelligence Community on this. Senator Akaka. General Walker, do you have any thoughts on the particular challenges of evaluating government activities where classified information is involved? Mr. Walker. Well, Mr. Chairman, we have a number of individuals, including myself and many others at different levels of the organization, that have top secret clearances and also have other ``tickets'' (Sensitive Compartmented Information Clearances and related accesses) that would be necessary to do a whole range of work. What I would envision is that if the Congress did start asking us to do work in this area, we would limit that to a relatively small group of individuals who had the required clearances and we would want to do that as a further safeguard in order to provide additional assurance that nothing would be leaked and that it was more a need to know within GAO. But I think you have to keep in mind it is not just the need-to-know concept, it is the right to know. The Congress has a right to know as well as a need to know. Senator Akaka. Mr. Walker, if GAO increases its work with the Intelligence Community, with the intelligence committee, it will have to rely on employees with security clearances, as you mentioned. Do you currently have enough GAO analysts with high- level clearances, in particular top secret and SCI, to increase GAO's work with the Intelligence Community if that work were no longer restricted? Mr. Walker. I believe we do, Mr. Chairman, but obviously it depends upon how many requests we receive. From a practical standpoint, what we are talking about is reallocating existing resources, given the current budget environment, rather than adding resources. I would be happy to provide for the record, if you would like, how many GAO employees we have with top secret clearance and how many we have with special SCI.\1\ --------------------------------------------------------------------------- \1\ The letter dated March 11, 2008 with the response from Mr. Walker appears in the Appendix on page 148. --------------------------------------------------------------------------- Senator Akaka. I would appreciate that. Congress created an Inspector General for the Central Intelligence Agency to improve oversight of that agency. Last fall, CIA Director Michael Hayden launched a probe into the CIA Inspector General's work, and earlier this month, Mr. Hayden announced that the CIA was creating an ombudsman to oversee the IG's work. How concerned should Congress be that the CIA is trying to rein in the IG's independence? Or is this more a matter of enhancing the IG's accountability? Mr. Ott. Mr. Ott. Mr. Chairman, to answer that question fully would require a very fine grained knowledge of exactly what is going on in the relationship between the DCI and the IG, which I do not pretend to have. I will say--and I noted it in my testimony--that the current CIA IG's office is a beleaguered office. It is continuing to conduct a series of investigations and do its business, but at the same time is dealing with this probe and these pressures and questions being raised by the DCI. And you now have the creation of an ombudsman as a rival office of some sort. And it basically just goes back to the original proposition that the instrumentalities of oversight that are available to deal with this hugely growing, complex animal of the Intelligence Community, even those limited instrumentalities like the CIA IG are, in fact, under pressure, beleaguered, and to some degree probably hobbled. Senator Akaka. Mr. Aftergood. Mr. Aftergood. As you were describing the creation of the ombudsman to review the activities of the Inspector General, I was wondering to myself who is going to oversee the ombudsman. But without prejudging the facts of that case, I would say two quick things. The Office of the Inspector General performs a crucial function. There is a new report out from the Project on Government Oversight this week examining the strengths and weaknesses of the Inspector General system, and it needs to be bolstered. But it is part of the larger issue confronting this Subcommittee and the Congress and addressed in your bill of how to strengthen the oversight function. If there are currently 50 intelligence staffers in Congress overseeing a budget of around $50 billion, that means that, on average, each staffer is responsible for $1 billion of government activity. And that is just not a reasonable task to expect them to perform adequately. So we need to strengthen all of the institutions of oversight, including the Inspector General, most certainly including a GAO role in intelligence. Senator Akaka. Thank you. Mr. Kaiser. Mr. Kaiser. Yes, if I may add to what has already been said. When the CIA Inspector General was created, it was in the aftermath of the Iran-contra affair. Congress had already tried to bolster the administratively created Inspector General at the CIA but found that it was not receiving adequate reports and information from that office. Consequently, the new office was created in 1989, and, in fact, in a very remarkable situation, because the Intelligence Authorization Act was already before the Senate on the floor. It was brought back into the intelligence committee, and this provision for a new Inspector General, a statutory Inspector General in the CIA, was added to it; and then the bill was re-released and sent to the floor for approval. That tells us how important and how conflictual that particular episode was. According to a recent press account, the Director of the Central Intelligence Agency said that he was looking at the IG the way he would at any other management entity. But the Inspector General is not the same as any other management entity within an organization. Even at the CIA, it is given certain statutory protections to prevent it being beleaguered and manipulated, if you will. The Inspector General also may have his investigations or audits prevented by the head of the agency. That applies, as I mentioned, to only six other governmental organizations. So for the DCIA to say or to insist that the Inspector General may have gone off on too independent of an exercise, the DCIA has authority to prohibit or intervene in some of those investigations. Senator Akaka. Mr. Marks. Mr. Marks. That has always been a fractious relationship for as long as it has been there between the IG and the CIA, and particularly on the operations side, which, as someone mentioned--I mean, this was set up shortly after Iran-contra, and the operations people were rubbed raw, as it was. It has been a difficult position but a necessary one, certainly the last several IGs who have been there--Britt Snider, Fred Hitz, a few others--have taken their share of flack. I am troubled by the ombudsman business because I think that does send the wrong message. But at the same time, I think the IG continues under John Helgerson, who is a long-time CIA official at a very senior level and a very bright, independent man, to continue to do the kinds of postmortems as well as suggested activities that they need to do there. However, again, I agree with the panel. I think that appointing an ombudsman at this point sends the wrong message altogether. Senator Akaka. Thank you. The fiscal year 2008 intelligence authorization bill would create an Inspector General for the Intelligence Community as a whole. I would like to hear your thoughts on how an IC-wide Inspector General could enhance oversight of the Intelligence Community as well as any potential problems you might see with the proposal. Mr. Marks. Mr. Marks. Thank you, Senator. Well, on the positive side of it, the DNI office has grown so large now and is dealing with such complex issues that it probably would not--it would certainly be helpful to have an Inspector General there to begin to look at some of the sub-processes going on there. Certainly an Inspector General at that level could also look at some of the interactions between the agencies and the DNI. I do not think it is any secret at this point that many of the agencies in the Intelligence Community have been greeted by the DNI like a third cousin coming from out of town to borrow money. They are unhappy with their presence there. It has, I think, conflicted to some extent with what the 2004 bill was in terms of creating that DNI, and probably having an Inspector General at this point, I think, would certainly help ease that process. It might also help as an interesting liaison to GAO as they begin their processes within the community as well. Senator Akaka. Mr. Walker. Mr. Walker. Mr. Chairman, I have mixed thoughts about it. First, I think the government has too many IGs. We have about 60 of them. Some of them are presidentially appointed, about half. About half are appointed by the agency head, and can be removed by the agency head. Some have hundreds of people at their disposal, that is, professionals at their disposal. Some have themselves and maybe one or two staff. So I think one of the things that has to happen in this year, which is the 30th anniversary of the IG Act, is that Congress needs to relook at the IG community in particular and the accountability community as well, which includes GAO, to try to make sure that there is adequate coverage while avoiding duplication of effort, trying to create more critical mass, more flexibility, more synergies, and more accountability. That being said, as has been said before, the CIA is the only agency within the Intelligence Community that has its sole, dedicated Inspector General. The DOD IG covers a lot of others, but they, frankly, have got a fair amount of work to do there. And so, I think you have to think about what do you do with regard to other ones that exist. It is one thing to say that you are going to have an Inspector General for the Intelligence Community and that that person is going to report to the Congress and maybe to the DNI, dual reporting, which the residentially appointed Inspectors General do. But then what is that going to do for the CIA Inspector General? And what is the impact going to be on the DOD IG in order to prevent duplication of effort and in order to create better clarity as to who is responsible for what? So I think it has some conceptual merit, but I think we have to put it in the context of, if you have more capacity here with an IG, what is that going to do on a micro basis to try to make sure you do not have duplication of effort within that community. And, second, I think we need to take a whole look at the IG Act and rationalize the overall structure and its relationship with GAO after 30 years. Senator Akaka. Mr. Aftergood. Mr. Aftergood. I would concur with that and just say that not all IGs are created equal, and that if there is to be an IC-wide IG, it is important that that office reflect the best practices in government and not the least effective. So the key touchstones really are the independence of the office, as written into statute; the resources that it has; and the personnel, the quality of the personnel working in the office. With the right people, the right resources, and the right statute, it can be a tremendous addition. Without them, it can be insignificant or perhaps even counterproductive. Senator Akaka. Mr. Ott. Mr. Ott. Mr. Chairman, maybe just one point in this regard, and I am keying on Mr. Walker's comments. Oversight works and it works effectively when various criteria are met, and one of those criteria is a perception among the overseen, in the Intelligence Community in this case, that the process is efficient, that the lines of authority and responsibility are clear, that you are not duplicating effort, you are not being asked to keep repeating the same thing to different people, reinventing the wheel, dealing with conflictual authorities. You want the process streamlined in every respect, including on the congressional end, in terms of oversight authority. Do you have multiple masters or is there a fairly limited demarcated set of folks that you are responding to? I just raise that because it is important in gaining the cooperation and support of the community itself, which is vital to making oversight work well. So I would encourage the Subcommittee, to keep this in mind as you address all these issues. Oversight is a good thing, but oversight just willy-nilly in all sort of guises and incarnations is not necessarily a good thing. It needs to be efficient and streamlined. Senator Akaka. Thank you. Well, thank you for those responses. Mr. Walker, notwithstanding DNI's reluctance to work with GAO, has DNI publicly identified any specific management issues that the community is having a challenging time working through? Mr. Walker. There are several issues that I know we have had conversations about. One in particular is human capital reform. Any organization is only as good as its people. That is clearly true in the Intelligence Community because, by definition, you are talking about intellectual property, intellectual capital, if you will. And so that is an area where they are engaging in a number of reforms, and, frankly, we have had some informal communications with the DNI's office on those issues. And I have seen some hopeful signs that we may actually be requested to do some work in that area because I think most people view the GAO as the clear leader in this area in government. And while we are not perfect, never will be, we are clearly the leader in this area. There are other areas that I do not know that the DNI has personally been engaged in or spoken publicly about, but that clearly, I think, should be areas of priority consideration in addition to human capital: Acquisition and contracting, information sharing, and potentially security clearances. All these are on our high-risk list. That is the common denominator. And I think, importantly, while a lot of people do not like oversight, I think sometimes people misconstrue GAO's role because we really try to employ a constructive engagement approach. It is in all of our interest for everybody to be successful, and so a lot of what we do is we try to bring best practices, make the entities aware of best practices based on our collective experience, as well as lessons learned, to increase the likelihood that they will actually be successful. And I think that is what sometimes gets missed. GAO did not always have that reputation, but I think we do have that reputation now, and I fully expect that it is likely to be maintained. Senator Akaka. Thank you. As Mr. Aftergood testified, ODNI has estimated that 70 percent of the Intelligence Community budget is spent on commercial contracts. That really is an astonishing statistic. Do any of you have insight into how IC contract management oversight is working, both in terms of the Intelligence Community's oversight of contractors as well as congressional oversight? Mr. Marks. Mr. Marks. At the risk of my business, I think one of the challenges for them right now is simply volume. The number of people involved with this process remains somewhat limited, certainly versus the Defense Department, who has had much greater experience over the years in terms of dealing with contractors. And we have seen some of the challenges that have come out of that as well. The creation of the DNI has added another strain on that process. We have certainly--in my own experience, I have certainly been well treated by those people. They have certainly gone out of their way to attempt to help, but they are oftentimes simply overwhelmed by the volume and, frankly, you have many young people in there who they are attempting to train up at this point. So while there are inefficiencies and you sort of hope they are gaining something on that as you are dealing with the tremendous volume of contracts now and the very large size and the billions of dollars of these contracts, the idea of having someone who can look over their shoulder such as the GAO and give them instruction on acquisition and give them instruction on the most effective best-practice ways of dealing with contracts I think would be greatly appreciated. Senator Akaka. Mr. Ott. Mr. Ott. If I can just refer to one case that I note in my testimony, in 2001 the National Security Agency, with considerable fanfare for a secretive agency, announced a program called ``Trailblazer'' that was to have three prime contractors, very large ones, and some 30 industrial partners and a budget that ultimately well exceeded $1 billion. ``Trailblazer'' went on for a number of years and was designed to provide a transformation of NSA capabilities to cope with the modern information technology world. Ultimately, it was a debacle, and then-Director Hayden ended up testifying that--it turned out that the new technologies were unmanageable--they were not working. NSA never fully understood what it was getting into. It ended up much like the infamous computer programs at the FBI, and ultimately the plug was pulled and defeat was declared. The point for our purposes is that in this whole episode, there was no real effective oversight. The kind of capabilities that a GAO might have brought to that process as it was ongoing just simply did not happen. So there are lots of examples like that, big examples, that argue the point that something else needs to be put in place here. Senator Akaka. Mr. Aftergood. Mr. Aftergood. This is not entirely a new problem. The National Reconnaissance Office, which builds spy satellites, has never actually built the spy satellites. It is always the contractors to the NRO that have built them for the last 40- plus years. But what is new is the explosion in contracting activity with just an enormous growth in spending and in number of contracts and in contracting on core intelligence functions, including analysis and collection. And the existing oversight system, it seems to me, is not well equipped to deal with that. The intelligence agencies answer to Congress, but the intelligence contractors do not. They answer to their customer, which is the intelligence agency who hired them. And so, in effect, the business of intelligence has been taken at least one step away from the oversight of Congress, and in some way, something needs to be done to rectify that. I think GAO provides an obvious if partial solution to that problem. Senator Akaka. Mr. Kaiser. Mr. Kaiser. Yes. To add to the complexity of auditing, overseeing, and evaluating the private contract operations is the notion that many of these contracts are bundled. I do not know if that is true in the Intelligence Community as it is elsewhere. But that means there are a number of separate private firms that are operating within, under a certain contract. That means further decentralization and difficulty in actually identifying or pinpointing who is responsible for what part of the contract. If down the line something does go wrong, there is a lot of finger pointing, and it is very difficult then to identify who is actually in charge of the whole operation or even a part of it. Senator Akaka. Well, let me ask Mr. Walker, as Mr. Aftergood testified, the intelligence components in the Department of Defense traditionally have not been as resistant as the CIA to cooperating with GAO. I understand that GAO even had an office at the NSA. Your testimony discusses some work related to elements of the Intelligence Community in the DOD. In general, do you still receive good cooperation from DOD components? Or has that changed as the IC has become somewhat more integrated under the DNI in recent years? Mr. Walker. We receive much better cooperation and generally good cooperation from the components dealing with the Department of Defense, at least most of them. We still actually do have space at the NSA. We just don't use it. And the reason we don't use it is we are not getting any requests. So I do not want to have people sitting out there twiddling their thumbs. Senator Akaka. Thank you. Mr. Walker, the Intelligence Community at times uses private contractors for outside reviews or auditing of IC programs or activities. You have served extensively in both government and the private sector reviewing and auditing Executive Branch activities and programs. Do you have any thoughts on the limitations or benefits of having private contractors review Intelligence Community activities? Mr. Walker. Well, Mr. Chairman, I think another area that is in desperate need of a review by the Congress is what has happened with regard to the proliferation of the use of contractors in government. It has grown dramatically. We are using contractors in many ways that we never did historically. A lot of times, if you go to a meeting at a particular department or agency, you have no idea who a contractor is and who a civil servant is. You really do not know. I think that there are certain functions and activities that should never be contracted out, and we need to have another discussion about that. But even if you do decide to contract out, I think there are plenty of things that should be contracted out. You need to have an adequate number of civil servants to be able to oversee cost, quality, and performance. And if you do not, you are going to get in trouble. And with the proliferation of service contracts in particular, there is also the additional challenge of not being able to provide enough specificity with regard to what those service contractors should be doing, which, in effect, gives them a quasi-blank check to do a number of things that may not be cost-effective for the American taxpayer. Senator Akaka. Professor Ott and Mr. Marks, you both also have worked as Senate staff on intelligence matters. The DNI is preparing to undertake a series of management reforms to its personnel systems: Contracting practices, financial systems, and business practices, among other proposals. What is your view on what type of expertise is needed by congressional staff to assess the Intelligence Community's performance on core management issues? For example, in your experience, how many auditors or accountants would be sufficient to perform the auditing function? Mr. Ott. Mr. Ott. The kind of review of management practices that you are referring to, I think it is fair to say, have never been adequately overseen by the intelligence committees. You are really talking about a kind of GAO type of expertise, and to my knowledge--and I will not pretend to be completely knowledgeable on the current set of circumstances--the oversight committees have never had that kind of specialized expertise. I will also say parenthetically, to use the metaphor, in the 1990s, Humpty Dumpty fell off the wall and was shattered into a very large number of pieces, and it will be a very difficult and very long-term business to try to put all those pieces back together again, if, in fact, it can be done at all. So just simply reconstituting what the Subcommittee once did is going to be a very difficult enterprise. And then to add to it a capability to oversee these kinds of management practices that the Subcommittee has really never done in the past will be adding additional difficulty on top of difficulty. You can detect a skepticism in my voice. I will just note finally that in my direct experience the Senate Subcommittee did in the 1980s, when, as I say, it functioned effectively, had an audit staff, and it was called that. It consisted, as I recall of basically three people. Basically what they did was look at very large budget items, primarily overhead systems, and got into questions of weighing various alternative strategies for constructing and satellite systems. And there were some very high-level, very informed engagements between that staff and the Intelligence Community at the time. I would argue one of the high points of legislative history, frankly, was the quality of debate that went on between that small staff--and I was not part of it--and the leadership of the Intelligence Community with regard to how to use billions of dollars for overhead systems. But that was not the sort of thing you are describing. That was not getting down into management practices, personnel, knowledge management, contracting, that sort of thing. That was big-ticket strategies. And that worked because that staff was world class. It was not big. It was very small. But the people on it, and particularly the leadership of it, was absolutely first rate. It was almost a unique thing. And it is very hard to imagine it being reconstituted, at least in the current environment, to do the kind of job you are talking about. Senator Akaka. Mr. Marks. Mr. Marks. This, Senator, is the kind of red meat that McKinsey and Booz Allen and others make a lot of money out of. But the problem, again, on this is to develop, as Marvin was saying, an internal expertise, people who understand the community, but at the same time understand these problems. And that is a difficult thing to do. We had a fortunate period of time and a relatively smaller community where people could concentrate on larger contracts and do that, and Marvin and I were acquainted with that audit staff, and they did a very good job. I am not so sure you can re-create that now. Certainly given the depth, you can just run the list--and Mr. Walker down at the end of the table has run this long list of management challenges at this point, ranging from workforce planning to information technology to secrecy and compartmentation. And I think, again, whether I am putting too much of a burden on GAO at this point, these are the kinds of people that you need to have who are going to be there on a longer-term basis and can really engage in a long-term dialogue on this, which I do not think you are going to get from a contractor, and you are certainly not going to be able to get from oversight committees that are already overburdened at this point. Let me also add another personal note, and this was an earlier comment that was made with regards to contractors within the community themselves. I can remember when this contracting business really began in terms of a much larger scale. Obviously, it was precipitated by 2001 and trying to buy quick expertise. The logic, however, was always one in which you supposedly got--the government got something cheaper in the sense of you are able to buy the expertise, but you did not have to pay for the pension, you did not have to pay for the insurance and all the rest of it, ignoring the profit the companies were making on top and still thinking you were making out in the long term. I think the term ``human capital'' has been used here before today, and I think one of the things the government has cheated themselves out of and to some extent cheated the taxpayer out of is that they may be saving some dollars, and I think there is still some debate as to how much they are saving, but certainly in terms of having the cadre of individuals who can deal with these kinds of issues within the government, I think we have cheated ourselves very badly. And maybe one or two of the places, one or two of the centers of expertise certainly remains in GAO, and I think it is one place that we can go back to fairly quickly to get some oversight on this. Senator Akaka. Thank you. Mr. Walker, as I noted in my opening remarks, in response to a question for the record from Senator Voinovich from a November 2005 hearing of this Subcommittee, GAO stated that it lacked the cooperation needed to ensure progress on the security clearance process. As you know, DNI may assume more responsibility for security clearances in the future. Given this situation, what specifically would GAO need from Congress and the Intelligence Community to continue making progress on this particular issue? Mr. Walker. Well, I think your bill, Senator, reaffirms certain authorities that GAO believes it already has, and I believe it also specifically may reference--if not in the statutory language, the contemplated, legislative history--the issue of security clearances. Let me restate. I have had a constructive working relationship with Director McConnell, and I think he is a very reasoned and reasonable person. He has a tough enough job in trying to do his job with regard to the 16 different entities in the Intelligence Community. And they do not all have the same attitude. The biggest problem that we have had on a recurring basis over many years has been the CIA, and not just with regard to whether and to what extent we would do work there, but in their historical unwillingness to cooperate on government-wide initiatives, even in circumstances where other members of the Intelligence Community did. And so I think we need to be precise about where the problem is and where it is not, and I do think that part of the problem is up here on Capitol Hill. I think the intelligence committees have still not come to the realization yet that no matter what their authorities are, no matter how capable their staff are, this is just an area that they are not going to be able to perform effectively, and GAO is the logical place to go, and it really, frankly, would not make sense to go anywhere else. Senator Akaka. Further, Mr. Walker, what do you think might be the result or what do you think might happen if GAO is unable to audit the security clearance process in the future? Mr. Walker. Well, it is already high risk. It would become higher risk, I can assure you. Senator Akaka. Mr. Walker, the DNI is trying to move forward with a new personnel system to unify the Intelligence Community. This, of course, is a lofty goal as practically each element of the IC has been granted different personnel flexibilities and has implemented the use of these flexibilities in an uneven manner. To date, have you provided any feedback to ODNI as it designs and prepares to implement the new personnel system? If not, would you speak a little bit more on how you could be helpful to the DNI in this area? Mr. Walker. Well, Ron Sanders is the chief human capital officer for the ODNI. I have known Mr. Sanders for a number of years. He is a very capable professional. There have been some informal conversations that have taken place with regard to what they are trying to do. I know that they have reached out to us at GAO to learn from our own experience and to draw upon some best practices. This is an area where I think we could add a lot of value. We have not received a formal request to look at what they have put together. But this is an example of an area where there has been some informal interaction and knowledge sharing, but it is an area where I think we could add value not just to the Congress but to the DNI. Senator Akaka. Professor Ott and Mr. Marks, you both also have served in the Intelligence Community working with the CIA. In your experience, how is our national security affected if there is inadequate oversight of the Intelligence Community? Mr. Ott. Mr. Ott. All right. I will venture out on thin ice here and make what is inherently maybe a tendentious assertion, but I will make it anyway because I believe it. When you pose a question like this it calls to mind the events of September 11, 2001, and the whole postmortem that was done on that by the 9/11 Commission and the connecting of the dots and the location of bits and pieces of information in various parts of the security community and the Intelligence Community in particular and the failure to bring those together and all of that--the story that we are all very familiar with. My argument is that if intelligence oversight by the Congress had been functioning in the 1990s and the years immediately up to 2001 the way it had functioned in the 1980s, I believe that, in fact, September 11, 2001 would have been prevented. And the reason is that an effective oversight system, as existed in the SSCI at the time, would have reacted to the 1993 truck bomb in the World Trade Center--and then the subsequent embassy bombings in East Africa--by saying we are now confronting something new, important, and dangerous. We are going to have to dedicate two or three of our professional staff to work this issue full-time. And if that had been done-- and I think it would have been done by a 1980s-era committee. If that had been done, you would then have had people from the committee ranging across the Intelligence Community, kicking the tires, asking questions: What are you doing? What are the programs? What do you know? And it is inherent in the nature of oversight that a staff doing that can bridge the stovepipes that compartmentalize information and can say, well, I was out at the FBI last week, and they told me this. Have you heard that? Well, no, we have not heard that. That is the process of correcting disparate, proprietary information which a Senate staff can do in the nature of things, actually very easily, but the community often cannot do. Not only that, you get the problem of orthodox thinking: Terrorists will never use airplanes, civilian airplanes. Who says? Well, we came to that conclusion somewhere a long time ago, and it is now sort of set in stone. Well, Senate staff is not beholden to or captured by bureaucratic orthodoxies. They might react with skepticism. Well, wait a minute. Why do you think that? I was talking to somebody in the civil aviation world who thinks quite differently about that. This is a service that oversight performs if it is done well, and it helps the bureaucracy itself bridge gaps, get outside of compartments, think outside the box, rethink conventional wisdom, and it is an absolutely-- in the kind of world that we face today, I think it is absolutely critical. Senator Akaka. Mr. Marks. Mr. Marks. I will take a slight variation on the theme, Senator, and I will take 2001 as the example because that is probably the best of the lot, at least for right now--maybe Iraq judgments. September 11, 2001, was a structural intelligence failure. We had a system that was built to do something else, to take on a very slow-moving, steady, Western-oriented Nation State, the U.S.S.R., very predictable, perhaps harder to penetrate but very predictable--hard to penetrate but very predictable. We had structures in place that separated international and domestic information. We had long-term laws in place that had placed some restrictions on a number of different agencies talking to each other. And Marvin is absolutely right. You also had cultures that had developed over the years that really were not dealing with each other. What you would hope for out of any oversight--and I can certainly see Marvin's point in terms of both the Senate and the House Intelligence Committees. But what you would hope for in any kind of oversight is the ability to look long term, the ability to look over the horizon in the sense of trying to get a handle on what is the next set of problems here. In a lot of ways, the Intelligence Community stopped somewhere around December 25, 1991, when the Soviet Union fell, and maintained a lot of the same structures throughout. And obviously there were cutbacks, etc., and that is all history now. But there are a number of us out there who really believed that there had to be an outside group that was saying to them, look, the situation has changed. People certainly were smart enough to realize it inside, but oftentimes they cannot move within their own bureaucracy to get things done. A good oversight committee--and again this is all hindsight, but good oversight of one form or another would have sent out the warning at this point. We are dealing in a different world now, the old joke being that the best thing that could happen to us is that al-Qaeda would have an international and a domestic desk, that they would not have connection. But they do. And the idea that these technologies that were developing in the 1990s that really were not taken into account, whether it is the ability to get on the Internet, whether it is the ability to make simply international phone calls and communicate that way, really weren't taken into account within the community. So, fundamentally, I think I agree with Dr. Ott on this, but at the same time, I do not know how much of that burden could have been taken on by the intelligence committees, given structure and, frankly, given the day-to-day issues that they have to deal with. Senator Akaka. Well, I want to thank all of you again for the time that you spent preparing as well as presenting this valuable information to this Subcommittee. This Subcommittee has been very fortunate. I hear all of you clearly, and your thoughts. Today's hearing for me has been a highlight on the need to improve oversight of the Intelligence Community, particularly as it prepares to implement a host of government-wide management reforms. It is clear to me that GAO, which has the expertise and capacity to do cross-cutting audits and evaluations of IC activities could provide valuable assistance to this effort. GAO's feedback would help Congress understand whether the Intelligence Community programs that it authorizes and funds are working properly. But, more importantly, GAO could help the IC work better. We should remember that the goal of oversight is not to point fingers at the Intelligence Community or to make newspaper headlines. Rather, the goal is to help the Intelligence Community function as effectively as possible to keep the American people safe. With that goal in mind, this Subcommittee will continue its attention to this important issue, and you have provided us with valuable insights and information to help us do that. The hearing record will be open for 2 weeks for additional comments or questions or statements other Members may have, and with that, this hearing is adjourned. 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