[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]



 
DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED 
                    AGENCIES APPROPRIATIONS FOR 2003

                              ----------                              

                                             Friday, June 21, 2002.

                    FEDERAL BUREAU OF INVESTIGATION

                               WITNESSES

ROBERT MUELLER, DIRECTOR, FEDERAL BUREAU OF INVESTIGATION
DAVID WALKER, COMPTROLLER GENERAL, GENERAL ACCOUNTING OFFICE
RICHARD THORNBURGH, FBI PROJECT PANEL CHAIR, NATIONAL ACADEMY OF PUBLIC 
    ADMINISTRATION
NANCY SAVAGE, PRESIDENT, FBI AGENTS ASSOCIATION

                    Opening Remarks of Chairman Wolf

    Mr. Wolf. Good morning. The committee will come to order.
    I'd like to welcome all the panelists this morning. Our 
world was changed on September 11th, 2001. Terrorism is no 
longer something you read about or see on the evening news. It 
has come to our shores.
    More than two dozen people from my Congressional district 
were killed in the September 11 attacks. My heart goes out to 
all the families who lost loved ones on that tragic day at the 
World Trade Center, here and in Pennsylvania. Our Government 
must do everything in its power to prevent something like 9/11 
from happening again. We need to make certain that America is 
safe and secure against terrorism. This is not a Republican 
issue or a Democratic issue. Only by working together will we 
be able to win the war against terrorism.


                     THE FBI'S REORGANIZATION PLANS


    The Federal Bureau of Investigation today finds itself in a 
central role in the fight against terrorism. The focus of 
today's hearing is the FBI's reorganization plan. This 
Subcommittee has the jurisdiction over the FBI and must approve 
the reprogramming of any appropriated funds for the Bureau. We 
owe it to the American people to be more than just a rubber 
stamp for the plan.
    Before I comment further on the proposed reorganization, I 
want it on the record that I have the highest respect for the 
thousands of FBI employees serving their country, both in the 
United States and abroad. I know many of them. They are 
extremely dedicated and work incredibly long hours to protect 
their country and their fellow citizens.
    I also want to thank Director Mueller, and want the record 
to reflect the respect that I have for him in leading this 
Nation's premier law enforcement agency. Director Mueller has a 
tough job. He came on the job just a few days before September 
11th. His first few months as Director were literally baptism 
by fire.
    As you well know, we're going to do everything we can to 
push the Bureau, to push the Justice Department and to push the 
Administration to do the very best job they can and even more. 
Our security demands it and the public deserves it.


                      CHANGING MISSION OF THE FBI


    The FBI's mission is changing. Prior to September 11th, the 
Bureau's primary charge was crime solving and prosecuting 
offenders. Now, preventing crimes, especially thwarting 
terrorist activities, has been elevated to job one. Director 
Mueller, I pledge, and I know the members of the Committee, 
that this Subcommittee will continue to provide the resources 
and support to the FBI to assist with its transformation. We 
will also provide the resources to ensure that the Bureau has 
the right mix of people to continue its new mission.
    As you well know, personnel is really the policy, and it is 
critical that the FBI have the best and the brightest on the 
front lines in protecting the American people. I take my role 
as Chairman of this Subcommittee very seriously. Since becoming 
Chairman in January of 2001 I have worked hard to learn 
everything I could, read every book I could to learn about the 
FBI and other law enforcement agencies that come under the 
jurisdiction of this Subcommittee. I did not serve on this 
Subcommittee prior to January, 2001, so the learning curve has 
been steep.
    Nevertheless, I personally am committed to working to 
ensure that the FBI, the DEA, the U.S. Marshals Service, along 
with all the other agencies this Subcommittee oversees, have 
the resources they need to carry out their respective missions.
    The issue of terrorism, however, is not new to me. It was 
my legislation in 1998 that created the National Commission on 
Terrorism. I pushed for the Blue Ribbon Commission, often 
referred to as the Bremer Commission, shortly after the U.S. 
embassies in Kenya and Tanzania were bombed by terrorists 
linked to Osama bin Laden.
    And after I had just returned from a trip to Algeria where 
terrorists, many of them coming out of training camps in 
Afghanistan, Mujahadeen and Al-Qaeda, have killed over 100,000 
people in Algeria, mostly women and children. Some believe that 
if the panel's recommendations had been implemented after being 
released in June of 2000, the terrorist attacks may have been 
averted. No one can say that with any certainty, however, the 
recommendations have all now been signed into law.
    I'm well aware of the threat to the country. It's very 
real. Three weeks ago I was in the Middle East where I visited 
Jordan, Syria and Israel. In January, along with Congressman 
Pitts and Congressman Hall, we traveled to Pakistan and 
Afghanistan and spent several days in Kabul. A year ago April I 
spent a week in Lebanon and went down into the Bekaa Valley and 
talked to people while I was there.
    I've been to the breeding grounds for terrorists. I know 
what we are up against. Anti-American sentiment can be found in 
all corners of the world. The task before the FBI, and our 
entire intelligence community, is daunting.
    Congress and this Subcommittee and full Committee have been 
very supportive of the FBI. Congress provided $745 million, 
$206.5 million more, more, than the Bush Administration 
requested in last year's supplemental spending bill for the 
FBI. The fiscal year 2002 supplemental spending bill pending 
now final action by the Congress includes $112 million for the 
FBI, $100 million more than requested by the Bush 
Administration. Much of this additional money is targeted 
toward modernizing the Bureau's information infrastructure. 
Clearly, we are committed to providing the FBI with the 
resources it needs to be the best it can be.

                   RESTRUCTURING PHASES AND APPROVAL

    One of the major challenges Director Mueller took on 
immediately after becoming director was the reorganization of 
the Bureau to meet its new mandates. And the Subcommittee 
quickly approved the first phase of that restructuring. A few 
weeks ago, the FBI sent the Subcommittee the second phase of 
the reorganization. And that phase we are going to discuss this 
morning.
    Before Congress approves the second phase, and major phase, 
of the reorganization, we want to be completely confident that 
the direction the FBI is taking is the right one. And because 
of the critical importance of this plan in fighting, and I 
believe winning, winning the war on terrorism, the Subcommittee 
and full Committee asked the General Accounting Office and the 
National Academy of Public Administration to provide the 
Subcommittee with an independent, analytical review of the 
reorganization. I'm pleased and appreciative that GAO and NAPA 
are here today to provide their comments, and we want to thank 
them for the speedy reviews because we didn't want this to drag 
on and on and not give the FBI the ability to do what they want 
to do. They have performed a vital public service and taken an 
impartial, and it is impartial, look at the FBI's proposals in 
providing the Subcommittee and the American people with expert 
advice on whether or not the restructuring being proposed is 
appropriate.
    Finally, I also want to thank Nancy Savage. Your 19 years 
experience as an FBI agent, as well as your leadership as 
president of the FBI Agents Association, provides you with the 
perspective to share important insights about the process. The 
agents on the street are on the front lines, gathering the 
intelligence information, and it's important we hear their 
thoughts on how this transformation plan will affect their 
work.
    In response to the urgent need to rout out terrorists who 
would do us harm, the FBI is seeking to shift its mandate from 
prosecution to prevention, also seeking to shift some staff 
away from its traditional duties, such as capturing drug 
dealers and violent criminals. The American people and the 
Congress need to know that to fight the war on terrorism in our 
homeland, how do we then redirect sources and personnel and how 
will that be done. Consequently, everyone should know this will 
result in fewer resources in personnel to fight other fights, 
such as the war on drugs.
    The proposed reorganization plans call for 400 agents who 
presently work related drug cases to be transferred to the war 
on terrorism. We need to know what impact this will have on the 
battle to stem the sale and use of illegal drugs, and we need 
to know if the Administration is considering providing 
additional resources, dollars, if you will, to the Drug 
Enforcement Administration to cover the shortfall. We have 
written Attorney General Ashcroft on that issue.

                           INCREASING THE FBI

    Perhaps the heart of the matter, though, is actually a 
shortage of FBI agents. Ronald Kessler, the author of several 
books which I read on the history of the FBI, argued in an op-
ed piece in the Washington Post last weekend, ``If Congress and 
the Administration are serious about fighting terrorism and 
other major crime, they should double the size of the FBI.'' I 
don't know if we need to go that far, but I think it's a fair 
question. Regardless of one's opinion of Mr. Kessler, and I 
know he raises some hackles on both sides of the issue, he has 
raised some very salient points, including the fact that there 
are 11,500 FBI agents worldwide, worldwide, compared to 40,000 
police officers in the City of New York.
    I personally support increasing the size of the FBI. I 
don't think we can expect the Bureau to take on the additional 
responsibilities, and if you go ask the Library of Congress 
about all the new laws that are passed over the years giving 
responsibility to the Bureau--without giving it additional 
manpower. I suspect the Bureau could use a number of highly 
trained intelligence analysts, in addition to experts in 
computers, technology, translating foreign languages, etc.

               CREATION OF AN INTELLIGENCE SCIENCE BOARD

    There is also the question of training. Is the curriculum 
at Quantico, where all the agents are trained, is it being 
changed to reflect the changing mission of the Bureau? If it 
isn't, it should be. This leads me to recommending the creation 
of an Intelligence Science Board, which I am going to put in 
legislation, similar to the Defense Science Board, that was 
established in 1956 in response to the recommendation of the 
Hoover Commission. Like the Defense Science Board, an 
``Intelligence Science Board'' would be a place where people in 
the intelligence community could have their ideas and 
technologies vetted by an independent group whose sole goal is 
to provide the best intelligence possible to the Nation.
    Clearly, our armed forces are the most technologically 
advanced in the world. The Defense Science Board and the 
Defense Advanced Research Projects Agency, more commonly known 
as DARPA, who helped develop the Internet, deserve a great deal 
of the credit for the incredible amount of technology that has 
been incorporated into our armed forces. The Defense Science 
Board has served as a sounding board, providing wisdom and 
knowledge, while DARPA's mission has been to ensure that the 
United States maintains a lead in applying State of the art 
technology for military capabilities and to prevent 
technological surprises from our adversaries.
    Our intelligence gathering community must possess the same 
technological advantages as our armed services. The creation of 
an Intelligence Science Board would help ensure that our 
intelligence communities have a place to test ideas and 
technologies, and benefit from each other's knowledge and 
wisdom. Everyone in the Nation's intelligence gathering 
community, from the CIA to the FBI, to the National Security 
Agency, to the proposed new Homeland Security, would benefit.

                             REORGANIZATION

    In considering the FBI's reorganization, the Administration 
also needs to ask if this reorganization goes far enough. It 
may not. We're anxious to hear the opinion of our witnesses as 
to whether the plan put on the table is adequate. This 
reorganization will have a tremendous impact on the country. It 
needs to be thoroughly vetted.
    And I do need to caution, however, in closing, that in our 
quest to create a better and a faster, more agile FBI, we have 
to be careful not to trample on the rights granted to every 
American under the Constitution.
    With that, I would just end, and I say that I believe 
personally, speaking for myself, and that's all I can speak for 
today, I think that Director Mueller is doing a good job under 
extremely trying and difficult circumstances. If the culture at 
the FBI does need changing, his leadership will be the guiding 
light. And in fulfilling its responsibility to provide the 
necessary and proper oversight, this Committee stands ready to 
help the FBI fulfill its mission into the new century and to be 
the best organization that it can possibly be.
    Now I would like to recognize Mr. Young and then Mr. Obey 
and Mr. Serrano, and then we'll go to Mr. Mueller for 
testimony.

                  Opening Remarks of Congressman Young

    Mr. Young. Mr. Chairman, thank you very much.
    Mr. Director, thank you for being here today. You come 
bearing a tremendous burden. You and we together with the 
leadership of President Bush have a tremendous responsibility, 
a tremendous challenge. As Chairman Wolf has suggested, I have 
tremendous confidence that if anyone is able to pull off this 
job right, that you're the one to do it.
    Mr. Director, I was quite young on December 7th, 1941. But 
I remember that day vividly today. I know as a young kid I was 
scared to death that I was going to see enemy troops walking on 
the street of my little town. After I got over that initial 
scare, I realized that I'm an American and Americans are going 
to prevail. We'll do whatever it takes to prevail. I think 
there's a lot of kids out there today, after September 11th, 
wondering what happens next, am I going to be blown up, or 
what's going to happen? But I'm satisfied that under your 
leadership the FBI is going to play the role that it needs to 
play.
    But you're going to need some tools. Mr. Obey and I both 
visited your headquarters shortly after September 11th and 
recognized the tremendous shortfall in technology which was 
frankly quite amazing to me. I noted to Mr. Obey that 
technology wasn't where we thought it should be. As Chairman of 
this Appropriations Committee, I'm prepared to do whatever is 
necessary to provide you and those who represent you in the 
field, as we seek out these terrorists, to provide you with 
whatever tools you need.
    Americans don't want to live in fear. Americans don't want 
to be threatened. You're on the front lines and we want to be 
here to support you. So thank you for being here today. I know 
we'll have a lot of interesting questions for you, but we're 
anxious to hear your comments first.
    Mr. Chairman, thank you very much.
    Mr. Wolf. Thank you, Mr. Chairman. Mr. Obey.

                 Opening Statement of Congressman Obey

    Mr. Obey. Mr. Chairman, thank you for yielding the time. 
Mr. Director, I have a lot of confidence in you, based on what 
I know of your past record and your personality. When we had a 
hearing with the FBI, a little over a year ago I guess it was, 
with the prior director, I spent a good deal of time in an 
exchange with him about the culture at the FBI and some of the 
problems. It's easy for us today to focus on counterterrorism, 
but the fact is that there were still a lot of other problems 
that the FBI had before you were ever brought on board.
    When Mr. Freeh was the principal witness, we talked about 
some of the past problems of the FBI, the lab operation 
problems that come to light, the leaks associated with the 
investigation of the bombing at the Olympics, Ruby Ridge, the 
Hanssen case, the loss of McVeigh documents. And a number of us 
in the hearing at that time expressed our concerns about the 
need for strong management reforms at the agency.
    Everything that I know about you seems to indicate that 
you're well aware of those problems and that you are moving to 
deal with them, and I appreciate that. I think that's crucial 
in an agency this large. This agency is about three quarters as 
large as my hometown. That may not be very big by Congressional 
standards when it comes to communities, but that's big by 
organizational standards, even though I think you need to grow 
even more.
    But I expressed one concern at that time, and I'll express 
it again here today, because I don't think that the FBI alone 
is responsible for some of its failings. I've been here 33 
years. And I have seen times when Congress exercised adequate 
oversight with respect to your agency, and I've seen times when 
I thought Congress' actions in that regard were miserable. I 
made the comment a year ago that I can recall times when 
members of the Committee seemed to be more interested in 
getting the autograph of the FBI director than they were in 
doing their job and asking tough questions. And I don't think 
the agency was served by that any more than the country was.
    I hope that over the next 20 years, we'll see a much more 
consistent and aggressive oversight of the agency, because your 
agency does have immense powers. In a democracy, the only 
institution that is the safety valve if those powers are mis-
used or used badly, is this one. So I think we have to live up 
to a higher standard as well.
    But the second thing I'm worried about is that I don't 
think your agency has been getting enough financial support 
since September 11th. Now, I know that overall budget 
considerations are very important. Chairman Young and I are 
told that every day in every way by everybody around, except 
when they want to spend money on something different, and then 
the concern disappears.
    But what I am especially concerned about is that after 
September 11th, when we were boxed out of this place because of 
the anthrax scare, Mr. Young and I and our staffs spent a good 
deal of time talking to a number of security agencies in this 
town--National Security Agency, FBI, CIA, CDC, HHS, you name 
it. I saw up close the working conditions that your people had 
in dealing with those challenges. I saw them work 14 hours a 
day, 7 days a week, and you could see the dedication of the 
teams around.
    And yet, when Mr. Young's staff and mine developed a 
bipartisan list of additional needs that agencies, including 
yours, had indicated to us were important, we were told by the 
White House if we tried to add those additional resources, the 
White House would veto the supplemental last year. In our 
conversations with the FBI, at that time after September 11th, 
we were told that there were needs of about a billion and a 
half dollars. OMB's request to Congress is $539 million. We 
finally were able to get it up to $750 million, not enough, but 
better than the original request.
    In this spring's supplemental, the agency had requested 
$635 million. OMB's request to the Congress for the agency was 
$10 million. That's a fair amount of difference. We increased 
that by a factor of 10 on a bipartisan basis. The House passed 
a bill containing $112 million in additional resources. As the 
Chairman indicated with his comment about the Washington Post 
article, there are those who feel that your agency needs to 
have significantly more agents. I think they do, too. So I want 
you to know that this Committee, I'm confident, on a bipartisan 
basis, will meet whatever your resource needs are.
    But I do have one frustration. If we are to go on record as 
adding more money to an agency like yours, we have to know that 
your agency has the right focus, and that it is not wasting 
resources. One incident does not a case make, I know that. But 
when we saw the news several weeks ago about the number of 
months long investigation of a house of ill repute in New 
Orleans, at a time when we had all these other higher competing 
needs, that investigation might be very interesting, but I 
doubt that it was dealing with a national security threat to 
the United States of America.
    So I would urge that as you take greater control over the 
agency over time that the agency recognizes that in this new 
era, there has to be a very different focus. Some of the 
interesting and headline grabbing activities which might have 
been acceptable prior to September 11th just aren't any more. I 
think if we have a greater awareness of that in the field, your 
agency is going to be doing a better job, the country will be 
safer and we'll be able to focus more on issues that are really 
important.
    Thank you, Mr. Chairman.
    Mr. Wolf. Thank you, Mr. Obey. Mr. Serrano, Ranking Member.

                 Opening Remarks of Congressman Serrano

    Mr. Serrano. Thank you, Mr. Chairman. Welcome, Mr. Mueller.
    This hearing is supposed to be about a reprogramming. The 
Commerce-Justice-State bill carries language each year that 
sets out requirements for agencies that want to spend funds for 
activities other than those for which we have expressly 
provided funding. Each year, we receive literally hundreds of 
reprogrammings. Some are approved quickly and with little 
discussion. Some are the subject of controversy and require a 
longer deliberation.
    But as far as I know, none has ever necessitated a hearing. 
The fact that this Subcommittee has taken the time to hold a 
hearing on this reprogramming is testimony to how strongly this 
Congress feels about the issues represented here.
    This is about much more than a reprogramming. On September 
11th, 2001, our Nation was changed forever. On that day, the 
World Trade Center and the Pentagon, symbols of the United 
States, were brutally attacked. One other target was spared due 
to the bravery of the passengers aboard Flight 93. Almost 3,000 
people perished in the World Trade Center alone. The sorrow 
that we felt that day will never leave us.
    As a New Yorker, I am dedicated to rebuilding my city. As a 
member of Congress, I'm dedicated to doing everything within my 
power to find the people responsible for these acts and 
ensuring the security of our citizens. And as an American, I 
remain dedicated to the values upon which this country was 
built.
    In response to the tragedy of the 11th of September, 
Congress has spent a considerable amount of time examining the 
way our Government is organized and how it has performed.

          REORGANIZATION OF THE FBI AND SAFETY OF THE COUNTRY

    The reorganization of the FBI, the world's premier law 
enforcement agency, is a critical part of this review. Director 
Mueller's proposal refocuses management attention and 
investigative resources on the Nation's most important 
priority, fighting the war on terrorism.
    I believe the proposal is a reasonable and measured step 
toward remedying deficiencies in our counterterrorism effort, 
and I would like to voice my support for it. However, as we 
further consider the Federal response to terrorism, I feel that 
I must voice a note of caution. Our greatest achievements as a 
Nation involve the advancements of the ideals that we hold so 
dear--freedom, liberty, justice. Our greatest tragedy is that 
we have so often failed to live up to these great ideals.
    This has been especially true during periods of crisis. I 
do not question the goals of security and safety that we all 
seek. But as Supreme Court Justice Louis Brandeis stated, 
``Experience should teach us to be most on our guard to protect 
liberty when the Government's purposes are beneficial. Men born 
to freedom are naturally alert to repel invasion of their 
liberty by evildoers. The greatest danger to liberty lurks in 
insidious encroachment by men of zeal, well meaning, but 
without understanding.''
    There will always be tension in a free and open society 
between national security and personal liberties. My fear now 
is that the delicate balance is shifting. It is absolutely 
essential that we secure our Nation, and I will do everything I 
can to support such efforts. However, it is not true that the 
price of such security must be our liberty. We must not lose 
sight of the fact that we seek security, not solely for its own 
purpose, but to preserve our liberties.
    As Ben Franklin argued, ``They that can give up essential 
liberty to obtain a little temporary safety deserve neither 
liberty nor safety.''
    As a testament to the FBI's significant authorities and 
responsibilities, much of the debate about Government power and 
personal liberty has centered on the Bureau. From the time of 
the Bureau's creation in 1908, people have expressed fear over 
a national police force or a domestic intelligence agency that 
would wield power against the people rather than in defense of 
them. Despite its many successes, the FBI has been criticized 
for such abuses of power in its past. The Palmer raids, illegal 
investigations on behalf of the House Un-American Activities 
Committee, damaging files on public persons, surveillance of 
Puerto Rican nationalists, illegal wire taps for political 
uses.

                         STATUTORY RESTRICTIONS

    Ironically, many of these abuses were associated with 
another American war effort, the war on communism. As a result 
of these abuses and Congressional investigations that 
threatened to lead to more stringent statutory restrictions, on 
April 5th, 1976, the Justice Department released guidelines to 
govern domestic security investigations and restrain the FBI. 
Last month, the Attorney General modified these self-imposed 
restraints to allow for a more proactive FBI. This action by 
itself would have caused me concern. However, viewed in a 
broader context, the loosening of the constraints seemed to be 
part of a broader deterioration of the protection of civil 
liberties.
    The reprogramming to implement this reorganization would 
facilitate the FBI becoming a more proactive institution. I am 
concerned, however, that in our rush to catch the bad guys, we 
will hurt the good guys. Mr. Director, you have done a 
remarkable job under very difficult circumstances. I do not 
want you to take my comments today in an improper, wrong way. 
My concerns are not a criticism of you.
    But there will be future directors, and the actions we take 
now will empower these future directors, and we have no idea 
how they will use that power. I'm not sure future FBI directors 
will be as conscientious as you have been during this very 
difficult period. And if the past is any indication, we may not 
know what abuses have been committed until well after the fact. 
Director Mueller, as we work to restructure and reform the FBI, 
as we work to give you the tools to carry out your critical 
mission, I hope you will keep in mind that with awesome power 
comes awesome responsibility.
    I have reviewed Mr. Walker's testimony and he has suggested 
establishing internal controls to protect civil rights. I agree 
with this recommendation, and it is my hope that I can work 
with you and Chairman Wolf to develop a means by which we can 
assure the American people that the FBI is using its powers 
responsibly.
    Let me close, Director Mueller, and members of the 
Committee, by reminding you that with the support of former 
Director Freeh, my office and the Government of the 
Commonwealth of Puerto Rico, as an example, are in the process 
of receiving, and I thank you for continuing the process, 
1,807,000 documents kept for a 40 or 50 year period on the 
Puerto Rican independence movement. Careers were ruined, lives 
were shattered, issues were fabricated, that all comes out now. 
People didn't pay attention then. They thought it was just one 
group. Now we're in the middle of a war. We need to win the 
war. But in the process, we can't throw out the Constitution. 
Thank you.
    Mr. Wolf. Thank you, Mr. Serrano.
    Mr. Director, you may begin.

                 Opening Statement of Director Mueller

    Mr. Mueller. Thank you, Mr. Chairman, Chairman Young, 
Congressman Obey, Congressman Serrano, and other members of the 
Committee. I appreciate being given the opportunity to appear 
here today.
    You have in the past, I believe, heard me say that having 
the FBI refocused and restructured around our new priority of 
preventing terrorism is critically important. While the mandate 
is urgent, getting it right and doing it correctly is as 
important, if not more important. Prevention in the war against 
terrorism must be sustained far into the future. It must 
become, unfortunately, our way of life.
    That is why we at the FBI must change, and that is why I 
welcome being here at this hearing today. I also look forward 
to hearing the testimony of David Walker and Dick Thornburgh. I 
believe my conversations and the conversations of our staffs 
with their staffs have been constructive and helpful. And I 
greatly appreciate their willingness to jump into these issues 
on relatively short notice, but with a sense of urgency.
    Certainly there are complexities here that benefit from the 
wealth of experience that they represent. As I often said in 
the past, I certainly do not have all of the answers, and I 
solicit any suggestions that anyone has on how we can do things 
better. I particularly appreciate David Walker's and Dick 
Thornburgh's suggestions to us.

                        NEED FOR A DIFFERENT FBI

    The attacks of September 11th left no doubt that a 
different FBI is needed. All of us in the FBI, whether it be 
support staff, agents or supervisors, recognize that there is 
the need to change. Almost immediately, in the wake of 
September 11th, we began refocusing and reshaping the 
institution.
    This Committee, and the full Committee, as well was 
instrumental in helping us adopt a new headquarters structure 
last fall, shortly after September 11th. It was also helpful in 
giving us the funding to begin fixing the many obvious problems 
that we have discussed on prior occasions. And I'm grateful, 
very grateful, for the Committee's support. These problems, 
especially the ones relating to technology, are as relevant to 
what we are discussing today as anything outlined in the 
reprogramming or indeed in my testimony. All of these issues 
are related and they all contribute in very substantial ways to 
our overall prevention capacity.

                        PROPOSED REORGANIZATION

    As you mentioned, Mr. Chairman, I have submitted for the 
record a rather lengthy statement describing the nuts and bolts 
of what I have proposed and the near-term actions that I 
believe are necessary to continue heading the FBI in this new 
direction. That statement supplements the formal reprogramming 
sent to you by the Department of Justice and also supplements 
the earlier briefings that I provided to, I believe yourself, 
Mr. Chairman, and the Committee staff.
    I won't take the time this morning to repeat all that, but 
instead I would like to offer a few brief points that I think 
are critically important. First, we have changed our priorities 
to reflect the post-September 11th realities. I tried to do 
this in a way that everyone from headquarters to the most 
distant legal attacks, anyone from the top to the bottom of the 
organization, would understand. These new priorities are listed 
in my prepared testimony and reflect considerable consultation 
within the FBI and with the Department of Justice.
    Second, what did not happen with the Phoenix memo has come 
to symbolize what I believe is our most urgent need, and that 
is building a robust, integrated, analytical capacity that not 
only will support our own investigative and preventive needs, 
but also will complement and enhance the efforts of the CIA, as 
well as those envisioned in the new Department of Homeland 
Security. Based on extensive interaction and experience with 
the CIA and with my discussions with Tom Ridge, I believe that 
what we have proposed, bolstered by the new resources, both 
received from you and requested for fiscal year 2003, does 
exactly that.
    And third, while the number of agents we have proposed 
shifting to counterterrorism may not seem perhaps enough at 
this juncture, I think it is critically important that we do 
not permanently go too far or too fast. You should understand 
that we will always use whatever resources are necessary, even 
the entire agency if need be, to address any and all threats of 
terrorism. That is what our priorities call for.
    For example, in the immediate aftermath of September 11th, 
although we only had somewhere in excess of 1,000 agents 
permanently assigned to work counterterrorism, we had over 
6,000 agents working nearly around the clock on terrorist 
issues in the immediate wake of September 11th. That number has 
now leveled off closer to 2,000 agents. Given that you have 
already appropriated us additional counterterrorism resources, 
I don't want to end up with agents assigned to 
counterterrorism, with inadequate responsibilities to support 
their time.
    So, while I have proposed what I believe addresses our 
assessment of this current situation, I will not hesitate to 
come back to you if it proves to be too low a number and we 
have to make additional shifts in the future, or make 
additional requests for special agents or support personnel.
    Ultimately, all of this reorganization is dependent to 
varying degrees on having our technology problems fixed. I know 
this and I know that you know this, and that is why I am 
continuing to bring into the FBI, persons like Sherry Higgins, 
persons with long and successful experiences in the private 
sector, who will continue us down the path first forged by Bob 
Dies.

                NEED FOR COLLABORATION AND OTHER CHANGES

    And finally, I think we all agree that there is a need for 
some changes that cannot be represented by new boxes on an 
organizational chart. We need new ways of doing business. We 
need far greater collaboration, not only amongst the Federal 
agencies, between us and the CIA and us and other Federal 
agencies, far greater collaboration between us and state and 
local entities in the United States, and far greater 
collaboration between us and our counterparts overseas.
    We need less obstructive bureaucracy. We need more 
accountability. And along with our new authorities, more 
careful oversight of our national programs. I think we are 
making these changes as well, although I must say, 
realistically, nothing happens overnight. We are on the right 
track.
    We have terrific employees, we have great employees out 
there. We need to give the employees, we have to give the 
support staff, and our agents the tools for them to do their 
jobs.
    And let me close by stressing one point. For prevention to 
work as the country expects, the United States Government 
effort must be integrated and coordinated. What we have 
proposed here was not created in a vacuum. George Tenet and I 
have spent substantial time testifying recently on how we have 
integrated our operations together. Many of the recent 
successes that have been reported upon, particularly overseas, 
are the result of our integrating our operations in ways that 
have not been integrated in the past.
    This proposal fits with what George Tenet is doing and it 
fits with the proposal for the new Department of Homeland 
Security. This proposal will feed and complement both and vice 
versa.
    Equally important, it will keep in play a two way street 
between the combined Federal effort and those of our 650,000 
state and local counterparts that are so essential for us doing 
the job nationwide to prevent additional acts of terrorism.
    Finally, Mr. Chairman, I appreciate the support that 
Congress has given us in turning the FBI in a different 
direction, and I look forward to hearing from the other 
witnesses who are to testify today, listening to your questions 
and trying to respond to them. What I would like to do is, once 
your questions have been asked of me, I would like to stay and 
hear the testimony of the additional witnesses and then I'd be 
very happy to, if there are other questions raised by them, be 
called back to respond to any questions that the other 
witnesses may have or raise.
    [The prepared statement of Mr. Mueller follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Mr. Wolf. Thank you very much. We appreciate that, 
particularly knowing how busy you are.

                HOW RESTRUCTURING IMPROVES COMMUNICATION

    The first question, then I want to go to Mr. Young and Mr. 
Obey, is how will the restructuring affect, and more 
importantly, improve, communications between the FBI and the 
CIA, but also between the FBI and INS, or with the State 
Department? Tell us specifically how the restructuring will 
improve the vital communications.
    Mr. Mueller. I would like to break it down two ways if I 
could. First of all, the CIA. The jurisdiction of the CIA is 
overseas in terms of gathering intelligence. The jurisdiction 
of the FBI is within the United States, to collect and gather 
intelligence. And with regard to the CIA, as you have noted in 
our papers, we are establishing an Office of Intelligence, and 
we are establishing it immediately in the Counterterrorism 
Division. The individual to head that up is Mark Miller, who is 
an experienced CIA intelligence officer. George Tenet has 
agreed to give us 25 CIA analysts to help staff that new Office 
of Intelligence. That Office of Intelligence, working with our 
operational sections in that same division, will have the 
responsibility of coordinating the information that is coming 
in from our field offices, not only within the Counterterrorism 
Division but also with the CIA.
    My own experience is that the best working relationships 
are those where you have agents of different agencies working 
together, shoulder to shoulder, in the same building. Whatever 
reserve there may be between the institutions is relatively 
quickly broken down when that happens. We have something like, 
I think, 11 or 12 FBI agents currently working over at the CIA. 
But this co-location building and Office of Intelligence in the 
Counterterrorism Division gives us some of the expertise that 
the CIA can bring to it, as well as the analyst, and the access 
to their data base. It also gives the CIA access to our data 
base and all of our material.
    With regard to the other agencies, INS, Customs and State, 
what we have found working well around the country is the Joint 
Terrorism Task Force. In each of our 56 offices, by the end of 
the year, we will have formal joint terrorism task forces with 
many of those federal agencies participating, including the 
State Department, because of their access to State Department 
information relating to visas.
    What we are replicating at headquarters is that same type 
of Joint Terrorism Task Force where you have individuals, 
representatives of each of these agencies, who have access to 
their own computerized data bases, sitting shoulder to shoulder 
with not only other federal agencies but also with state and 
local agencies. For example we have two, detectives, or 
officers from the New York Police Department, working on our 
PENTTBOM case. We want to expand that, so that we have at FBI 
headquarters that mix of individuals and agencies that will 
give us rapid response time whenever we have information on a 
particular individual who may cause a threat or a particular 
threat in one of our communities.
    The last thing I would say is that the capability of 
integrating persons in one room, or a series of interlocking 
rooms, is exactly what we had in the wake of September 11th. 
Those of you who came down to see the SIOC, the Strategic 
Information Operations Center, saw working there with the 
placards up in front of them representatives of just about 
every Federal agency you could name, as well as some state and 
locals.
    So what we are hoping to do is replicate and make permanent 
that integrated investigative and analytical capability.

                           VISA APPLICATIONS

    Mr. Wolf. We need some assurances, though, particularly 
with regard to the relationship with the State Department, that 
when an individual comes in, whether it be in Saudi Arabia or 
Syria, and the visa application comes back to the United 
States, that that visa application on that individual is 
clearly checked.
    There are some concerns that it's coming back and there's 
30 days delay and it's not completely checked. I assume you saw 
the article where they had, in Saudi Arabia, a visa express 
procedure, whereby rather than coming into the American 
embassy, they just went into a travel agent and were granted a 
visa. We need to know that when an application comes back to 
the United States, each and every one of them is checked before 
the State Department grants the visa.
    Mr. Mueller. There are procedures established to do that. 
We have been doing that for a period of time since September 
11th. I would have to get back to you on the specific details 
of that.
    [The information follows:]

                      Checks of Visa Applications

    Prior to the September 11th terrorist attacks, the Department of 
State (DOS) and the Federal Bureau of Investigation (FBI) were 
developing a plan to share criminal justice information for processing 
non-immigrant visas, including obtaining the statutory authority to do 
so. September 11, 2001 served as a catalyst to expedite those plans. 
Through the passage of the USA Patriot Act, the DOS was granted access 
through their Consular Lookout and Support System (CLASS) to data 
contained in the FBI's National Criminal Information Center (NCIC) and 
the interstate Identification Index (III) segment of the Integrated 
Automated Fingerprint Identification System (IAFIS). Specifically, in 
June 2002, approximately 425,000 records from the NCIC's Wanted Persons 
File, Deported Felon File, Violent Gang and Terrorist Organization 
File, and Foreign Fugitives File were uploaded into the CLASS system. 
In addition, at the request of the DOS, approximately seven million 
criminal history records from the FBI's III will be phased into the 
CLASS system. The NCIC will and III records being provided to the DOS 
include only those individuals whose place of birth is ``foreign born'' 
or ``unknown'' in their base record. The DOS has advised the FBI that 
hardware changes to the CLASS system must be made prior to acceptance 
of the III data.
    The DOS has been provided direct access to FBI criminal justice 
information for many years for processing immigrant visas through the 
DOS' National Visa Center in Portsmouth, New Hampshire. This direct 
access has been through name checks of the FBI's III, and, when a 
positive record is indicated, through the submission of fingerprint 
searches to the FBI's IAFIS.

                             RESTRUCTURING

    Mr. Wolf. The other issue, and then we will recognize Mr. 
Young. How will the restructuring take place? We're concerned 
that as you shift the management of counterterrorism to 
headquarters that you will lose some time in the transition. 
How will you assure a smooth transition with the people in the 
New York field office who right now, I understand, possess the 
breadth of the knowledge on al Qaeda and bin Laden? Will they 
come to Washington to manage the transition of this knowledge 
base?
    Mr. Mueller. Let me describe a little bit of how I expect 
it to work in the future. One of my concerns, as I think I've 
expressed here before, and that is, when you have a national 
program, in my mind there ought to be national accountability 
for it. We cannot have an individual, special agent in charge 
SAC in the field saying, okay, it's headquarters' 
responsibility, with headquarters saying, it's the SAC's 
responsibility. When it comes to protecting the United States 
from counterintelligence or counterterrorism, in my mind, the 
Assistant Directors of each of those divisions should have some 
responsibility of understanding what is out there, or whether 
it be a case as important as Wen Ho Lee, or whether it be a 
threat that has come from overseas. Be assured that the 
investigative talent of the agency in the field, our 
investigators are in the field, are doing a tremendous job.
    But what we need to do in Washington is assure that what is 
happening in Portland, Oregon, where it may relate to what's 
happening in Seattle or Albuquerque, is put together, and that 
investigative steps are taken to assure that we push it out. So 
there is an oversight and management role for headquarters. I 
recognized early on that the breadth of knowledge in terms of 
al Qaeda was principally in New York because New York had done 
a superb job of investigating the 1993 World Trade Center 
bombing, and superb job in investigating the 1998 embassy 
bombings in East Africa. They not only investigated but brought 
the defendants into the courtroom for prosecution, so that many 
of them are serving life terms.
    I have reached out to New York to help in broadening the 
capabilities of the Counterterrorism Division. The new 
Assistant Director of the Counterterrorism Division is Pat 
D'Amuro, who was head of the Joint Terrorism Task Force in New 
York for a number of years and I believe is recognized as one 
of those persons who is very knowledgeable about, particularly, 
al Qaeda. He has brought in a number of people from the field 
whom I believe are respected in the field as having been out 
there and done it and know what it's like to do an 
investigation. So when they suggest things to be done to a 
special agent in charge, their suggestions are looked upon as 
coming from persons who are experienced in these fields.
    I intend to grow headquarters with that type of personnel. 
It is a problem, the housing, home prices here are not easy. 
Coming back to headquarters is not easy for people. But we have 
to attract back to headquarters some of the best that we have 
around the country if we hope to do our job adequately for 
counterterrorism and counterintelligence. And I have sought out 
and will continue to seek out those persons in the country whom 
I believe are experts and capable leaders so that they can be 
back at headquarters and lead the institution, not just a unit 
in any particular field office.
    Mr. Wolf. Mr. Young.

                                TRILOGY

    Mr. Young. Mr. Chairman, thank you very much.
    Mr. Director, I'm very pleased that the Appropriations 
Committee, all the members, have shown a strong determination 
to provide you with whatever you need, the tools, the people, 
to meet the challenge that you've been given. One of the areas 
where I think the FBI is really short is technology. Mr. Obey 
and I both visited your SIOC, and I think we both came away 
just tremendously impressed in a negative way at the lack of 
ability for you to have the exchanges of information as 
effectively as need be. We've tried to be supportive.
    Could you give us a report on where we are on Trilogy?
    Mr. Mueller. Let me tell you, I welcomed having you in the 
SIOC for two reasons. One, you saw the caliber of the people 
that were working there. But secondly, you did see how we were 
deficient in terms of having to move pieces of paper as opposed 
to moving items digitally. I think on the one hand, the FBI is 
on the cutting edge of the cyber world in terms of 
investigating cyber intrusion, cyber crime and the like. On the 
other hand, our infrastructure is not where we want it to be. 
The first phase of up-grading our infrastructure was obtaining 
the backbone for our system, that is, the Pentium computers, 
the monitors, the local area networks, the wide area networks 
that would carry the information amongst our various offices. 
Coupled with that, was giving each of our agents, to the extent 
possible, the new, for instance, Microsoft Office Suite, so 
that they're better able to communicate with each other and to 
do their work and have access to the programs that most of us 
have on our home computers.
    That process has been going well. Most of our offices have 
these upgrades. I expect it to be concluded some time toward 
the end of this year.
    Our biggest problem, though, is we have something like 34 
to 36 separate investigative software applications which we 
have used over the years that have grown up separately, that 
have to be integrated into a date warehouse and have to be 
migrated from their old application structures into, it would 
probably be some sort of large data warehouse architecture. 
Part of the problem there is that the security rules were 
included in the original architecture for our main program, 
which is called automated case support. Doing that takes a much 
longer time. That is going to be accomplished hopefully by 
December of 2003.
    The other piece of the puzzle, in addition to the data 
warehousing, which is critically important, is having the user 
interface, the data input and the data output that every 
individual in the FBI can use and understand. It has to be user 
friendly, it has to be adopted to the way we do things. It is 
in the process of being developed now by teams of agents and 
support staff and supervisors, so that we will accomplish at 
the end that which will modernize our agency. My expectation is 
the first phase of that will be completed also in December of 
2003.
    [The information follows:]

                         Information Technology

    The Federal Bureau of Investigation's (FBI) biggest information 
technology problem is the 36 investigative software applications that 
have been developed and implemented separately. Of the 36 applications, 
only 5 will be integrated by Trilogy into a single application called 
Virtual Case File. One problem with the current system is that the 
security rules were coded right into the application software, 
including our main program, Automated Case Support. This makes 
modernizing these applications much more complex. Ensuring that the 
appropriate user interfaces and security roles are implemented in a way 
that is easy to use and manage will take considerable time.
    The other piece of the puzzle, which is critically important, is 
having a user friendly interface for data input and query that every 
individual in the FBI can use and understand. It is the process of 
being developed now by teams of agents, support staff, and supervisors, 
so that what we accomplish will modernize our agency. My expectation is 
the first phase will be completed in December 2003.
    Access to the data in the FBI's remaining 31 investigative 
applications will be provided under a separate program called 
investigative data warehousing, which is also critically important.

    Mr. Mueller. Now, I will tell you that when I first came in 
and heard the time frame, I was beating up on those persons who 
were responsible, saying, I need it in 18 months. I've come to 
find out, to get the product that we want and need, that is 
user friendly, that has the security concerns addressed, and 
that works the way we want it to work, I have to be a little 
bit more patient than I ordinarily am.
    Critical to this is bringing persons on board who are 
familiar with bringing institutions through this metamorphosis. 
We have a number of persons that I have brought on board and 
more to come whom I think will help us through this. They have 
been through this in the private sector on a number of 
occasions and have substantial reputations for having done so.

        ESTABLISHMENT OF THE NEW DEPARTMENT OF HOMELAND SECURITY

    Mr. Young. On Tuesday this week, Congress received the 
President's legislation to establish the new Department of 
Homeland Security. I support this effort, I think this threat 
is extremely real and I think it's going to be there for a long 
time. We really need to focus.
    But under the proposal the President sent to us, the FBI's 
National Infrastructure Protection Center and the National 
Domestic Preparedness Office would be transferred to the new 
department. Comment on that and tell us, how does that affect 
the overall operation of the FBI?
    Mr. Mueller. Well, let me just check one thing if I might, 
Mr. Chairman. The original proposal, with regard to the 
National Infrastructure Protection Center [NIPC], was that all 
three sections, the Computer Investigations and Operations 
Section, the Analysis and Warnings Section, and the Training, 
Outreach and Strategy Section, would be transferred to the 
Department of Homeland Security. In the legislation that has 
been forwarded to Congress, the Computer Investigations and 
Operations Section will stay with the FBI, principally for the 
reasons that those investigations are done often in the field, 
requiring agents to go out and interview people to do the kind 
of forensic investigation that's necessary to pull a case 
together.
    However, the Analysis and Warning Section, and the 
Training, Outreach and Strategy Section would go to the 
Department of Homeland Security to be part of Homeland 
Security's responsibility to assure protection of various 
assets in the country, including those that would be subject to 
cyber attack. We have to be closely integrated with Homeland 
Security on that, and I expect that we will be.
    With regard to the National Domestic Prepareness Office 
NDPO section, that section for the Bureau required us to go out 
and identify assets around the country, liaise with those, 
which could be a dam, a Federal Reserve bank, or it could be an 
amusement park. It could be those areas or those assets around 
the country that could be subject to a terrorist attack. That 
seems to me to be exactly what Homeland Security is being set 
up to do. The benefit of having Homeland Security doing this is 
that there will be the outreach to the Governors and the State 
police and other first responders, so that there is the 
continuity of protection for those assets. So that makes some 
sense to me.
    [Subsequent to the hearing, the following clarification was 
provided:]

                  National Domestic Prepareness Office

    The National Domestic Prepareness Office (NDPO) was an interagency 
effort created to coordinate and serve as an information clearinghouse 
for federal programs supporting state and local emergency responder 
communities in the area of Weapons of Mass Destruction (WMD)-related 
domestic prepareness planning, training, exercises, and equipment 
research and development. As such, it was intended to serve as the 
central coordinating office for the planning and execution of federal 
assistance programs, with the goal of integrating and streamlining 
government assistance. The primary goal of the NDPO was to form a 
partnership between the Federal Government and the nation's emergency 
responder community (of state, local and tribal governments). By 
providing a venue for a full and sustained partnership of the federal 
agencies responsible for WMD crisis and consequence management, with 
their counterparts in state and local emergency management, and public 
health and medical counterparts, the NDPO sought to promote the highest 
level of national domestic prepareness, using existing mechanisms among 
state, local and federal agencies.
    The Administration announced that the Federal Emergency Management 
Administration (FEMA) has been designated as the lead agency for the 
coordination of federal concequence management activities as they 
relate to terrorist incidents, and has created a new office for this 
purpose. The Federal Bureau of Investigation (FBI) does not forsee any 
problem with transferring NDPO consequence management activities to 
FEMA. The FBI will retain responsibility for crisis management 
activities.

           REASSIGNING AGENTS FROM DRUGS TO COUNTERTERRORISM

    Mr. Young. I wanted to explain why some of the members are 
departing. There is a vote in the House. We are going to 
continue the hearing, Mr. Wolf and Mr. Serrano, will be 
returning very quickly.
    Just let me ask one more question, then I'll yield to Mr. 
Obey.
    Mr. Obey. What are you going to do about the vote?
    Mr. Young. Mr. Wolf asked that we continue the hearing. I 
expect he'll be back momentarily.
    Let me go back to the issue of personnel. My understanding 
is that when the President announced his plan on Homeland 
Security reorganization that a substantial number of your 
agents would be transferred from the drug enforcement programs 
to the Homeland Security effort.
    Mr. Mueller. I'm not certain I'm aware of that, sir. I have 
made a recommendation to Congress that I reassign 400 agents 
from working on narcotics cases to doing counterterrorism 
within the FBI, not at Homeland Security. The only shift of 
individuals would be some of those individuals who are 
currently working at NDPO and some of those individuals that 
were in the two sections I mentioned of NIPC. Those are the 
only FBI personnel, that I'm currently aware of, that are 
scheduled to be shifted in some way to the new Department of 
Homeland Security agency.

                     NEWS REPORT OF JULY 4TH THREAT

    Mr. Young. Mr. Director, since I am the only member present 
right now, I'm going to take advantage of this time. 
[Laughter.]
    Mr. Mueller. I suppose that's good.
    Mr. Young. Well, because the attendance is excellent today, 
and I think that's a tribute to you, all the members want to 
have an opportunity to ask you questions. Since they're not 
here, I'll take a little extra time.
    There was a news report this morning about the FBI 
investigating a claim from a man in Nevada who had picked up a 
conversation in Arabic on his cell phone during which someone 
said there would be a hit on the day of freedom. We've 
initiated a full scale investigation to determine if this 
constitutes a threat and if so, what kind of a threat, said 
Special Agent Borst in Las Vegas.
    Borst said agents have interviewed the man, Michael Hamden, 
who reported the conversation, and plan to question him again 
Friday, today. Hamden said he was trying to call his wife on 
his cell phone Saturday when he heard Arabic voices. Hamden, 
54, said he's a naturalized U.S. citizen who was born in 
Lebanon and speaks Arabic. They said in Arabic, not even a word 
of English, we are in the city of corruption, the city of 
prostitution, the city of gambling, the city of unbelievers. 
Hamden told the Associated Press late Thursday, we are going to 
hit them on the day of freedom.
    Hamden said the call lasted about 90 seconds before the 
line went dead. He said he believed the men were talking about 
July 4th. Then he goes on to explain how he felt about it 
personally, that he was frightened and cold and sweaty, etc. 
Can you comment on that?
    Mr. Mueller. I can comment to the extent to say we are 
investigating that threat. The statement made by the special 
agent out there, to the extent it was reflected in what you 
read, is accurate.
    Mr. Young. Why did I think that that was about all you 
could tell us today? [Laughter.]
    But that was a good filler until Chairman Wolf got back.
    Mr. Mueller. Thank you, sir.

                             FLYING SQUADS

    Mr. Wolf. I apologize, we're voting, and I don't know if 
there's going to be another one or not. Hopefully not. I think 
if I may ask a few more questions and give Mr. Obey and Mr. 
Serrano a chance, I don't think I should go to the next panel.
    Let me ask you a number of questions. The flying squad, how 
will it actually work? I'd hate to have the job, because my 
sense is you'd never be home. So how will it work? What will 
they be doing when they're not flying out and back?
    Mr. Mueller. There are two types that I have discussed. One 
is, there are a number of agents at headquarters who will have 
the expertise, and this is focused on al Qaeda now.
    Mr. Wolf. Yes, who will be around for a while.
    Mr. Mueller. Absolutely. But my problem, I think, as I see 
it, is reflected in a case such as the Richard Reid case up in 
Boston where, if you recall, he was the individual who was on a 
plane from Paris to Miami, a very alert flight attendant saw 
that he was trying to light something to his shoes. He was 
detained and we came to find out that he had explosives in his 
shoes. The pilot, in the midst of that flight, when this 
occurred, pulled the rudder to the right and went to Boston. 
Under our venue statutes, that's where the case has to be 
prosecuted.
    With the initiation of that prosecution there, you have a 
tremendous amount of information that is being gathered by the 
prosecutors and the agents from Boston that are assigned to 
that case. My expectation of the flying squad is that we would 
have maybe two agents from the flying squad who have the 
understanding of al Qaeda worldwide, have the understanding of 
how headquarters relates to CIA and other areas of information 
that can be utilized to help in the prosecution. They would go 
to Boston and participate in the investigation and the 
prosecution to bring their expertise to that team. When that 
prosecution was over, they would come back to headquarters and 
bring back with them the knowledge, information, and 
intelligence that they had gathered in their participation in 
that prosecution.
    I will tell you in the past, there was John Martin, who 
headed up one of the offices in the Criminal Division, National 
Security, who would do this with espionage cases. He had a 
group of individuals who were experts in espionage cases, and 
when you have espionage cases, I had one in Boston, and he 
would send one of his lawyers up who were expert in CIPA, the 
Classified Information Procedures Act, espionage statutes, to 
participate in the prosecution for a period of time. They would 
learn, they would help us and then they would go back to 
Washington. And that flying squad, in my mind, should help to 
do that.
    Secondly, one develops over a period of time, if you were 
doing this, relationships with foreign counterparts, whether it 
be in Pakistan or United Arab Emirates or what have you. And 
when there is a terrorist attack overseas, I would expect that 
one or more of the individuals in the flying squads would be 
some of the first ones out, who could then take that particular 
terrorist attack, whether it be the attack on the consulate in 
Karachi last week, and help put it into context and help other 
agents who may be surged to that particular attack with the 
knowledge that they have.
    Mr. Wolf. So it isn't a squad that's going to go out, it's 
an individual with ties, two individuals.
    Mr. Mueller. Yes.

                         LEGAL ATTACHE PROGRAM

    Mr. Wolf. Mr. Kolbe, if you want to think about it for a 
second. I can ask one quick question. Okay.
    In the restructuring, I noticed it does not include any 
changes to the legal attache program. I visited your legal 
attaches when I was in Jordan and Israel. If the restructuring 
is geared towards boosting the FBI's ability to prevent acts of 
terrorism, you just talked about the relationships of knowing 
one another. Shouldn't we have forward deployments of 
``legats'' in other places a little bit more than we currently 
have? Also perhaps have one in West Africa, where you have the 
potential problem of the diamonds funding al Qaeda.
    Mr. Mueller. We have, I believe as part of the House Mark 
of the spring supplemental, additional ``legats.''
    Mr. Wolf. Enough?
    Mr. Mueller. It is enough for right now. It takes us a 
while, and I will be back to you on legats. I will tell you, 
you will see me again on legats. But it takes a period of time 
for us to, once we get the funding, to get the people in place, 
get the expertise, get the offices up and running. We've 
already laid a great deal of the groundwork. But I would expect 
us coming back to you for additional funding on legats in the 
fall.
    Mr. Wolf. I think you need one in West Africa, particularly 
with regard to the diamonds.
    [Subsequent to the hearing, the following clarification was 
provided:]

                            Legat Expansion

    The Conference Report (H. Rept. 107-593) accompanying the FY 2002 
Supplemental Appropriation Act for Further Recovery From and Response 
to Terrorist Attacks on the United States directs the FBI to use 
$44,713,000 expected to be carried over from funds provided in P.L. 
107-117 to establish additional Legat offices and provide for 
information infrastructure enhancements for Legats.

    Mr. Serrano.

                        ENSURING CIVIL LIBERTIES

    Mr. Serrano. Mr. Director, before I ask you a couple of 
questions maybe I missed it, but I don't think you spoke about 
my concerns. In particular, I mentioned the possibility of 
having someone in the agency to monitor some of the activities. 
I know that always upsets people who are running an agency, and 
I'm the first one who doesn't like somebody looking over my 
shoulder.
    But if in fact voices keep being raised in this country 
about the issue of civil liberties during this difficult time, 
and you are asked to respond, what are you going to tell the 
American people to make us feel better about this issue, those 
of us who think this is a problem? And secondly, how much are 
you willing to accept at the agency in terms of someone that 
would analyze the activities to make sure we don't run into the 
situation that we're sure to run into if we just keep using 
power?
    And let me just end by saying this. I don't think it's 
always a desire to hurt people that has gotten the FBI into 
trouble in the past. I think it's a desire to do the job and 
think about how you accomplish it that later brought about the 
problems. So I need you to speak to that issue, since that 
continues to be the issue that sits at the center of my 
concerns about this whole time. And it's not just you, it's a 
lot of other agencies.
    Mr. Mueller. I think it's something that we always have to 
watch carefully. In preparation for this job, I read most of 
the histories of the FBI, including the abuses. I think most 
agents recognize the awesome power that you have as an FBI 
agent to harm people, to harm persons' lives. A couple of good 
things that I think the Bureau has done over time is that it 
goes out and hires mature persons with judgment who have had 
other life experiences. We do not hire right out of college, 
the reason being that as an FBI agent, you are given not only a 
gun but also the power to dramatically adversely affect 
persons' lives.
    I think it critically important that we continue the 
training that we do to assure that every agent coming out of 
Quantico understands what happens when an agency goes beyond 
its bounds. As I'm sure you're aware, Louis Freeh started and 
we are continuing that part of the training that has every 
agent go through the Holocaust Museum, so that one understands 
what can go wrong when you have a police state, when you have 
an agency such as the FBI that oversteps its bounds. It is 
critically important that as we obtain new authorities, that we 
have in place mechanisms to assure that they are not being 
abused.
    I am open to other mechanisms within or without the 
organization, and certainly oversight to assure that they are 
not being abused. You can take oversight in the context not 
only of Congress but also the courts. One of the investigative 
techniques we have for counterterrorism as well as 
counterintelligence is the use of the Foreign Intelligence 
Surveillance Act. When I look at that power, which is a 
substantial power, I am somewhat calmed by the fact that there 
is a court which overlooks our authority and has to sign off 
before we can exercise any of that expertise to intrude on the 
private lives of our citizens.
    Many of these mechanisms have been put in place in the last 
15 or 20 years that I think will protect us in the future from 
being an agency that oversteps its bounds. Nevertheless, we 
have to be watchful, we have to monitor what our agents are 
doing. And it is particularly difficult when you are looking at 
terrorism and being predictive, trying to be predictive and 
preventive. Because there is no one who has yet committed a 
crime.
    It is a very fine line we walk in terms of surveilling an 
individual who might commit a terrorist act, and surveilling 
somebody who is a private citizen that is acting a little bit 
differently. We have to watch that very, very carefully. On the 
one hand, we have to be aggressive in being preventive and more 
predictive with our intelligence capabilities. On the other 
hand, we have to be very careful to utilize those capabilities 
to make early decisions as to whether or not a person is a 
member of a terrorist group or affiliated with a terrorist 
group.

                         TRAINING OF FBI AGENTS

    Mr. Serrano. I am very impressed by the fact, I was not 
aware of this, that part of the training at Quantico has to do 
with the Holocaust Museum and so on. I think that's crucial to 
understand that. The New York City Police Department, prior to 
September 11th and ongoing now, is involved in sensitivity 
training, talks to their folks coming into the department and 
the ones already there about the community they serve and 
police, and how to deal with all the various groups and so on.
    Do you think there is a need for any additional special 
training during this period, so that agents understand, as I 
said to you, that with awesome power comes awesome 
responsibility? Because as you well know, Director, what is 
being talked about by the President, by the Congress, by 
Attorney General Ashcroft, is unprecedented in American 
history. It could allow you to do great harm if agents don't 
watch their step, if you will.
    So do you feel that there is need for any additional 
training at this point?
    Mr. Mueller. Yes. I'm blunt about it, I think that it is 
important that in certain areas, particularly with the Muslim 
community, that we learn much more than we have in the past 
about Arab-American communities, Muslim-American communities, 
Sikh-American communities. On the one hand, we have made it a 
priority since September 11th that any claim of retaliation or 
violence against any member of Muslim-American, Arab-American, 
Sikh-American communities would be immediately and thoroughly 
investigated and when appropriate, prosecuted. That is 
critically important to assure members of those communities 
that they are not being singled out, that we protect the civil 
rights of everybody in the United States.
    Likewise, it is critically important for us to reach out to 
those communities, and we have. Every SAC around the country 
has reached out to those communities, to try to develop the 
liaison, the relationships that will both teach us but also 
allow us to be better members of the communities. And that's 
critically important as we go through this phase.
    It's also important that in our training at Quantico and 
our re-training at Quantico that we incorporate that.

                           DEPARTMENT ABUSES

    Mr. Serrano. One other issue that I have great concern with 
is that in the past, part of the abuse was the fact that the 
Department, and the Bureau, tied together issues that didn't 
belong together. For instance, during the war on communism, it 
was important for us to know who was here, either born here or 
not born here, who was in some ways tied to the communist 
movement, and to go after those folks.
    But in the process, if there was an environmentalist who 
made a lot of noise, there was a time in our history when that 
environmentalist making a lot of noise would somehow land up on 
the same chart as those who were suspected of being communists, 
because you know, any opposition to any policy in the 
Government was singled out for problems. How do we try to make 
sure during this difficult time, that we know what it is we're 
after, and that other situations, even if they're not good, are 
not tied together so people pay a price that they're not 
supposed to be paying? Because pretty soon, you could get to 
the point where you just want to sit home and not get involved 
in any issue, or else you'd be tied into terrorism.
    Mr. Mueller. One of the biggest changes is in the 
guidelines. First the guidelines have been modified, but they 
are still there to guide the agents. Second, one of the changes 
with a national program like counterterrorism, where you have 
the oversight from headquarters, it should give you more 
insight into what is happening in the field than we have had in 
the past. We have been, because it has worked exceptionally 
well, a very dispersed organization with the authority 
dispersed among the various field offices, with the oversight 
principally being inspections that would come periodically in 
each of those offices.
    Now in counterterrorism, what we're requesting is an 
expanded Counterterrorism Division to provide the coordination 
and the oversight of the investigations around the country. 
They also will be in a position to determine whether there are 
any abuses.
    So while we do not want to be excessively bureaucratic, we 
do not want to hold up investigations, it seems to me that one 
of the benefits of having greater involvement of headquarters, 
is that it gives you another pair of eyes to look at what is 
happening in the field. Where in the past, perhaps those eyes 
haven't been there.
    Mr. Serrano. Before I give up my time, Mr. Chairman, let me 
just, as a New Yorker, thank you and your agents for the work 
you've done in New York. Just your presence there has made New 
Yorkers deal with their sorrow in sort of a different way, 
understanding that perhaps we are safer now than we were 
before. And you folks have been very, very careful to put that 
message out. So again, just one more New Yorker thanks you for 
making our life a little better these days.
    Mr. Mueller. Thank you, sir.
    Mr. Wolf. Mr. Rogers.
    Mr. Rogers. Thank you, Mr. Chairman.
    Mr. Director, it's good to see you again.
    Mr. Mueller. Good to see you, sir.

              EFFECT OF RESTRUCTURING ON DRUG ENFORCEMENT

    Mr. Rogers. I want to ask you about two things. One, in 
your plan, you would shift permanently 400 agents, almost 20 
percent, away from counternarcotics into counterterrorism. 
Admittedly, we need to have more people in counterterrorism. 
But are you leaving a hole in our counternarcotics efforts?
    Mr. Mueller. I talked to Asa Hutchinson about it. I'll tell 
you how I came to this point. On several occasions, I've had a 
special agent in charge educate me on how best to realign the 
agents. First I've asked each of the special agents in charge, 
what do you need to address counterterrorism in your particular 
division, number one, and I got those figures. And secondly, 
because you are much more knowledgeable of the programs in your 
particular division and the priorities in your division, which 
programs could you take resources from to support 
counterterrorism.
    When you come out and you look at those sets of figures and 
make certain they bear some resemblance to reality, what 
happens in the division, you'll find that there are 400 agents 
that can, according to special agents in charge, be taken from 
counternarcotics and go into counterterrorism.
    Now, these agents, many of them are on task forces. We want 
to stay in the DETF, Drug Enforcement Task Forces, and the 
HIDTA, High Intensity Drug Trafficking, task force. But where 
we may have had ten agents, we may have eight now or five. So 
we will still participate. And if there is a particular case 
where we bring something special to the table that DEA or the 
state and locals do not, then we can put additional agents on 
the case.
    Likewise, what I would like to do in the future is avoid to 
the extent possible the overlap in the investigation of the 
cartel cases. By cartels I mean the Mexican and Colombian 
cartels, which have been a national priority for both the FBI 
and the DEA for a period of time. Where the DEA is available 
and capable, they're always capable, but where they have the 
manpower to do it, we would be withdrawing from some of those 
investigations.
    If this reorganization is approved by the Committee, what 
I've discussed with Asa Hutchinson is that we will go district 
by district to make certain that the reassignment of personnel 
does not adversely affect any particular investigation. If you 
have FBI agents that are involved in a particularly important 
cartel investigation, then they would stay until the end of 
that investigation. So it will not be an immediate 400 agents 
that will move, but we will do it in such a way that we will 
not adversely affect ongoing investigations.
    We also would not be doing in the future standalone 
narcotics cases such as maybe marijuana, methamphetamine or far 
fewer methamphetamine, ecstasy cases and the like, which can be 
handled by Drug Enforcement Administration or by state and 
locals. I know Asa Hutchinson is realigning his manpower to 
address the additional investigative responsibilities, that may 
flow from this. I expect that we would have discussions with 
state and local law enforcement also, should this be approved, 
so that there is no gap, there is no hiatus in particular 
investigations, but that there is a smooth transition.

                         TECHNOLOGY INVESTMENTS

    Mr. Rogers. Well, we want to keep monitoring that. Because 
I'm a little nervous about the massive movement out of the 
counter-drug efforts that FBI has done such a good job with 
over the years.
    Number two, I've been sitting on this Subcommittee for 18 
years. I've heard director after director after director say, 
give us the money, we're going to modernize this computer 
system. Pardon me, I don't want to be cynical here. But I've 
heard this before.
    In fact, we loaded the FBI up with money just for this very 
purpose, and I want to give you a little summary of that. Since 
1993, this Subcommittee has given the FBI for technology 
enhancements a total of $1.7 billion. The automated case 
management system, ACS, $67 million. Trilogy system, $100 
million in just fiscal year 2001, and there's no telling where 
that's going to go.
    The IAFIS system, we've given $640 million. The National 
Crime Information Center, $200 million. Digital Storm, $25 
million. CALEA, $500 million. Narrowband, $310 million. And on 
and on.
    And all the while, we were pleading for FBI to not only 
build a common architecture within FBI computer systems, but 
for the various intelligence agencies and other agencies that 
we need, like INS, State and others, to merge their data bases 
so that we could keep track of somebody who got a visa in 
Prague through the State Department, turned over to INS over 
here, monitoring during the six month visit. We couldn't ever 
get them to merge their data bases, much less get the CIA, FBI, 
INS, DEA, DIA and so on to merge the watch list data bases, so 
that the screeners at the airport know when somebody bad is 
coming to the gate, or the police in Phoenix, when they stop 
somebody for a traffic ticket, know they're a bad person. What 
assurances can you give us that you're going to make this work 
if we give you the money?
    Mr. Mueller. I think a number of the projects that you've 
supported have worked quite well, actually, IAFIS, NCIC, CALEA, 
there are some wrinkles there.
    I think there are several things that are different. One, I 
think it is important to recognize that technology is not just 
bringing in the computers and putting in the area networks and 
bringing in the servers. If you just do that, then you're 
doomed to failure, because you have not transformed the work 
force. You have not transformed the way you do things.
    One of the problems, for instance, with ACS, is that it is 
user-unfriendly. If you have a user-unfriendly piece of 
software, people will not use it. They will go back to paper. 
You have to transform the organization from top to bottom. You 
have to have the person from the top all the way to the bottom 
understand that the organization is going to be transformed.
    And it's not just bringing in the boxes, and the wires. 
There has to be training, there has to be the development of 
the applications that are user-friendly, so everybody will know 
how to use them and will continue to use them. You've got to 
build the data bases. All of that has to be there, there are 
about four or five things, the data bases, the software 
application packages, the Pentium computers, the networks, all 
have to be staged in, coupled with training of the personnel 
and redoing of the procedures in order to make it work as a 
whole. If you do it piece-meal, it's doomed to failure.
    Mr. Rogers. We're going to keep a real close eye on this, 
as we have in the past. I guarantee you, MasterCard didn't 
spend anywhere near this amount of money to get the kind of 
system they have. I guarantee you that Citicorp didn't do the 
same. And yet those systems are marvelous in their ability to 
keep track of things.
    Mr. Mueller. I will tell you, I've been interviewing Chief 
Information Officers CIOs for the last two months, persons from 
the outside who have been in many of these corporations, some 
that you just mentioned. And until very recently, a number of 
these corporations had similar problems. There is one large 
data base management corporation who, I read an article a year 
and a half ago in the Wall Street Journal about this data base 
architecture corporation, who only a year and a half ago had 
removed the stovepipes in its organization so it could be 
integrated.
    Now, it's out there selling its software package to 
everybody and their brother. But until a year and a half, two 
years ago, they were stovepiped in much the way that many of 
the agencies in the Federal Government are. My challenge is to 
have the person in, I've got a CIO coming in who I think will 
have the vision of the architecture to remove the stovepipes, 
migrate the applications and develop the software packages to 
complement what we've got and are putting it in Trilogy. I 
think it can be accomplished, I'm dedicated to it.
    I love computers, my wife wants me off the computer half 
the time. I see how the Bureau ought to work, I see how we 
ought to be doing our work. I see how it ought to be digitized. 
I see how our notes ought to be imaged in and coded so that 
they could be pumped out whenever you make a query for the 302 
as well as the notes. I see how our leads can be sent 
digitally. I see how what you saw in the SIOC, where you had 
the paper leads coming in, how that can be dramatically changed 
by doing it digitally. And I expect to get there.

         ESTABLISHMENT OF NATIONAL JOINT TERRORISM TASK FORCES

    Mr. Rogers. Well, we expect you to get there, too. And 
that's one thing we'll be keeping close tabs with you on.
    Quickly, as I close here, you're calling for the 
establishment of a new multi-agency National Joint Terrorism 
Task Force at your headquarters, which to me is a great step 
forward. I want to commend your work in the Joint Interagency 
Task Force east and west in the war on drugs, which I think are 
great models. I hope this center you're talking about on joint 
terrorism would be similar to that?
    Mr. Mueller. Somewhat similar to that, yes, much like our 
Joint Terrorism Task Forces around the country, where we have 
all the agencies represented, whether it is the INS, State 
Department, or the United States Postal Service with access to 
their own computers, but also have access to our computers, so 
that the information can be shared quickly, investigative steps 
and follow-up can be done regardless of which agency, quickly, 
and there can be that sharing of intelligence.
    I will tell you that in part this idea springs out of what 
I saw at the Salt Lake City Olympics, where we had this fused 
center that enabled us to very quickly follow up on any 
individual whose name came to us. And I saw it operate there, 
it worked tremendously well during the Olympics. I think we can 
replicate that at headquarters, not only with the Federal 
agencies, but also with certain state and local agencies.

                    DEPARTMENT OF HOMELAND SECURITY

    Mr. Rogers. Now, would the Homeland Security department 
have a similar thing?
    Mr. Mueller. That's to be decided. My problem is, I can't 
wait. I need to get it up as soon as possible and then, it may 
well be something that merges into Homeland Security down the 
road. But I think it's necessary and pending approval of the 
legislation for the Department of Homeland Security, I think we 
ought to put it up. Then down the road, if it is duplicative of 
what they are doing, then we can merge the two.
    If it did happen and did go over there, at least we would 
have the personnel trained, working together, the protocols in 
place and have it up and operating.
    Mr. Rogers. Is this a place where you would be able to fuse 
intelligence data from various agencies?
    Mr. Mueller. It is more operational, but there would be a 
complementary fusion of intelligence, yes.
    Mr. Rogers. So that you would be able to receive the 
intelligence, analyze it and then immediately take action?
    Mr. Mueller. Yes.
    Mr. Rogers. Calling in various parts of the government to 
do whatever?
    Mr. Mueller. Yes.
    Mr. Rogers. Great. Thank you very much.

                            TRILOGY FUNDING

    Mr. Wolf. Mr. Obey.
    Mr. Obey. Mr. Director, Chairman Young raised the question 
of the money that we provided your agency last year to speed up 
the installation of Trilogy. If we had not provided that money 
last year and had waited to do it in the bill this year, where 
would you be? What would the impact have been?
    Mr. Mueller. I think we would be behind where we are now in 
providing for the agents in the field the first stage of 
Trilogy. Those funds, as I understand it, enabled us to 
continue the acceleration of providing the basic computers and 
the software to the agents in the field.

                       PROPOSED TRANSFER OF NIPC

    Mr. Obey. Thank you. Let me ask a couple of questions about 
your proposed reorganization. And let me say, I don't do it to 
be a critic. I just don't want to see the Executive Branch do 
things as stupidly as I think the Congress is doing on this 
issue. The way the Congress is going to handle it is that the 
substantive committees who have the jurisdiction--and that 
isn't this Committee, we'll have jurisdiction no matter what 
happens, so we don't have a dog in that fight--but the 
authorizing committees of jurisdiction, will have approximately 
one week after the Congress finishes its July 4th recess for 
them to make their recommendations on what ought to be in that 
reorganization, after which the recommendations will then be 
put in the hands of the nine people in this House who by 
definition know the least about the subject, the leadership of 
both parties. I don't say that because they have any personal 
failing, it's just that they have other duties.
    I can't think of a way to make this more political and less 
substantive than to have the bulk of the decisions made by the 
leadership in both parties, rather than by the committees who 
have spent years trying to learn the substance. It's a good way 
to get a political fix. I have minimum high regard for the 
process in terms of our getting a substantive fix that makes 
sense.
    Let me ask a couple of questions about the reorganization. 
And let me stipulate, I think in the main what we're talking 
about here is hackers. If you're concerned with hackers, it 
seems to me that no matter what degree of sophistication Al 
Qaeda may have achieved, they're not likely to be as big a 
threat to us as foreign governments.
    Mr. Mueller. If I can interrupt, I must say I'm not certain 
I agree with that. I do believe that there are those who are 
affiliated that have that capability.
    Mr. Obey. Well, they may have some capability. But 
certainly, the agency was established in the first place to 
deal with governmental efforts to attack our computer networks. 
That being the case, wouldn't you agree that this institution 
is primarily a counterintelligence institution? I will grant it 
has other missions, but doesn't it have primarily 
counterintelligence?
    Mr. Mueller. I think that is the first priority, 
absolutely, from it. But the problem is that when you have a 
hack or an intrusion, you don't know until you do the 
investigation what the source is. You don't know whether it's a 
foreign government, you don't know whether it's an individual 
until you do the investigation. In accomplishing the 
investigation, it may be a hit any place in the country. Those 
investigations are complicated. You have to have the 
technically proficient personnel to do the basic investigation 
on tracing back the penetration in the particular computer or 
computers.
    Mr. Obey. I understand all that. But my concern is that if 
it is primarily counterintelligence, and it is being 
transferred out of the FBI to this new security agency, that 
seems to me that you have moved an important resource that the 
FBI shouldn't lose.
    Mr. Mueller. I agree. The proposed legislation keeps that 
section, the Computer Investigations and Operations Section, in 
the FBI. When the original proposal was made two weeks ago, and 
it was summarized in the papers, it had the National 
Infrastructure Protection Center moving in toto to the new 
agency. The legislation leaves the Computer Investigations and 
Operations section in the FBI and moves the Training, Outreach 
and Strategy section and the analysis and warnings section to 
the Department of Homeland Security.
    Mr. Obey. So in other words, since the initial package was 
announced, people who knew something about the subject were 
able to weigh in and get some changes?
    Mr. Mueller. There were modifications to the original 
package.
    Mr. Obey. Like I said, people who knew something about it 
were able to wade in and get some changes made, I assume.

                        TRANSFER TO NDPO TO FEMA

    I still have concerns about that, but let me ask about the 
second agency. The Office of National Domestic Preparedness, 
how many FBI people are at this moment assigned to that office?
    Mr. Mueller. It's very few.
    Mr. Obey. Isn't it zero?
    Mr. Mueller. It may well be zero.
    Mr. Obey. Then we're transferring an agency that doesn't 
exist.
    Mr. Mueller. And their responsibilities. My understanding 
was----
    Mr. Obey. They must not have many responsibilities if they 
don't exist. [Laughter.]
    Mr. Mueller. Well, they have been picked up by others in 
the meantime.
    Mr. Obey. Isn't it true that the responsibilities were 
moved to FEMA last year, essentially?
    Mr. Mueller. Essentially, yes.
    Mr. Obey. To me, this is another example of a slapdash way 
of going about reorganization. I don't object to 
reorganization. I do think that you need to have people in the 
agencies who know the most about this plugged in at the 
beginning rather than playing catch-up. Nonetheless, I thank 
you for making clear that we're transferring zero people by 
that action.

                           INTELLIGENCE LEAKS

    I've got a more serious question. The Vice President 
correctly yesterday expressed concern which appeared in the 
paper this morning about leaks associated with the 
investigations being conducted by the Intelligence Committee. I 
don't even talk to reporters about what happens in party 
caucuses, for God's sake. I think we talk to the press far too 
much on all subjects.
    But having said that, he's worried about leaks and so am I. 
I'm concerned about the disclosure of highly sensitive 
information by one of the two newspapers in this town, frankly, 
on a regular basis, it appears to me.
    I'm also concerned that the bad guys not only get to read a 
lot of secrets in the papers, but they also have been quite 
successful in simply buying them directly from both the Bureau 
and the agency, as you know. With that in mind, I would like to 
ask you a hypothetical question. I never answer them, but I 
hope that you will.
    Let's say that we have a high ranking official in an 
unfriendly embassy at the U.N.
    Mr. Mueller. Did you say unfriendly?
    Mr. Obey. Unfriendly, yes. Let's say, for example, Iran, 
Iraq, somebody like that. Let's say that one of those officials 
approaches your agency and says he'd really like to have his 
kids attend college in the U.S. I presume that you would say 
that that might be possible, and you might ask what he might 
know about Al Qaeda or a number of other operations, or 
concerns or the Government's concerns.
    In any case, if he were to provide information to your 
agency, how many people would actually have access to the 
information in a situation like that?
    Mr. Mueller. I'm trying to think----
    Mr. Obey. How many people would know who he was, for 
instance?
    Mr. Mueller. I'm trying to determine whether to adopt your 
rule, and just not answer any hypotheticals. But----
    Mr. Obey. It would be very few, wouldn't it?
    Mr. Mueller. I would think it would be very few.
    Mr. Obey. Now, if he does provide you with information, it 
could be truthful and it might be baloney. He could be making a 
lot of it up. How do you go about evaluating something like 
that?
    Mr. Mueller. I would talk generally, not particular case. 
Whenever an informant, that's where we walk in or somebody 
comes in with information, there are a number of ways that we 
test that information to determine its accuracy. One, you can 
polygraph the person. Two, you take every piece of information 
that is given to you and you determine whether it can be 
corroborated. Thirdly, you would look and determine generally 
whether the person has a track record of credibility. In other 
words, if that person has worked with the agents for a 
substantial period of time in the past, and on ten separate 
occasions provided information and on those ten separate 
occasions that information has proved to be true, then that 
person is deemed to be more credible than that person who has 
given information on ten occasions and none of it's proved to 
be true.
    Mr. Obey. But to make a long story short, it can be pretty 
difficult and pretty delicate, right?
    Mr. Mueller. It is always difficult and it's always 
delicate.
    Mr. Obey. My point is, you're in a situation, it would seem 
to me, where you are trying to maintain the maximum possible 
level of compartmentalization of that information. It would 
also seem to me that even so, we have lost a large number of 
key assets. It also seems to me at the same time that you have 
the task of evaluating the veracity of sources that we have 
every reason to believe may be dishonest and it's going to be 
hard to know whether we've pegged somebody correctly. And it's 
a very tough job.
    Now, my concern is that if you have another analytical 
operation in Government intelligence, the Department of 
Homeland Security, and particularly if that office is provided 
with raw intelligence, we will come to a choice. We will either 
have to provide them with no way of knowing who these folks are 
or how reliable their information is, or we're going to have to 
tell them, one of the two, aren't they?
    Mr. Mueller. I'm not certain that necessarily follows. 
Today, whether it be the FBI or the CIA, information is 
provided, to the National Security Council, NSC, without the 
names being divulged, without the background being divulged, 
but with an analysis of the credibility and whether or not the 
information has been corroborated. That is the way that often 
we work in terms of exchanging information amongst the various 
agencies.
    Mr. Obey. My point is, the Vice President indicated 
correctly, and so have people on the Intelligence Committee, 
that we've got, as it is, a problem with people leaking 
information. If the Homeland Security people also are going to 
be in the analysis business, then they either are or are not 
going to know a lot about the people supplying it, supplying 
the information. I don't know whether they will or whether they 
won't. But it will be one of the two.
    And it seems to me that if they don't have that 
information, it's going to be harder for them to assess it, and 
if they do have the information, there are going to be more 
people with access to information and more potential for leaks. 
Then when you add to that the fact that if the Congress 
rejiggers its jurisdictional operation and creates yet another 
committee to oversee yet another agency, there are going to be 
more people on the Hill who also have that information than had 
it before. At least you have a significant possibility of that.
    And I'm wondering whether that simply doesn't compound our 
problems in terms of information getting out that shouldn't get 
out. The more agencies that handle it in government, the more 
committees that handle it in Congress, the more potential you 
have for leaks, isn't that true?
    Mr. Mueller. Yes.

             NEED FOR THOROUGH REVIEW OF DHS REORGANIZATION

    Mr. Obey. I think so, too. Which is why I'm dubious about a 
lot of the lines that have been sent down so far.
    I had one other question I was going to ask, but I think 
I'll talk to you about it privately.
    Let me say that I have a lot of confidence in your ability 
to deal with the problems you've got at the FBI. But I am very 
concerned about the gaps that we're going to have if we move 
rapidly to reorganize without giving adequate thought to it. 
I'm concerned that the transition might be awfully rocky, and 
I'm concerned also about this idea that somehow this 
reorganization is going to take place without costing anything.
    I simply do not believe that. I do not know of a 
reorganization in the history of mankind that hasn't cost some 
kind of money, certainly not in this town. I think it's 
important that the Administration and the Congress be 
realistic, up front, about what it's going to cost. Because if 
it isn't, then we're going to wind up taking the reorganization 
costs out of program money and we're not going to be any better 
off than we were before.
    The second thing I would simply say is that based upon what 
I've been told by intelligence agencies, I don't believe our 
biggest problem is analysis. I think our biggest problem is 
that we've got one hell of a lot of information laying on the 
floor somewhere people haven't even been able to read, much 
less analyze, because we don't have the translators, we don't 
have the screening systems to create less burden on 
translators.
    And I would predict in the end that the most difficult job 
this government is going to have is to find enough people with 
enough language skills in the right languages to be able to 
actually read for the first time a lot of the stuff that we're 
getting. It seems to me that there is very little that's being 
done about that problem. In fact, in the past, there's been 
resistance on the part of several administrations to adding 
more money for activities like that. So in the end, I think 
that's going to be more important than where the boxes are.
    Thank you, Mr. Chairman.
    Mr. Wolf. Thank you.
    Mr. Kolbe.

                 LEADERSHIP TO COMPLETE REORGANIZATION

    Mr. Kolbe. Thank you, Mr. Chairman.
    Mr. Director, welcome. There was a cartoon not long ago 
that I saw that was, one box says, the organizational chart for 
U.S. intelligence and counterintelligence agencies, and it 
shows all the elaborate charts and so forth, and boxes for 
directors and assistant directors and deputy assistant 
directors and all that kind of thing. The next panel in this 
cartoon says, Al Qaeda organization chart, and there's a 
picture of one terrorist standing there with a bomb in his 
hand.
    I don't think anybody suggests that the organization of our 
counterterrorism effort could be anything along those kinds of 
simple lines that a terrorist organization itself uses. But I 
think a lot of us do have concerns that we get overly organized 
and too much bureaucracy.
    I mention that simply because it seems to me that the most 
important thing in all of this in the end is still leadership, 
the leadership that comes from you, the leadership that comes 
from the other agency heads that have the responsibility for 
making this work. I've been around government long enough here 
in Congress to see enough reorganizations and see a lot of 
moving, shifting boxes around on charts and so forth, that 
nothing really substantively changes.
    So I guess that's really the issue that I think we're 
trying to grapple with, is do we have the right kind of 
leadership to make that happen. I think all of us have a lot of 
confidence in you and your abilities. But I just mention that 
because I think that's the critical thing. We can all talk 
about how the organization has done, but in the end it really 
depends on the kind of leadership we're going to have from the 
agency and the directors and the people that are going to be 
responsible for implementing it.
    I know you said you would stay around and respond to some 
of the things that came after the next panel, the GAO report 
and NAPA report. But a couple of my questions are on things 
that are in their reports, so I'll just ask them to you now. 
GAO points out that you're in the early part of a 10-year term, 
and believes that's helpful because they think it's going to 
take a long time to change the culture of an organization like 
the FBI, as much as seven years. The problem is, do we have 
seven years to really wait to transform an organization like 
the FBI in order to get more effective counterterrorism 
intelligence and counterterrorism response?
    So my question to you is, do you think it really is going 
to take seven years? How long do you think it is going to take 
to transform the culture, and how do we think that the 
organizational structure in the meantime will be adequate to 
handle the needs that we're looking at?
    Mr. Mueller. One phrase you used, transform the culture, in 
one sense we can define culture in a variety of ways but I 
think it's also harnessing the culture. Because as you'll hear, 
FBI agents are unbelievably hard working, expert investigators. 
And the integrity is an integral part of being an FBI agent and 
of the FBI. The challenge is to harness that aspect of the 
culture. Others refer to it as an inability to work with state 
and local counterparts or other counterparts. That is changing, 
I think it has changed fairly dramatically over the last 10 
years and even more dramatically since September 11th. We have 
to keep working on changing that aspect of it.
    The technology is intertwined with the bureaucracy. We have 
a paper bureaucracy that has built up over 90 years. There are 
ways of doing things that are burdensome if not tortuous, let 
me just put it that way. The technology is going to make a 
large difference in how we change as an organization. In my 
mind, if you listen to Jack Welch and what he did with GE, and 
what the impact of technology was on that institution in terms 
of making it a much more horizontal information flow 
organization. I think that will happen with the FBI.
    Consequently, I believe that our move to upgrade the 
technology in the next two or three years will have a dramatic 
impact on the way we do business. By eliminating a lot of the 
bureaucratic hangups, giving the agents the tools they need to 
be interactive and to pass among themselves the best ways of 
doing things, will enhance the Bureau in a substantial number 
of ways.
    Two or three years down the road, I think we will undergo a 
fairly remarkable transition. Some people will like it, some 
frankly will not. People who are not used to using computers, 
persons who have to be acclimated to a new way of doing 
business will have to be brought along. But we have to provide 
the training and the capability.
    But I can't wait. Part of this reorganization is to put 
into place that which I think we need immediately to try to 
fill those holes, plug those holes, to get the type of analysis 
and overview of the terrorist threat against the United States 
and align our resources against it as best we can.
    We have done so since September 11th, and as the number of 
leads dwindled, as the number of agents went back to doing 
other things, what I need to do is put into permanent place 
right now those capabilities that will protect us the next year 
or two until we can get to the next phase, where the technology 
kicks in across the board to give us a much greater degree of 
interoperability than we currently have.

               EFFECT OF REORGANIZATION ON OTHER AGENCIES

    Mr. Kolbe. The GAO report suggests that your SACs, when you 
asked them to identify the number of people that might be 
transferred to this effort, to Washington and elsewhere for 
this effort, actually identified more agents that might be 
transferred than the number you identified, the 480 or 515, 
whatever it is, that you finally identified. Is that correct?
    Mr. Mueller. I think there may have been a couple of 
offices that----
    Mr. Kolbe. Identified some additional?
    Mr. Mueller [continuing]. Identified quite a number. We 
would go back to them and say, why do you have this number. It 
might be a medium sized office, for instance, where the request 
to transfer the number of agents was way out of line with the 
resources in that particular division. But generally, I think, 
across the board, when we scrub those figures, I mean, we had 
to go and look and say, okay, what are these individuals going 
to do, what is the threat in this particular city. And so there 
was a dialogue between the persons who were looking at it from 
headquarters and the special agent in charge or people in the 
particular divisions.
    Mr. Kolbe. My real question is, whatever number they 
identify, the number that you're going to be able to transfer 
here. You also made a statement earlier that you assured DEA 
and other agencies that no major drug case will fall through 
the cracks, that you'll continue to investigate them.
    It seems that there's only one of three ways you're going 
to be able to do this. You transfer these additional agents, 
and either they weren't working as efficiently on the other 
tasks if nothing else is going to suffer as a result of this, 
you're not going to stop doing any other kind of 
investigations, or you're learning to work more efficiently, or 
there are going to be some cases that just don't get handled, 
whether it's in drug enforcement or white collar criminal cases 
or whatever it might be. Do you think you're going to be able 
to handle all the same responsibilities, even though you're 
transferring these people?
    Mr. Mueller. Other agencies will have to pick up some of 
the responsibilities. But it should not be overnight. They've 
known it's coming, we've had dialogue as to where it might be 
coming, the transfers. But we've had, as I think I've indicated 
in the past, over 6,000 agents doing counterterrorism in the 
wake of September 11th. The current figure for agents working 
counterterrorism is about 2,100. This proposed shift of 
resources makes permanent what people have been doing since 
September 11th, down to the 2,100 agent level. In other words, 
it will bring us up to somewhere at or around 2,000 that are 
permanently assigned to working counterterrorism.
    And so a number of the agents who once, if and when this is 
approved, go from a narcotics slot to a counterterrorism slot 
have been doing that in the weeks and months since September 
11th. They've just been categorized because of the way the 
funding goes as filling a narcotics slot.

                  TRANSFER OF FBI TO HOMELAND SECURITY

    Mr. Young. Would the gentleman yield, while you're on the 
subject?
    Mr. Kolbe. Yes, of course. I have just one final question, 
but I'll certainly yield to the Chairman.
    Mr. Young. On the subject you've just raised with the 
Director, if you would yield. Mr. Director, you're talking 
about transferring of resources. There are some in the Congress 
who believe that the entire FBI should be transferred into the 
Homeland Security Agency. I don't think that's a good idea, I 
know the President doesn't think that's a good idea. How would 
you respond to that?
    Mr. Mueller. For a variety of reasons, I've got concerns 
about--maybe the best way to put it is establishing a separate 
intelligence agency, in other words, splitting up the FBI and 
creating a separate intelligence agency. There are a number of 
concerns that I would raise.
    First is that agents do a terrific job at gathering 
information. In the past, the principal focus of that is to 
gather information, unless it's counterintelligence, but on the 
criminal side, it is to gather the information in a way that 
you can put it into a courtroom to convict somebody down the 
road. But they are terrific at doing investigations and doing 
surveillance, doing all that investigative work that is the 
gathering of information, and the collecting of information.
    What has to change, in my mind, at the Bureau is the 
understanding that a piece of information that may not be 
evidence in a trial, you may not be able to get it into trial, 
nonetheless has to be accumulated, assimilated and put in a 
larger matrix so we can be more predictive about where the next 
attack may occur.
    Separating off another agency, whether it be an 
intelligence agency or homeland security, does not make much 
sense to me, because these agents are the best in the world at 
doing this type of work. Coupled with the fact that they have 
very good relations in most of the country with state and 
locals who augment that capability.
    And so the collection of information in my mind should stay 
with the FBI. What we need to do better is the analysis, and 
the understanding that those pieces of information that may not 
go into the courtroom may help us predict the next terrorist 
attack.
    Secondly, you would have to replicate, if you're going to 
set up a new agency, that which we have, including the 
surveillance vehicles, the surveillance teams, the aerial 
surveillance, and the technology. Perhaps even the laboratory. 
All that would be inordinately expensive to replicate.
    Thirdly, if you were going to set up another agency, you 
would have to look at the capability of that agency to interact 
overseas. With our 44 Legats and the additional Legats that we 
have identified, we have developed, particularly in the wake of 
September 11th, very good relationships with our counterparts.
    Our counterparts are law enforcement agencies in these 
various countries. They are not intelligence counterparts. The 
CIA develops the relationships with the intelligence 
counterparts. It's critical to our function in the globe, as it 
shrinks, to expand on those relationships. And if you're going 
to set up another agency, that agency would be deprived of the 
law enforcement relationships that we've developed around the 
country and the world.
    The last point I would make is that I think it is 
critically important that we understand, the FBI understands in 
this intelligence gathering mode that we have to be tethered to 
the Constitution and to the statutes that enforce the privacy 
rights of our citizens. Inculcated in every FBI agent coming 
out of Quantico is the understanding that you operate within 
the law, that you protect the civil rights of individuals in 
the United States, and that part of your function is, yes, 
gathering the information, yes, trying to put it into a 
courtroom and prosecute individuals, yes, gathering the 
information to be predictive in preventing terrorist attacks or 
counter intelligence probes.
    But by the same token, it has to be done within the 
Constitution. We are a law enforcement agency. And I think 
that's good. I believe it's good to have us as part of the 
Department of Justice, because there is that screening 
mechanism. I would hesitate to have a separate agency out there 
untethered to the Constitution or the statutory structure under 
which we operate.
    Mr. Young. Thank you, Mr. Chairman.

          NATIONAL ASSOCIATION OF PUBLIC ADMINISTRATORS (NAPA)

    Mr. Kolbe. Let me ask one final question, if I might. The 
NAPA report, the panel from NAPA says they support the 
restructuring and resource alignment. But they point out they 
have a couple of reservations, and they note that 
counterintelligence and counterterrorism are different kinds of 
disciplines, that counterintelligence entails extensive 
precautions and that you need to compartmentalize, you need to 
hold things very close to the vest, whereas counterterrorism 
operations, where the danger of penetration isn't the same, you 
might indeed have much more of a reason to be reaching out and 
to be much more public or outgoing about it.
    They suggest that combining these under a single executive 
assistant director could inhibit the performance of one or the 
other. Would you comment on that?
    Mr. Mueller. I think it's something that I'll continue to 
consider down the road. Actually, I view counterterrorism as 
somewhat of a hybrid because you have the intelligence 
acquisition responsibility and you have the use of the, the 
Foreign Intelligence Surveillance Act techniques to advance 
your investigations in the same way that you do in 
counterintelligence. Yet on the other hand, for terrorists, 
there is a sanction. There should be a sanction, whether it be 
deportation, or prosecution and incarceration.
    Whereas on the counterintelligence side, generally what 
you're trying to do is move against those who are moving 
against you, anticipating the moves of a person, or in the most 
dramatic sanction, I guess, is persona non grata of foreign 
officers from the United States. Actually, the most extreme is 
those few cases where you have espionage. But where you have 
intelligence on one side and criminal on the other side, I tend 
to think of counterterrorism as being in the middle, somewhat 
of a hybrid in which you have to look at all the possibilities 
of investigation, whether it be an intelligence investigation 
to criminal investigation, to adequately address that threat.
    Mr. Kolbe. Thank you, Mr. Chairman.
    Mr. Wolf. Mr. Mollohan.

                   INFORMATION SHARING AND MANAGEMENT

    Mr. Mollohan. Thank you, Mr. Chairman.
    Mr. Director, it seems to me that at the heart of all this 
reorganization is the challenge of information sharing and 
information management. You've addressed it a bit in your 
testimony, and you've explained that you are bringing on agents 
or personnel from other agencies, CIA and perhaps others, into 
a working group in your organization. Likewise, you are sharing 
some of your personel with other agencies and organizations who 
have intelligence gathering assessment responsibilities.
    However, personnel sharing doesn't seem to me to get to the 
ultimate goal of ensuring that we are able to collect, assess 
and manage information in one place. Is there any credence to 
that concern and if so, is that addressed in the suggestions 
you made in your testimony, or is it otherwise being addressed?
    Mr. Mueller. I think we have made remarkable strides in 
terms of information sharing since September 11th between the 
CIA and us in a variety of ways, whether it be exchange of 
personnel, exchange of documents, exchange of information, and 
working together at all levels. I think evidence of that are 
some of the successes we've seen overseas where we have worked 
very closely with the CIA and other comparable institutions in 
other countries to thwart a number of terrorist attacks, on the 
one hand. And on the other hand, detain and interrogate high 
level individuals in Al Qaeda.
    So I think we have moved dramatically since September 11th, 
to have that integration of analysis and data that we need. I 
do believe two things. One, the Department of Homeland Security 
would be helpful in terms of having our product, CIA's product 
and the product of other agencies, and to have yet another 
analytical team reviewing it, looking at it in terms of being 
predictive on where the next attacks can come. That's number 
one.
    Number two, I do not think it's altogether bad to have 
redundancy in individuals looking at a set of facts, dots, or 
patterns and looking at it in various ways to determine where 
the next attack may come from.
    Mr. Mollohan. I would agree with all that. Dramatic 
improvements have been made. And I agree with you, I don't 
think redundancy is a bad thing. That's not exactly my 
question, but perhaps you're getting at the answer when you 
talk about the Homeland Security Agency. Are you suggesting 
that the mission to centralize this information should reside 
in one place within the Homeland Security Agency?
    Mr. Mueller. Yes, I think the information relating to 
terrorism should funnel up to the Department of Homeland 
Security. That does not mean the raw data at all. What I'm 
talking about is what I would call finished intelligence. That 
is, intelligence that has been stripped of its sources, for 
instance, but has the information from that particular source 
with some idea of the credibility of that source what weight 
should be given to this information. Yes, it should go to the 
Department of Homeland Security and should be looked at----
    Mr. Mollohan. I agree with that, again. Maybe we don't want 
to get to this question, or maybe I'm not asking in a way that 
you're understanding it. Is there going to be one place where 
all this intelligence information, or information that is 
collected and will be useful for intelligence purposes going to 
be assessed in one place? Will it all have to come through one 
place, so we're sure that somebody is looking at it all?
    Mr. Mueller. The Department of Homeland Security.
    Mr. Mollohan. Indeed.
    Mr. Mueller. Yes.

    DEPARTMENT OF HOMELAND SECURITY INTELLIGENCE GATHERING AUTHORITY

    Mr. Mollohan. So you're suggesting, at the end of the day, 
the question is, who has the authority. The Department of 
Homeland Security is going to have the authority to bring 
together information from the CIA, from the National Security 
Agency and the FBI. Are you suggesting that it is a part of the 
plan or that it is your idea that this information come into 
Homeland Security at one place?
    Mr. Mueller. It's part of the legislation that analyses and 
reports relating to terrorism go to Homeland Security. To the 
extent that there is a necessity for Homeland Security to look 
at raw data or intelligence, there is a provision in there 
whereby Homeland Security can get it.
    Mr. Mollohan. So Homeland Security is going to get filtered 
information, it's going to get information that's already been 
looked at, primary sources. Is there one place that the raw 
data is going to have to come through?
    Mr. Mueller. No. And it would be very difficult to do that. 
We had----
    Mr. Mollohan. Would it be wise to do that?
    Mr. Mueller. I do not think it would be wise to do that, I 
think that we're incapable of doing it. Part of the problem is, 
there is this vast information that flows into our agency, and 
to the CIA, every day. As an example, I was just reading this 
morning or yesterday, in terms of just our investigation of 
PENTTBOM, what happened September 11th, we have generated 
160,000 302s since September 11th, just on that. We've run down 
close to 400,000 leads. They all relate to terrorism. Each of 
those 302s, are leads relate to terrorism.
    Now, are you telling me that the Department of Homeland 
Security Agency should have all of that raw data?
    Mr. Mollohan. No, I'm sorry, I'm asking the questions.
    Mr. Mueller. I didn't mean to put it that way. I'm just 
saying that I think it would be impractical.
    Mr. Mollohan. I'm asking you to tell me.
    Mr. Mueller. I'm sorry, I didn't mean----
    Mr. Mollohan. Just so we get our roles straight here.
    Mr. Mueller. I didn't mean to put it that way. I'm just 
saying that there is a vast amount of information that comes 
into each agency each day, and I guess the bottom line is, I 
think it would be impractical for any one agency to get every 
piece of paper generated in the United States Government each 
day relating to terrorism.
    Mr. Mollohan. I guess that's true, and it's a subject that 
certainly can't be exhausted in this line of questioning. I'm 
sure there's been an awful lot of good thinking on it. That's 
just what I'm trying to probe with you, where are we with the 
idea of making sure that none of this information is falling 
through the cracks, and is being disseminated to you if you 
need it, or to the CIA if they need it, as you pick up and pass 
this information to the sources that it should get to.
    Mr. Mueller. I share your concern. It is a very important 
issue and I didn't mean to ask the questions.

           SHARING INFORMATION WITH AND FROM STATE AND LOCALS

    Mr. Mollohan. I know you didn't.
    I would look at that as a kind of horizontal sharing of 
information, perhaps. How about the vertical information 
sharing, with and from state and locals? What attention is 
being given to improving that? I know there is some feeling by 
the state and locals that they're not getting information when 
they should, and it's being filtered in ways that it shouldn't 
be.
    Mr. Mueller. I think there is substantial concern by the 
state and locals. We have done a number of things to try to 
address that. We have expanded our Joint Terrorism Task Forces 
JTTFs. We have been open in embracing any state and local law 
enforcement agency who wishes to participate in the JTTFs. They 
have their police officers or sheriff's deputies cleared for 
the information that goes to the JTTFs.
    We also now have put, at the suggestion of state and local 
law enforcement, we are putting out a weekly bulletin that has 
general information about terrorism that may be information 
that comes from one or more of the persons that we're 
interrogating in Guantanamo and elsewhere. We are trying to 
advise on a weekly basis law enforcement about concerns they 
should address and what we have learned in the course of our 
investigations.
    My hope is that the technology advances that we're seeking 
in the next two years will go a long way to addressing that 
problem. We do not have, in law enforcement, only one 
communication system that is readily available to pass 
information. We have three or four, some of which are 
competing, that we have to address and have a much better way 
of communicating with other law enforcement agencies, large and 
small.
    Mr. Mollohan. Mr. Chairman, I would just end by suggesting 
that with regard to this question of information collection and 
management, analysis and sharing, my concern is, where is the 
authority. It almost sounds like this is a voluntary process 
where the FBI sits on the CIA and the CIA sits on the FBI and I 
expect a number of other agencies as well. It almost sounds 
like a voluntary process. My question would be, and I would 
look forward to talking about it with you further, is, where is 
the authority to pull that together?
    Mr. Mueller. In the proposed statute, it directs that the 
Secretary of Homeland Security will have, from the various 
agencies, that second cut of reporting. Not the raw, 
necessarily the raw data, but the second cut, and that is what 
we call the finished intelligence, plus any analytical work 
that is done. Then under the President's directive, getting 
that raw reporting, which the Secretary of Homeland Security 
believes that he or she needs.
    Mr. Mollohan. Thank you, Director. Thank you, Mr. Chairman.

                        CHANGING FBI PRIORITIES

    Mr. Wolf. Mr. Latham.
    Mr. Latham. Thank you, Mr. Chairman, and welcome, Mr. 
Director.
    In your opening statement, you listed the three points of 
emphasis that you're attempting. One is to change priorities 
since September 11th. Yet I question whether that's actually 
happened. From information I have, the referrals for 
prosecution and crimes that overlap those jurisdictions, say 
the local law enforcement, or State, that the referrals have 
been since October through March of this year, 39 percent have 
been for bank robberies, narcotics, things that other agencies 
would have jurisdiction over.
    And that really is statistically no different than what it 
has been, 41 percent, I believe, in 2001, 40 percent in 2000. I 
just wonder, have they gotten the memo that there is a 
different priority?
    Mr. Mueller. I really wonder about those statistics. I 
think I saw them in the papers. Because I can tell you that 
we've had as many as 6,000 agents looking at our figures, 
working on counterterrorism since September 11th. I'd have to 
look at those figures, because I believe that----
    Mr. Latham. It comes from Syracuse University.
    Mr. Mueller. Yes. I'd have to look at the basis for those 
statistics. Because I absolutely believe, particularly in the 
months following September 11th, we had up to 6,000 agents, 
half our agents were working counterterrorism. And I had heard 
from United States Attorneys around the country as well as 
others that they were anxious to get some of those agents back 
doing white collar crime, violent crime, and narcotics cases. 
So I would ask to be able to get back to you on that.

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




    Mr. Latham. Apparently from October 2001 until March of 
this year, when talking about domestic terrorism cases that 
were referred, 61 percent of those have been declined for 
prosecution, normally for lack of evidence or no Federal crime. 
Why is that rate so high?
    Mr. Mueller. My understanding is we're different than other 
agencies, as we seek the consultation of U.S. Attorneys when we 
wish to close out a case. And many of the cases will be obvious 
closures and not in any way significant. I don't think it says 
much about, or I don't think you can read much into that 
statistic in terms of the failure of a prosecutor to pick up an 
investigation. I think we seek the input from the United States 
Attorneys in terms of declining a case, I believe, more often 
than other agencies. That's what I've been led to believe.
    [Subsequent to the hearing, the following clarification was 
provided:]

                           Domestic Terrorism

    The records maintained by the Executive Office for U.S. Attorneys 
indicate that from October 2001 through March of 2002, the Federal 
Bureau of Investigation referred a total of 226 Domestic Terrorism 
matters for prosecution. These records also indicate that during this 
same period, 75 Domestic Terrorism matters, or 33.2 percent of the 
total number of matters referred, were declined for prosecution. The 
decision of a U.S. Attorney's Office to decline to prosecute a Domestic 
Terrorism matter can be influenced by several factors. In this regard, 
the U.S. Attorney's Office may decline to prosecute a Domestic 
Terrorism matter being investigated by a Joint Terrorism Task Force if 
it has been determined that the matter is more suitable for prosecution 
at a local level. In addition, a U.S. Attorney's Office may decline to 
prosecute a Domestic Terrorism matter if it is determined that the 
matter at hand does not meet the office's standards for prosecution.

                          AVAILABLE TECHNOLOGY

    Mr. Latham. I share a lot of the concerns I think you've 
said yourself, and members of the Committee here, each member 
of Congress has the Blackberries. We can e-mail our offices 
anywhere in the country, we can make a telephone call on this. 
My concern is that possibly the government is not aware that 
there is technology available to do a lot of things you're 
talking about. Your response to the question before about, 
there is no way of getting all of this information and getting 
your arms around it.
    There really is, there are commercial systems in place 
today that you could use that an officer and agent in the field 
could input and within seconds, get back information from INS, 
from CIA, known associates, all that type of information you're 
talking about. And my concern is that you talked about 
reorganization inside the FBI, and that's not good enough. 
We're thinking inside boxes yet. And I think there's got to be 
at least a realization or knowledge that there's technology 
available. If Congress can actually do something like this, any 
agency should be able to move more quickly than we often do 
around here. Just don't think inside the FBI box, because this 
has to be an integrated system.
    Mr. Mueller. I absolutely agree. I should have pointed out 
that I believe that we can have access in the future to just 
about any document or information, putting aside the security 
concerns, in the CIA or the FBI. And that there is the 
technology and the capability to sort through those 160,000 
reports, absolutely. It is out there.
    The first stage, though, is that each agency has to have a 
data base upon which you can put another data base that will 
give you the meta data to get that information out, with the 
appropriate security. Ultimately, I know Homeland Security, the 
Department agency of Homeland Security, the CIA, the FBI, the 
INS, are all looking for that day when we can, given the 
appropriate security screens, go into other data bases and pull 
out that piece of information and look at it. We should be able 
to do this.
    But the problem is, you have to do it with a series of 
building blocks. I have to upgrade the FBI and migrate our data 
bases into a data warehouse upon which we can build a separate 
data base that can be hit by either the CIA or Homeland 
Security or the like.
    Mr. Latham. And I hope that you're successful in this area, 
and we will certainly be of assistance whenever necessary.
    The cases that you've been criticized for, basically with 
the technology that's available today, if those agents in the 
field had the technology, they could be in their car or have 
something like this in their pocket, put that name in, and it 
wouldn't have gone to the bureaucratic levels, that there would 
have been flags come up all over saying that Al Qaeda, saying 
known associates, status, everything. The technology is there. 
I just hope we remain focused to look at the big picture.
    Mr. Mueller. I would just say with regard to that, in the 
incidents you're talking about, even looking at our data bases, 
we may not have made those connections. What should have 
happened are documents come up and be alerted to, for instance, 
the persons handling the Moussaoui case should have had access 
to the Phoenix EC, that type of thing. That's what we're trying 
to fix.
    Mr. Latham. Inside the FBI, you're right. But if you had an 
integrated system of information, then the flags would have 
come up everywhere.
    Mr. Mueller. Absolutely.
    Mr. Latham. And that's my point.
    Mr. Mueller. Absolutely.
    Mr. Latham. Thank you. We will obviously be supportive of 
all your efforts, and I admire you for the job that you're 
doing. Thank you.
    Mr. Mueller. Thank you.
    Mr. Wolf. Ms. Roybal-Allard.

                       PROTECTING CIVIL LIBERTIES

    Ms. Roybal-Allard. Thank you, Mr. Chairman.
    Director Mueller, I, like all Americans am concerned about 
us finding that right balance between protecting civil 
liberties and making sure that our intelligence agencies and 
law enforcement have the tools that they need in order to 
protect our country.
    I'd like to follow up on the line of questioning that was 
started by Congressman Serrano. In the GAO report, on page 12, 
there was a recommendation made by Comptroller Walker, and I 
quote, He says, ``To better ensure that these new investigative 
tools do not infringe on civil liberties, appropriate internal 
controls, such as training and supervisory review, must be 
developed, implemented and monitored.'' My question to you is, 
can you tell us what specific steps you are taking to ensure 
that civil liberties are protected, and what is the time line 
for implementing those protections?
    Mr. Mueller. I agree with the statement by the GAO. We have 
a number of safe-guards that have been in place in the Bureau 
for a substantial period of time to assure that the civil 
liberties of United States citizens are not infringed. We have 
an inspection process which looks at every office on a regular 
basis. We have the Office of Professional Responsibility that 
any allegation, where a person has, an agent or even a support 
person has overstepped the bounds, OPR looks into it. We have 
an Inspector General, since July, where there are allegations 
or accusations that we have overstepped our bounds, the 
Inspector General, an arm above the Congress and the Justice 
Department, looks into the allegations.
    Lastly, we have for a number of years in our training 
addressed specifically those issues, so that agents understand 
the limitations of their actions and understand the 
consequences from going beyond the Constitution. But I am happy 
to look at whatever other suggestions there are as to how we 
could do more to assure that we have those protections.
    Ms. Roybal-Allard. So right now, what you're suggesting is 
that in spite of this reorganization and some expanded new 
investigative tools that are being given, that you think what 
is already in place is sufficient to protect the civil 
liberties in our country?
    Mr. Mueller. I do. I do think in the one area where there 
has been a modification of the AG's guidelines, we have to look 
at ways to identify areas that may come close to those 
guidelines. In other words, the one new thing that's come most 
recently is the change in the AG guidelines. I want to make 
certain that that change does not trigger some activity that we 
would not want to see down the road.
    The changes in the PATRIOT Act, for instance, which relate 
to our ability to conduct surveillance pursuant to the FISA 
statute, we still have the protections of the courts. In other 
words, before we take any action pursuant to the Foreign 
Intelligence Surveillance Act, it has to be signed off on by 
the court. I believe that is adequate protection.

            GUIDELINES FOR DURATION OF PRELIMINARY INQUIRIES

    Ms. Roybal-Allard. Well, speaking of the AG, that's my next 
question. One of the newly announced rules regarding domestic 
investigations extends the authorized duration of preliminary 
inquiries from 90 days to 180 days. And it allows the special 
agent in charge, as opposed to headquarters, to authorize two 
additional 90 day extensions. As I understand it, that means 
that a preliminary inquiry, which requires far less evidence of 
a crime than probable cause, could last as long as a year with 
no oversight from FBI headquarters.
    It seems to me that it runs a little bit contrary to what 
your stated goal has been with regard to the expansion of the 
counterterrorism division at FBI headquarters, which, and this 
is a partial quote, that the expansion would include a more 
direct role in managing investigations and providing 
operational support to field offices. Without the oversight of 
headquarters, how will you be able to ensure that these field 
officers are not compromising civil rights, violating 
individual privacy, or perhaps even wasting valuable resources 
on what could be considered a questionable fishing expedition?
    Mr. Mueller. The changes as related to the approval 
process, not the notification. In other words, there's 
notification to headquarters. And it seems to me it does 
eliminate one of those bureaucratic hurdles. The notification 
in my mind is sufficient for us to track and see what is 
happening at headquarters.
    Secondly, it's a preliminary investigation, it's not a full 
investigation. Therefore, the intrusions or the investigative 
steps that the agent could take are very, very limited. I think 
that is an assurance to the public, I think that is a good 
balance of the privacy rights of the individual that's being 
investigated against the necessity of us gathering additional 
information to determine whether or not a full investigation, 
where you can use all of the investigative tools, should be 
authorized.

                         FBI RECRUITMENT ISSUES

    Ms. Roybal-Allard. The GAO testimony states that the FBI 
will need to address recruitment issues. It cites a study which 
found that about a quarter of the special agent work force will 
be eligible to retire between 2001 and 2005, and that 80 
percent of the senior executive corps was eligible for 
retirement at the time of the review. In addition, the GAO 
study states that the FBI may find recruitment more difficult 
than in prior years because of the competing demand of law 
enforcement personnel with other Federal Government agencies 
and possibly even the private sector, especially in those 
specialized fields such as having technology skills or language 
skills.
    It is my understanding that you are now currently trying to 
hire at least 900 additional agents. I was just wondering if 
you were experiencing difficulties in hiring qualified agents, 
particularly those with language skills or special skills in 
technology.
    Mr. Mueller. Since February 8th, when we allowed 
individuals to apply to the FBI online, we've had 47,000 
applications. And it's truly remarkable. So there are a number 
of people, and I think rightfully so, who wish to join the FBI. 
And we have also, amongst those, found any number who have the 
skills we're looking for, the language skills, the computer 
skills, the science skills, the intelligence skills, many from 
the military, and the engineering skills.
    But we have changed and focused our recruiting to address 
those particular categories. It takes a while, however, we had 
on September 11th a universe of individuals who were prepared 
to come into the classes under the older recruiting guidelines. 
We have added different categories that we've focused on since 
then, but there is a lag time to having them come in.
    We have, for instance, to date, been able to recruit, 
attract and get into our classes a number of persons in each of 
those categories. Not as many as I would like, but as we go 
along, we refine our recruiting and we are able to expand on 
the individuals who have come to us since the first of the 
year. My expectation is the number of individuals that fall 
into one of those discrete categories will greatly improve.
    Ms. Roybal-Allard. So right now, you don't have any real 
concerns, then, about being able to hire or recruit qualified 
people?
    Mr. Mueller. No.

                             REORGANIZATION

    Ms. Roybal-Allard. My final question is, reading all the 
material and trying to understand either all the nuances of 
this reorganization is an immense job. I'm wondering if there 
are any concerns that you have that have not been raised by 
this Committee or any questions that should have been asked 
that weren't, that would perhaps raise a red flag or provide 
this Committee with important information or insights about 
this reorganization.
    Mr. Mueller. I don't believe so. I think in the materials 
we provided, the briefings that we've given, I think not only 
the specifics of the reorganization, but my thinking, my belief 
that this is yet a stage of a continuum of a necessity to 
change the Bureau, have the Bureau grow to be better. I think 
we've provided both the background and the context as well as 
the specifics. And in the questions today, I believe we've 
covered most of the areas.
    Ms. Roybal-Allard. Thank you very much, and thank you for 
the work that you're doing.
    Mr. Mueller. Thank you.
    Mr. Wolf. Mr. Vitter.

                        CHANGING THE FBI MINDSET

    Mr. Vitter. Thank you, Mr. Chairman.
    And thank you, Mr. Director, for all of your work. All of 
us have used this term, change the culture. You certainly used 
that term. I guess to me, the most significant change in the 
culture that has to happen isn't simply shifting from one 
primary focus to another, but really changing the whole bar 
that I think agents are used to operating under. This is what I 
mean.
    When they are doing criminal cases, drug cases, other 
cases, my perception is that the FBI in working with U.S. 
Attorneys' offices is used to using a model that conducts an 
amazingly thorough investigation and really, in a typical case, 
gets these people dead to rights through wire taps and other 
means in an exhaustive, thorough way. I think that's a major 
component of the culture of the FBI in the past.
    Now, considering the urgency of this challenge of stopping 
acts of violence before they occur, we can't wait around to do 
that. I mean, the point is not to prosecute these cases in a 
court and have these people dead to rights after the fact, the 
point is to disrupt. So I'm wondering how you approach that 
change in culture, which is not simply a matter of setting up 
different agencies within the Bureau, but going to the 
fundamental mind set and training of your typical agent.
    Mr. Mueller. I actually think that you need to combine the 
expertise, the talents of both the intelligence side as well as 
the criminal side. I guess in my own mind, I find often on the 
intelligence side insufficient discipline in evaluating facts 
that you would find on the criminal side. Because the criminal 
agent will look at a particular fact and say, what is the 
credibility of the source, is it corroborated.
    And on the intelligence side, there is occasionally the 
desire to take speculation and rumor and put it into a 
framework with tidbits. The most effective work I've seen is by 
those who have had both the experience on the intelligence side 
as well as on the criminal side. And what I would hope to have 
is the capabilities of an agent who understands that you have 
to look at a fact and determine its accuracy with some 
discipline, coupled with the understanding that, to not 
necessarily worry about whether it's going to be in a courtroom 
down the road. But instead, that fact has to be looked at and 
gotten back to those persons who are looking at the overall 
picture to see whether it fits in the puzzle some place.
    The other point I would make is that there has to be some 
sanction for terrorists. In other words, you find a terrorist 
in the United States, we can follow them around for a period of 
time, but the fact of the matter is, what you want to do is, as 
you said, disrupt. But you have to take particular steps. If 
the person is out of status, you can have them detained by INS 
and deported. If the person is committing a crime, albeit not a 
terrorist crime but another crime, then there has to be a 
consequence and the consequence is in the criminal justice 
system.
    So as I said before, I see terrorism on a continuum between 
intelligence and the criminal justice system, where yes, you 
need to have the intelligence to prevent the next attack and 
identify the terrorists, but then whether it be the criminal 
justice system or the immigration system or some other way you 
have to have a sanction and accomplish the disruption. So I'm 
not certain that it's such a dramatic change in culture, let me 
just put it that way.

                        TRAINING AND PREVENTION

    Mr. Vitter. Let me ask the question a slightly different 
way. You have a few new people coming into the Bureau from an 
intelligence background who may have that sort of intelligence 
mind set that you were describing. But certainly, the vast 
majority of your agents have come from the criminal background 
and mind set. And that's going to be the case for some time to 
come.
    How do you retrain them to have somewhat more urgency than 
simply developing a typical criminal case or drug case demand?
    Mr. Mueller. I think a great deal of the training was 
accomplished on September 11th, unfortunately. I don't believe 
there's an agent out there who doesn't understand the 
importance of uncovering any piece of information, not 
necessarily evidence, but information that might be helpful in 
preventing another terrorist attack. I think the FBI as an 
organization understands and adopts the understanding that the 
principle priority is to prevent another terrorist attack.
    And while we can teach intelligence techniques, I believe 
that special agents out there understand that the hero in the 
future is going to be that particular agent that uncovers a 
fact that leads us to a terrorist who we ultimately arrest 
prior to the time that that terrorist is going to be able to 
commit their act. Thereby, that special agent is saving 
American lives. I think that lesson is out there.
    Mr. Vitter. Thank you.
    Mr. Wolf. Thank you, Mr. Director.
    We're going to go to the next panel. We will have a couple 
questions at the end, just to make some points. But I do 
appreciate it.
    Mr. David Walker, the GAO Comptroller General. Your full 
statement will appear in the record as read. I want to thank 
both you and former Attorney General Mr. Thornburgh for doing 
this so quickly. I know both of you would have liked to have a 
lot more time. But we didn't want to be in a position whereby 
this reorganization could have been delayed for a long period 
of time. So thank you very much. Your full statement will be as 
if read, and you can proceed.
    Mr. Walker. Thank you, Mr. Chairman, Mr. Serrano. I'd like 
to summarize my statement if I can.
    I appreciate the opportunity to discuss the FBI's proposed 
reorganization and realignment efforts. While transformation 
across the Federal government is critically important to our 
successful transition into the 21st century and to face the 
challenges we face in the 21st century, it is of critical 
importance at the FBI. The FBI is on the front line of 
defending the public and our way of life from the new and 
lethal threat, that of terrorism against Americans.
    At the same time, the FBI maintains the responsibility for 
investigations of a range of other serious Federal crimes. 
Every American has a stake in assuring the success of the FBI's 
efforts. The FBI's unique organization, comprised of thousands 
of devoted and capable public servants, who live and breathe 
the agency's motto of fidelity, bravery and integrity, every 
day. The FBI has a long and proud history and it does many 
things very well.
    But times have changed, and the FBI must change with the 
times in considering what it does and how it does business. At 
the same time, the FBI's motto is timeless in nature. Any 
changes at the FBI must be part of and consistent with the 
broader Government transformation efforts that are taking 
place. This is especially true with regard to the establishment 
of the Department of Homeland Security that is being debated 
and as it is being put into place.
    Moreover, Director Mueller has noted that the FBI 
reorganization and realignment efforts that we are discussing 
today are just the second phase in a comprehensive effort that 
he is planning to address that will take a number of years and 
multiple steps to accomplish. This in effect is another down 
payment on the broader transformation effort.
    Director Mueller has taken the first and most important 
step in successfully undertaking the needed transformation of 
the FBI. He has demonstrated his personal commitment through 
his direct involvement in developing and leading the Bureau's 
transformation efforts. The importance of maintaining this 
leadership and commitment over time cannot be overstated.
    The central thrust of this phase of the reorganization plan 
is to build an FBI with a national terrorism response 
capability that is larger, more mobile, agile and flexible. The 
key elements of the second installment of the reorganization 
include a shifting of some of the resources from longstanding 
areas of focus, such as drug enforcement, to counterterrorism 
and intelligence, building analytic capability and recruiting 
to address needed skills.
    Director Mueller is planning a number of steps in this 
phase of the reorganization to better align the agency's 
resources with its new priorities. But a broader assessment of 
the organization in relation to the new priorities is needed. 
Given the seeming disparity between priorities and resource 
allocation that will remain after the current realignment, more 
resource changes are likely to be needed.
    In addition, this broader reassessment will need to 
consider the significant succession planning challenges that 
have been alluded to previously. To build the capacity to 
prevent future terrorist attacks, the FBI plans to expand its 
office of intelligence with an improved and robust analytical 
capability.
    It is, however, unclear how the FBI's proposed analytical 
efforts will interrelate with the planned analytical capability 
of the new proposed Department of Homeland Security. The FBI 
reorganization plan calls for NIPC to be housed in the cyber 
division, which is under the leadership of the executive 
assistant director for criminal investigations. However, the 
President's plans for the Department of Homeland Security call 
for this same entity or parts of this same entity to be moved 
out of the FBI and into this new department.
    Regardless of location, focus on enhancing the capabilities 
of this unit as contained in GAO's 2001 report is critical. The 
FBI plan also calls for recruitment of additional agents, 
analysts, translators and others with certain specialized 
skills and backgrounds. However, recruitment may become more 
difficult than in prior years because of the competing demand 
for qualified candidates, particularly individuals with 
technology, language and science skills.
    Let me be clear here. There's no question but there's a lot 
more supply of people who want to work for the FBI than there 
is demand. That's for general agents. However, for people with 
technology skills, language skills, and sciences, like biochem, 
that is not the case. As a result, the agency may need to seek 
additional legislative authority to help attract and retain 
qualified employees with these critical skills.
    The agency may also need to obtain additional legislative 
authority to help facilitate the current and future 
realignment, for example, possibly targeted by an early out 
authority. While the FBI has shared linguistics resources with 
other agencies, more opportunities for pooling these and other 
scarce resources should be considered in the future.
    Transformations of organizations are multi-faceted 
undertakings that take a number of years to achieve. In this 
regard, communications have been a longstanding problem for the 
FBI. These problems have included antiquated computer hardware 
and software, including the lack of a fully functional e-mail 
and even voice mail system.
    Mr. Chairman, we do not believe that the FBI will be able 
to successfully change its mission and effectively transform 
itself without significantly upgrading its basic communications 
and information technology capabilities. You can have as many 
people as you want, but if they're not adequately trained and 
supported, with effective communications systems and 
technological capabilities, it really isn't going to make much 
difference.
    This is critical and it will take time and money to be 
successful. In this regard, historically the Congress has 
funded additional agents, but adequate resources have not 
always been made available to enhance the efficiency and 
effectiveness that the agents of the FBI have. It is critical 
that the FBI have an effective plan and adequate resources to 
enhance its infrastructure dealing with communications and 
technology, and upgrade its training programs.
    It's also critically important that they follow the best 
practices guide that GAO has promulgated with regard to the 
development of information technology and communications 
systems to maximize the likelihood that the resources that you 
provide will be effectively utilized and achieve desired 
outcomes. As you know, Mr. Chairman and Mr. Serrano, we've done 
work with regard to the IRS in trying to help provide 
additional assurance at the request of the Congress to make 
sure the funds you provide in fact are being used for the 
intended purpose, and that they are following best practices in 
order to make sure that funds are not wasted in this regard, as 
sometimes has been the case in the past.
    Although the FBI wishes to become a more proactive agency, 
it needs to be cognizant of civil liberties. To best ensure 
that these new investigate tools do not infringe on civil 
liberties, appropriate internal controls, such as training and 
supervisory review, must be developed and implemented and 
monitored.
    Our central focus today is the effect that these changes 
have on the FBI itself, but needless to say, these reallocation 
of resources and reorganizations will have a ripple effect on 
the Justice Department, on the DEA, and a variety of State and 
local agencies. And these ripple effects need clearly to be 
considered.
    A new strategic plan is essential to guide decision making 
of the FBI's transformation. The Director has set agency 
priorities, but the strategic plan can be the tool to link 
these together and to achieve sustained success over time. I 
would like to commend the Director for first focusing not only 
his personal leadership but coming up with the top 10 
priorities that have been communicated throughout the agency 
and for identifying a set of core values which will serve as 
the foundation for everything that the FBI will do.
    This is a supplement to its motto. We've done this at GAO 
and many other outstanding organizations who have gone through 
cultural transformations and have found this essential in order 
to have hit those singles and doubles early on. Because the 
transformation effort will take, based upon my experience in 
the public and private sector, to make it stick, seven plus 
years. But there's a lot that can and should be done in order 
to make sure that needed things happen before that and that 
successes are achieved.
    The FBI does not have a comprehensive strategic human 
capital plan. People are the key to transformation. Without the 
right people, nothing else matters. This plan flowing out of 
the updated strategic plan could guide the FBI as they move 
through an era of transformation. A performance management 
system that encourages staff to focus on achieving agency goals 
is an important tool to facilitate an agency transformation, 
and can lead to positive outcomes. In this regard, the FBI's 
current performance management system is antiquated and 
inadequate and must be changed.
    The FBI can reinforce its transformation efforts and 
improve its performance by aligning institutional, unit and 
employee performance expectations with planned agency goals and 
objectives. Ultimately, the FBI must engage in a fundamental 
review and reassignment of the level of resources that it needs 
to accomplish its mission and how it should best be organized 
to help achieve the desired results.
    This means reviewing and possibly and probably, not 
possibly, probably reducing the number of layers, levels and 
units within the FBI in order to increase efficiency and 
enhance flexibility and responsiveness. This should be coupled 
with the enhanced communication and technological capabilities. 
Those enhanced communication and technological capabilities 
will help horizontal communication, vertical communication 
within the FBI, as well as communication with other Federal 
agencies, as well as with State and local government entities.
    Transforming an organization like the FBI with its deep-
seated culture and traditions is a massive undertaking that 
will take considerable time and effort. Again, there are some 
things you don't want to change about the FBI. The commitment 
to that motto, the core values are something you never want to 
change.
    But they are going to have to do things differently, as 
some have talked about earlier today. Continuous internal and 
independent external monitoring and oversight will be essential 
to help ensure the implementation of the transformation plan 
stays on track and its purpose for making the FBI more 
proactive in the fight against terrorism without compromising 
civil rights. We stand ready to assist this Committee and the 
Congress in trying to help assure that this occurs.
    In closing, Mr. Chairman and Mr. Serrano, I would like to 
commend Director Mueller, as well as other Department of 
Justice and FBI officials, for their cooperation and 
responsiveness in providing requested documentation and in 
making themselves available for interviews in order to develop 
the statement on very short time frames. And we're happy to 
help.
    [The prepared statement of Mr. Walker follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Mr. Wolf. Thank you very much, Mr. Walker. I appreciate 
you're doing this quickly.
    I also want to say, which is leading me to a point I want 
to make, I appreciate Mr. Mueller being here, too. I try to put 
myself in his position, somehow if I had somebody sitting up 
and telling me in my office how my office ought to change and I 
had to sit there and listen, a little bit of me would say, this 
guy just doesn't understand. And I want to thank Mr. Mueller. 
Generally, witnesses come and after they're over, they're gone. 
The fact that you're here I think is a very positive signal.
    There are a lot of questions that we could ask, but I would 
like to ask two. One, I think in fairness to Director Mueller, 
if you could set up a time whereby you and your people go over 
and sit down and go through the testimony. The Director 
obviously has just gotten that testimony, he may have some 
answers to it that you're not aware of or there may be some 
things he's not aware of.
    So I would just ask there to be within the next two weeks 
an opportunity, if you will, where you can sit down with the 
Director and make sure that they are focused on some of these 
things. Maybe the GAO didn't quite understand why they did a 
certain thing. If we can get you to do that, that would be 
helpful. I think you've already made a big impact, all the 
members have read your testimony, as I have. So if we can get 
you to agree to do that.
    Secondly, I would like to ask you to track these things for 
a year. What the Subcommittee will do, assuming the Republicans 
keep the House, and I certainly hope that they do, but if they 
don't, if Mr. Serrano could, but I think the Subcommittee, 
whoever is in control, next year ought to have a hearing about 
this time, bring the FBI back, bring the GAO back, bring NAPA 
back to see, so we have an example that we can match and see, 
okay, here's what was said, so this just wasn't another hearing 
where people did not follow through. But there is an end of the 
course, so we can come back and take a look. So if we could get 
you to agree to do that.
    Mr. Walker. We will do that.
    Mr. Wolf. You seem to talk a lot about technology and 
technology and technology. I read your testimony. Do you think 
there is any merit in the idea of an intelligence science board 
similar to a DARPA or similar to a Defense Science Board that 
the Department of Defense has that helps them with the 
technology precisely the way that you were talking about?
    Mr. Walker. I think it deserves serious consideration, Mr. 
Chairman. I haven't studied it, but from what I know about the 
one that already exists, it has helped.
    Mr. Wolf. Do you think they may very well have to hire more 
personnel than they currently have?
    Mr. Walker. I think they may well have to do that. But I 
also think it's critically important that they have the right 
type of tools and training and technology to support the number 
that they have, whatever that is. I think if they don't have 
that, then hiring more people may not be the most effective 
thing to do.
    Mr. Wolf. And you think they should look at the Quantico 
training program to make sure that that meets the current 
changes based on 9/11?
    Mr. Walker. Absolutely. There are a number of things that 
have been mentioned by members today, and by Director Mueller, 
that are modifications in training programs and procedures that 
will have to take place given the new priorities and the new 
emphasis.
    Mr. Wolf. Mr. Serrano.
    Mr. Walker. If I can, Mr. Chairman, let me respond to your 
first request, and that is, I have already sat down with 
Director Mueller face to face once. We've spoken on the phone 
as well, and we have already reached an understanding that we 
will meet periodically in order to try to work with the FBI in 
a constructive fashion, as we have the IRS and others in the 
past. Because I'm convinced that he's committed to doing the 
right thing here. And I think there's a lot of knowledge and 
tools that we can help bring to bear to make sure that that's 
the case.
    Secondly, I think the idea of having another hearing on 
this is critically important. This is a non-partisan issue and 
we need to have periodic oversight. The stakes are very high 
here.
    Mr. Wolf. Thank you. We will have a hearing next year, we 
will follow the progress.
    Mr. Serrano.
    Mr. Serrano. Thank you, Mr. Chairman. I also want to thank 
Director Mueller for staying around and, as you've said, that's 
a unique situation. Although I must tell you, I come from a 
generation who, when the FBI hangs around too long, we get very 
nervous. [Laughter.]
    I'm wondering who these guys taking pictures are, too. 
[Laughter.]
    It's interesting, your comment, Mr. Chairman, was going to 
be my first question, and that is, it's obvious to us that 
you've met with the Director, and we all want to work with him 
to make this a success. One of the few areas that elected 
officials can face where you're not looking for someone to 
fail, you're looking for everyone to succeed at what we have to 
do.
    So at what point would you say we should look at whether 
we're going in the right direction, succeeding or not? I mean, 
you can give me a time frame.
    Mr. Walker. My personal view is, as my testimony lays out, 
I think they need to update their strategic plan; they need to 
have a transformation plan with key milestones. I think the 
Congress can end up using the GAO and others, for example, the 
DOJ IG, in order to periodically monitor or find out things are 
going in that regard. To the extent that you end up 
appropriating additional funds for specific purposes, whether 
it be for communications and information technology or whatever 
else it might be, then obviously we would be happy to help in 
periodically monitoring that and reporting back to you.
    But I think there are things that should be reported 
periodically, and I think you should have a hearing at least 
once a year, at least once a year to talk about how things are 
going. Because this is going to take a number of years in order 
for it to stick. There's a lot that's already happened. There's 
a lot that will happen over time that will make a big 
difference.
    But to really truly do everything that needs to be done and 
to make it stick, no matter who the Director is, will take a 
number of years.
    Mr. Serrano. Some of these questions I actually was going 
to ask the Director. But I'll ask you first, for your analysis. 
One of them is that on one hand, the Bureau says we're going to 
do counterterrorism more than anything else. So does that mean 
that if I'm a white collar criminal or organized crime figure I 
should feel relief now, because there will be less emphasis on 
me?
    But then on the other hand, the Director assigns double the 
amount of agents from 1,057 I believe to 2,100, which still 
leaves about 7,000 agents to do something else. So there seems 
to be at least in the message a contradiction, although I'm not 
against that contradiction. I worry that in a district like 
mine, big drug dealers are now going to have a field day.
    So what's your sense of how that allotment of personnel 
will be? Should somebody in organized crime be feeling any 
better these days?
    Mr. Walker. If I was them, I wouldn't feel any better. The 
fact of the matter is----
    Mr. Serrano. Mueller's on the job, right?
    Mr. Walker. That's right. I mean, the fact of the matter 
is, that the FBI has received additional resource allocations 
over the years and recently, not only with regard to agents but 
also with regard to other resources. What they have done and 
what Director Mueller has done, he's basically re-prioritized 
the allocation of those resources. A significant percentage of 
the FBI's resources will be dedicated to counterterrorism. But 
it will not be a majority of the FBI's resources. And in 
addition to that, a significant percentage of the FBI's 
resources will continue to be allocated to counterintelligence 
as well as to fighting organized crime, protecting civil 
rights, and dealing with a number of other Federal laws.
    I think if you make sure that they have not only an 
adequate number of agents, but also have the right type of 
communications and technologies and training, then their 
effectiveness will increase much greater than the number of 
agents that they have. So they shouldn't take any comfort.
    Mr. Serrano. On the issue of civil liberties, again, just 
to get everybody on the record here, do you see things in the 
training that need to be changed or need to be re-emphasized? 
The Director has made it clear that that's going to be a 
priority. How much emphasis do you think we need to put on, 
that we don't have on now, to tell folks, listen, you're 
getting a lot of power, more than you've ever had before, you 
have a responsibility for this power? Give me your thoughts on 
that.
    Mr. Walker. First, they do have additional authority, and 
that's appropriate given what happened on September 11th. At 
the same point in time, while you want to provide additional 
flexibility and additional tools, you've got to have 
appropriate safeguards to prevent abuse. As a result, I think 
what has to happen is, you have to start with the guidelines, 
look at the guidelines, determine whether or not there's 
additional training that's necessary, determine whether or not 
there needs to be additional advisement, whether or not there 
ought to be additional approvals. You have to determine whether 
and to what extent the inspections office, the DOJ Inspector 
General might end up doing periodic reviews.
    There's two aspects, one of which is proactive, which means 
you try to do things to minimize the possibility a problem's 
going to happen in the first instance, and the second is 
reactive. I would respectfully suggest that the inspections 
office and the Inspector General quite frequently are reacting 
to things that are happening.
    So you've got to have controls and training and others in 
place to minimize the possibility that something will happen to 
begin with. Of course, we're in that line of business. We do 
that in a lot of areas of government. We're happy to help work 
with the Director to identify some of those areas.
    Mr. Serrano. Do you think that's something that is already 
in place, should be expanded, or do you think there should be a 
special effort made to assign someone? We're assigning a lot of 
people to do a lot of things now, and Homeland Security will 
create what some people think is a major growth in Government 
and in agencies.
    Should we then make an effort in this process to say, okay, 
there are some folks in this country, and the number of people 
will increase, who will be nervous about the power the FBI and 
other agencies will have, so we will from the get-go set 
something in place to monitor or to react? Should that happen 
or are you suggesting that it's just to remind some of the 
folks in there to do this? Because I get nervous about having 
people say, well, remember, part of your role is to check on 
them. I'd rather have something in place that is a part of the 
process, in fact, so that these things don't get out of hand.
    Mr. Walker. My personal view is that one of the things that 
needs to happen, and I think Director Mueller will acknowledge 
this, is they need to review and possibly revise their existing 
policies and procedures in order to make sure they've got the 
right type of controls in place. In some cases, as Director 
Mueller talked about, it may not be getting an approval, it 
could be providing a notification.
    A lot of it depends upon what's the nature of what the 
activity is and what the potential level of risk, as it relates 
to time sensitivity or civil liberties. Again, this is an area 
that I am committing to the Chairman that we will sit down and 
go over these issues with Director Mueller and his people, that 
I think we would be more than happy to try to explore and be 
constructive and try to work with them on this.
    Mr. Serrano. I have one last question, Mr. Chairman. It may 
seem like a strange question, but how different than your usual 
analysis was this for you, for your agency? Did it require some 
things that usually don't take place?
    Mr. Walker. Well, one of the things that we are starting to 
do more at GAO is we're starting to get more involved in a 
range of transformation issues. As you may know, Mr. Serrano, I 
have a significant background in both the public and the 
private sector, where I've done a lot in the area of 
transformation and change management. That's really what you're 
talking about here.
    While the FBI is a world class entity, it's preeminent in 
what it does as a law enforcement entity, it's going through a 
major transformation, cultural and otherwise. The issues you 
have to deal with on that, strategic planning, organizational 
alignment, human capital strategy, financial management, 
information technology, communications, knowledge sharing, 
those are generic.
    No matter what type of entity you are, whether you're the 
FBI, the CIA, the Department of Transportation, the Department 
of Homeland Security, GAO, it's generic. So we are spending 
more time and effort in GAO, in some cases on our own nickel 
and sometimes at the request of Committees, to do this type of 
work, because I think it's critically important right now. And 
I think we can do it in a constructive way without compromising 
our independence.
    Mr. Serrano. Thank you, Mr. Chairman.
    Mr. Wolf. Thank you, Mr. Walker. We appreciate it.
    Governor Thornburgh, we appreciate your patience for being 
here, and I appreciate your service over the many years, both 
as Governor and here in Washington. Your full statement will 
appear in the record, and you can proceed as you feel 
appropriate.
    Mr. Thornburgh. Thank you very much, Mr. Chairman, 
Representative Serrano. I'm speaking today as the Chair of the 
National Academy of Public Administration's panel on FBI 
reorganization, the other members of this panel who are here 
today are Robert Alloway, Kristine Marcy, Robert O'Neill and 
Harold Saunders.
    While I certainly present this statement free of any bias, 
I am not neutral when it comes to the FBI, as you can imagine. 
I've spent a good deal of my time, dating back to the 1960s, 
working with the FBI in a variety of capacities. I regarded 
them and still regard them as the preeminent law enforcement 
agency in the world. Director Mueller was a colleague of mine 
at the Department of Justice while I was Attorney General, and 
I have long admired his integrity and ability and the country 
is well served with him as Director.
    But this is the particular reason for me to be pleased to 
participate in a process designed to strengthen the FBI. I will 
try to summarize our key findings from the statement that we 
have presented to you.
    Based on our review and discussions with Director Mueller 
and his staff, our panel concluded that the FBI reorganization 
plan clearly is a step in the right direction. The proposed 
organizational and personnel changes are designed to address 
deficiencies that Director Mueller identified after he assumed 
his position in September 2001.
    Of considerable importance, Director Mueller expressed his 
intent to be flexible in implementing the reorganization and 
open to modifications as it evolves and as he gains experience 
with the new structure. And you've heard that today. For 
example, he is exploring the co-location of the financial 
records section of the FBI's counterterrorism division with the 
Department of Treasury's financial crimes enforcement network, 
which tracks financial transactions associated with potential 
criminal and terrorist activities.
    In addition, Director Mueller is formulating a rule for the 
flying squad to be based at FBI headquarters. He envisions 
their role as providing FBI field units with both specialized 
expertise in counterterrorism investigations and a better 
understanding of the capabilities of and interrelation among 
other Federal agencies, particularly those with intelligence, 
national security and international connections. It seems to me 
this is the kind of innovative thinking that really can profit 
the Bureau.
    Let me review the panel's perspectives regarding the five 
major changes to the FBI's organizational structure. These are 
first, forming a new counterterrorism division and allocating 
increased resources to headquarters and the field for this 
function. This change is the centerpiece of the FBI's 
reorganization proposal. Reallocating 480 field agents to 
counterterrorism primarily from drug investigations affirms the 
increased priority given to the Bureau's counterterrorism 
function.
    Similarly, strengthening the headquarters investigative 
management capabilities by 150 personnel and building an all 
source analytical capability are extremely critical to focusing 
the efforts on counterterrorism. The panel supports this 
restructuring and resource realignment, but at the same time, 
we have two reservations about it.
    First, counterintelligence and counterterrorism are very 
different disciplines. Counterintelligence entails extensive 
precautions and compartmentalization. Yet these very same 
attributes might hinder counterterrorism operations where the 
dangers of penetration are not as great.
    Therefore, combining these two activities under a single 
executive assistant director may inhibit the best possible 
performance for each in the long run. Experience may show, we 
suggest, that an additional executive assistant director may be 
beneficial.
    Secondly, fewer agents assigned to drug cases will result 
in decreased FBI emphasis on foreign cartels and drug 
trafficking. The panel believes this is a realistic choice in 
light of existing staffing and priorities. Nevertheless, the 
FBI will continue to devote substantial resources, an estimated 
1,000 agents, to counternarcotics activities. The proposed 
consolidation of border control activities within the new 
Department of Homeland Security may improve the overall 
effectiveness of drug interdiction activities.
    As the new Department of Homeland Security's structure and 
FBI plans evolve, the panel believes it will be important to 
examine the Nation's drug control strategy and reassess the 
combination of foreign and domestic efforts needed to execute 
it. This may dictate personnel increases in FBI to restore the 
previous level of effort.
    On the other hand, it may dictate the assignment of 
increased responsibilities of the Drug Enforcement 
Administration for investigative activities formerly performed 
by the Bureau, coupled with further reductions in FBI counter-
drug activity.
    Second, formally establishing a separate records management 
division as part of FBI's management and administration 
activities. The Oklahoma City bombing and other cases have 
exposed certain of the Bureau's record keeping difficulties. 
Records management has received inadequate attention as part of 
the FBI's information and automation unit. A separate, 
freestanding unit can best address these deficiencies.
    The panel endorses this approach and notes that centralized 
records also provide a valuable data resource for headquarters 
analysts and field investigators as they research past case 
files for terrorism information and patterns.
    Three, creating a new security division to handle all 
aspects of FBI personnel, documents, physical, computer and 
communication security. This division would pull together 
various FBI components that previously had responsibility for 
different aspects of security but were not guided by a 
comprehensive strategy or approach. The Robert Hanssen case 
provides ample evidence of the need to structure a Bureau-wide 
security program.
    The panel believes this reorganization is indispensable in 
fostering enhanced information sharing with the FBI and the 
intelligence community and the national security apparatus. It 
is also critical to improving the Bureau's internal safeguards 
against foreign intelligence penetration and to instilling 
confidence in other agencies that their information will be 
protected when it is shared with the Bureau.
    Four, establishing a new cyber division to coordinate 
investigations of internet and computer network crimes and 
threats to the electronic infrastructure that underpins the 
Nation's economy, transportation systems, utilize and 
Government operations.
    Much of this work entails sophisticated investigations into 
the theft of intellectual property, copyrights and trade 
secrets, as well as internet fraud. However, many 
infrastructure protection efforts are more similar to 
conventional security and information protection approaches, 
which are proposed to be transferred to a Department of 
Homeland Security. Regardless of the precise splits between the 
FBI and the new Department, the panel believes the 
consolidation of all cyber crime investigation in a separate 
cyber division has merit.
    Finally, putting portions of the existing laboratory 
division into a separate investigative technology division. The 
new division will be responsible for the development and 
application of advanced investigative technology. The residual 
forensic laboratory functions will remain in the laboratory 
division.
    Changes in threat and FBI priorities may require greater 
reliance on these investigative technologies, particularly when 
dealing with counterterrorism threats. And the panel supports 
this change.
    The proposed FBI reorganization, we must remember, affects 
less than 5 percent of the Bureau's total resources and 
personnel. Thus, many other ongoing activities are not directly 
involved in the reorganization, including the bulk of the FBI 
field offices and resident agent field structure.
    Let me offer some additional observations. I want to 
emphasize that the reorganization plan is the beginning and not 
the end of the process of change. It is truly, as Director 
Mueller recognizes, a work in progress. The Academy panel 
believes that additional steps are needed to go beyond the 
announced actions to improve the Bureau's long term management 
and the prospects of preventing and countering terrorist 
activities.
    The panel notes that Director Mueller's restatement of FBI 
priorities includes eight programmatic priorities, ranging from 
counterterrorism to combating violent crime. It also includes 
support for FBI law enforcement partners in upgrading FBI 
technology, both of which support the first eight program 
priorities.
    I would also personally note that in recent years the 
Congress has assigned the FBI substantial new responsibilities 
for crimes such as drive-by shootings, deadbeat dads, 
carjacking and the like. I would encourage the Congress to take 
note of the observations of the Chief Justice and the American 
Bar Association that many investigations of these offenses 
could well be relinquished to State and local authorities.
    What's missing from the statement of FBI program priorities 
is an equally clear list of management priorities. The panel 
believes that the institutional change and redirection on which 
the FBI has embarked require a clear articulation of management 
priorities.
    Many are implied in the Director's comments about the 
reorganization, such as improving headquarters accountability 
for counterterrorism and counterintelligence investigations, 
improving internal information sharing, both between 
headquarters and the field and among field offices, increasing 
information sharing with other Federal agencies, State and 
local law enforcement agencies and international partners, 
reassigning personnel and acquiring new personnel, such as 
analysts with different competencies to fill gaps in the 
current and revised structure, improving analytical and 
managerial training, upgrading the inefficient and outdated 
computer infrastructure, developing evaluation and personnel 
systems that reward innovation and specialized expertise.
    We are confident that the Director recognizes the 
importance of management related activities. At the same time, 
the reorganization would benefit from a formal statement 
prioritizing explicit management objectives and a commitment to 
management training programs within the Bureau.
    The Subcommittee, as you know, Mr. Chairman, asked the 
panel to identify possible future approaches to measuring how 
well the reorganization accomplishes its objectives. The panel 
paid particular attention to this request and recommends a 
three step strategy for measuring the Bureau's performance. 
This approach would allow the Subcommittee to monitor the pace 
of implementation and the agency's success in meeting its 
objectives, but would also need additional follow-up to develop 
specific measures.
    These steps in broad outline include step one--there should 
be an explicit time schedule for and measures of the progress 
the FBI is making in implementing the reorganization. These 
measures should focus on the reassigning of personnel at field 
headquarters, recruitment of analytical and other skills 
required by the realigned substantive priorities, redesign of 
training programs to expand awareness of counterterrorism 
targets and activities, redrafted policies and procedures, and 
increased information sharing between headquarters and field 
and with other Federal agencies and State and local entities. 
Similar schedules and measures should be developed and 
monitored for the records management, security and cyber 
division.
    Step two--the FBI should develop performance measures that 
stakeholders, including this Subcommittee, can agree upon to 
assess how well the FBI is meeting the goals of the 
reorganization plan. Some of the questions that should be 
addressed are: how will the FBI gauge improvements in analytic 
products and field reports? How will headquarters analysts 
grade field reports and inputs? Will the utility and value of 
analysts' reports be evaluated by field agents, the Department 
of Homeland Security and other users? How will the impact on 
field operations be assessed? What are the criteria by which 
personnel recruitment goals and improved technologies will be 
measured?
    These performance measures, I would suggest, dovetail with 
the Chairman's suggestion of further hearings to examine the 
progress the Bureau is making.
    Step three--an external review should be done annually to 
add an independent perspective to assess the FBI's progress in 
reaching its organizational goals. Expert and peer reviews can 
provide insight into the successes or difficulties associated 
with reorganization and offer perspectives that enable the FBI 
to adopt its perspectives and objectives.
    Information technology is a particular area of concern that 
we've heard today and is acknowledged by the FBI. The FBI is 
engaged in a massive effort to automate its case management 
file system through Project Trilogy. This effort will help move 
the Bureau's IT into the 21st century, to be sure. However, 
progress must be closely monitored given the problems 
associated with introducing major IT systems into Federal 
agencies. Schedule, performance and cost criteria must continue 
to be established and monitored.
    While Trilogy clearly merits continued support, it does not 
address critical counterterrorism functions that the panel 
believes must also be automated. These functions include 
electronic source data capture by field agents, support for 
local data bases and a headquarters analysis system searchable 
by the field. Efforts in these areas, as you've heard today, we 
feel must be developed and implemented.
    More broadly, the panel is concerned with the apparent 
fragmentation of management control over IT resources. The 
chief information officer reports to the Director, but has no 
direct line control over IT resources. The Trilogy program 
manager also reports directly to the Director. A separate 
information resources division manages other computer systems, 
but some of the most important IT support systems are operated 
separately by the Criminal Justice Information Service under 
the Executive Assistant Director for Support Services. I think 
we all are sensitive to the need for some further attention to 
this organizational dilemma.
    In addition, major improvements in information sharing are 
critical. The panel doubts that yet another joint task force or 
analytic center will adequately address this deficiency. The 
FBI and the intelligence agencies must be encouraged to develop 
new and innovative approaches to information sharing internally 
with the new Department of Homeland Security and with Federal, 
State and local users.
    Finally, we should all remember that the notion of 
prevention rather than prosecution is properly given priority 
in the field of terrorism. Public expectations may be 
disappointed in some cases where terrorist acts are thwarted by 
effective intelligence gathering that did not produce legally 
admissible evidence that would support a criminal prosecution. 
Or when prosecution is deemed to be unwise because of the 
potential exposure of informants or sophisticated intelligence 
gathering techniques.
    To put it in stark terms, the public and the media must 
understand that not all the bad guys will be prosecuted under 
these new priorities. Mr. Chairman, the task facing the FBI is 
substantial. The reorganization plan is designed to provide an 
improved organizational structure, refocus mission priorities 
in a new and important direction, upgrade analytical capability 
and initiate technology enhancements to better support the work 
force. The Director and his colleagues are to be commended for 
this ambitious effort to transform the FBI.
    But as we all know, there are inherent challenges in 
undertaking major culture changes such as this one. In many 
respects, the toughest job of all, effectively implementing the 
change, still lies ahead. Bringing this job to a successful 
conclusion will require continued leadership commitment, an 
implementation strategy and plan, and managers and employees 
who are engaged, know their jobs and are held accountable.
    Mr. Chairman, that concludes my statement. I would be 
pleased to answer any questions you might have.
    [The prepared statement of Mr. Thornburgh follows:]

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    Mr. Wolf. Thank you very much. I have a lot of questions, 
but we're going to have a vote in about five minutes. We can 
stay for ten minutes and then there will be a series of three 
votes. So I will make my questions relatively brief.
    One, I want to thank you and the Academy for doing this so 
quickly. Two, I would hope that you would agree, the same way 
that the GAO did, to sit down with Mr. Mueller, now that the 
recommendations have been made, and go over each and every one, 
if that would be appropriate.
    Mr. Thornburgh. We can do that, yes.
    Mr. Wolf. Secondly, would you also agree, you or the 
Academy to track reorganization over the coming year and report 
back to the Committee about a year from now.
    Mr. Thornburgh. I'm sure the Academy will be pleased to do 
that.
    Mr. Wolf. Good. I agree with most of your testimony; I 
think it was excellent. I share your concern with regard to 
counterterrorism and counterintelligence. I think Mr. Mueller 
was very open, too. He said he would look at that. Particularly 
with Chinese espionage and different things that are taking 
place, that to mesh these two programs together may be almost 
to mix two things that may look like they should be combined on 
the outside, but I think ought not to be.
    So I agree with that, and I think you bring a particular 
perspective, having been head of all of these agencies. I agree 
with you. If you do redirect 400 agents who are on the street 
working drug cases, that has to have an impact.
    Now, that's not really Mr. Mueller's responsibility to a 
certain degree, because I think everyone will share that the 
FBI must do that. But do you agree then that the Bush 
Administration and the Attorney General will have to plan to 
replace that, and it may very well take additional resources 
for the DEA? How would you, if you were the Attorney General 
now, and you were looking at this case and you would agree that 
Mr. Mueller ought to take 400 agents off the streets that are 
working drug cases, how would you then resolve the fact that 
we're taking 400 people away who are doing something very 
important?
    Mr. Thornburgh. I wish I could give you a quick and easy 
answer on that, Mr. Chairman. But I think the essential thing 
to keep in mind is number one, there should be no diminution in 
our efforts in the anti-drug effort overall. Just as there 
should be no diminution in the effort against organized crime, 
white collar crime, public corruption and other priorities 
which Director Mueller has identified for the FBI and which I'm 
sure are shared by the Attorney General.
    It's a management task. Once having set priorities, the 
task is to use the resources at hand in the highest and best 
possible way. That's a challenge that has to be undertaken by 
all of the managers within the law enforcement community. It 
may well be, as we suggest, that the DEA will need additional 
resources or if it decided to sustain a level of commitment 
within the Bureau, that they may need additional resources in 
the anti-drug effort.
    It may well be that even closer coordination with State and 
local authorities can produce the same results. I don't think 
there's any one answer. But what has to be kept in mind is what 
I said at the outset, there can be no diminution in the effort 
to carry forward important law enforcement priorities at the 
same time that we're establishing a prime priority for 
counterterrorism activities.
    Mr. Wolf. I agree. I don't think the Justice Department has 
answered that issue. Again, as I say, it's not Mr. Mueller's 
reasonings to come up with that. But now that they are taking 
those 400 agents away, drug cases are very intensive. I'm sure 
you won't make up the difference by technology. I think there 
will need to be additional people.
    I think your comments on cyber terrorism are right on 
target. I think with regard to the Hanssen case, I would agree.
    The last question I would ask you, then I would recognize 
Mr. Serrano. What are your thoughts about putting together an 
intelligence science board, similar to a DARPA or the Defense 
Science Board, whereby there would be a resource for our 
Attorney General and the FBI to go to with regard to 
technology?
    Mr. Thornburgh. Once again, I think it's essential that we 
bring to bear every resource that we have on this important 
threat that has now been identified as our number one priority. 
That can be done both within government, along the lines that 
you suggest that have proved so fruitful for our national 
defense. It can also be done by more outreach to the private 
sector, which has enormous capability in the science and 
technology area.
    I would think that the first thing that ought to be done is 
to identify the options that are available to ensure that these 
resources are not overlooked or under-utilized, and that we 
equip the FBI and other law enforcement agencies and 
intelligence agencies with the very best in technological 
capability. I'm not smart enough to know how those options 
should be exercised, but clearly, that ought to be a high 
priority.
    What's pervaded this whole session today, both from the 
point of view of Members and those of us privileged to appear 
here, is a concern that the highest and best technology be 
available in this effort. Precisely how that can be brought to 
bear, as I said, I'm not wise enough to say. But I think that 
priority ought to be, and has properly been identified by 
Director Mueller as one of his top ten.
    Mr. Wolf. Correct. The last question, which I had not heard 
before, I think makes sense. Who would do an external review? 
Who could, without just being picky? Who could, in a 
constructive, solid way, for the good of the country for this 
effort, who could do an external review, without running to the 
media and say, we have a problem here and we have a problem 
here. Who would you go to?
    Mr. Thornburgh. I think clearly you have asked two 
organizations today to undertake that kind of quick look at the 
reorganization plan.
    Mr. Wolf. Do you think we can do a combination, if the 
Committee and we funded it, to have a situation whereby NAPA 
and the GAO, both responsible groups, were to, on a contractual 
basis, conduct this review? Would that be a good approach?
    Mr. Thornburgh. I think the first cut might be to look at 
organizations and I think both Mr. Walker and, speaking for 
NAPA, myself, we are ``in for a dime/in for a dollar.'' We are 
committed to this effort, and we want to help in any way we 
can.
    But I think it might be well, also, to develop a roster, as 
you suggest, of other think tank capabilities, which could be 
brought to bear.
    When Director Mueller and I spoke earlier this week, I 
wanted to make sure that there was an effective outreach and 
liaison with the private sector resources that are looking at a 
wide variety of questions relating to our war against 
terrorism, so we do not want to overlook any resource.
    If we are in a war, as I believe we are, and as the 
President has identified, then we ought to be using every bit 
of our national resources to try to equip us to win that war. I 
think this kind of analytic overview of efforts, from time to 
time, can be very useful.
    Mr. Wolf. Well, we will try to develop something. I think 
that is a good idea to have some sort of external review on a 
continuing basis, but not in the sense of someone who is just 
going to pick and pick and run out and call press conferences, 
and create problems.
    Mr. Thornburgh. No, I quite agree.
    Mr. Wolf. We want a constructive program. I think both you 
and Mr. Walker have had the right approach. We appreciate the 
fact that you were able to do it so quickly. Both of you have a 
number of people who are identified as team reviewers, and you 
could add more staff as you go.
    But my sense is, it may be good to keep a list of options 
in regard to that. But maybe that is what we will try to do, to 
institutionalize, working with the Bureau, some sort of 
external review to detect issues that they did not see.
    Obviously, nobody is going to rubber stamp it and be a 
patsy; but on the other hand, they can guide them as they go to 
have some milestones, and you can see what the progress is, 
certainly over the next several years. I want to thank you, 
again.
    Mr. Serrano?
    Mr. Serrano. Thank you so much, Mr. Chairman. Let me also 
echo the Chairman's comments on your presentation, which was 
very much on the mark. So I have just a couple of questions.
    You commented on the federalizing of local crime, as we 
called it around here a few years ago, when there was a lot of 
concern that a lot of things were moving over to the Federal 
side. Are you suggesting now that maybe we should review that 
and perhaps shift the burden back?
    Mr. Thornburgh. You have touched a sensitive nerve with me, 
Representative Serrano, because this has been a concern of mine 
for a considerable period of time.
    And it is not necessarily answered by the argument that few 
Federal resources are devoted to the prosecution and 
investigation of these so-called marginal cases. It just simply 
seems to me to send the wrong message about what the Federal 
role should be in law enforcement.
    Most of our law enforcement activities are carried out at 
the State and local level. Ninety-five percent of the 
prosecutions occur in State courts.
    The role for the FBI and other Federal law enforcement 
agencies should be discretely defined, and we should be very 
jealous, and you and your colleagues should be very jealous, 
about giving them jurisdiction over matters where their 
particular expertise is not required, or where State and local 
expertise is sufficient to handle the types of crime that I 
mention today.
    I have been very critical, I must acknowledge, of the 
Congress, for responding to what I call the ``issue du jour'' 
by passing Federal legislation. This should be, in the final 
analysis and over the long run, part of a comprehensive effort 
to create, for the first time, a Federal criminal code.
    That is something we do not have now. Our whole fabric of 
criminal laws has grown like top seed. I went through two 
rounds of trying to get the Congress to tackle this problem, 
but we will leave that for another day.
    But I think that it is time for a little more restraint on 
the part of the Congress in examining the federalization of 
criminal acts. This, it seems to me, offers an occasion where 
that can logically be undertaken.
    Mr. Serrano. You touched on it as something that is best, 
right now, left aside, but what do you think made us do that? 
There was a lot of concern, when that happened here in 
Congress. There was, as you know, a very hardy debate.
    What do you think made us move in the direction of 
federalizing so many crimes? Why is that question important? It 
is because it might be that we start doing that again, and bog 
down activities at the Federal level.
    Mr. Thornburgh. Yes, I think it might be well, somewhere 
along the line, and perhaps it is a lessor priority today, to 
re-examine a lot of those statutory enactments, to see whether 
they were prudent and wise in the first place. You could do 
that, in terms of how many prosecutions have been brought; were 
they prosecutions of any significance; how much manpower, 
womanpower was diverted to them; whether or not they were 
really important, from a Federal point of view.
    Look, I have held an elected office. I know what the 
temptation is, when there is a public problem that hits the top 
of the 6:00 news. The first thing you think of is, what do we 
do in government about it, and often the legislative response 
is, pass a law. I am sure that is true of some of these cases.
    I think that my criticism is that that has not been a 
thoughtful process. It has been facilitated by the fact that we 
have no overall criminal code, where you have to fit a 
particular offense in.
    But again, I think that is for another day, and I 
appreciate your interest and appreciation of the problem.
    Mr. Serrano. Let me ask one last question. When you are 
reorganizing a centrally placed organization like the FBI, it 
will clearly, have implications for the way other agencies do 
their jobs.
    What do you think the impact of the reorganization will be 
on other intelligence agencies, other law enforcement agencies, 
or state and local governments?
    Mr. Thornburgh. I think the FBI has traditionally played a 
leadership role in law enforcement. I would think that Director 
Mueller is possessed of the skills that can see that leadership 
role carried forward, and promote the notion of cooperation and 
emulation among other law enforcement agencies.
    That is to say that similar introspective looks will be 
taken at their roles, their tasks, their priorities, that can 
make this a seamless operation, when it comes to fighting 
terrorism.
    Obviously, there are always going to be competing 
interests. There is always going to be personal considerations. 
Law enforcement folks are peculiarly jealous of their own 
prerogatives.
    But I think that at a time of national emergency, such as 
we are in now, a lot of those will go by the boards. I would 
not be surprised if Director Mueller has not found that to be 
the case since September 11th, that a lot of those petty 
jealousies and differences that characterize law enforcement in 
his and my past may have vanished in the commitment to 
promoting a strong effort against terrorism.
    Mr. Serrano. Well, we certainly thank you for your 
testimony.
    Mr. Thornburgh. Thank you.
    Ms. Savage. We thank you for your continuing service to our 
country.
    Thank you, Mr. Chairman.
    Mr. Wolf. Ms. Savage, we are going to have another vote. 
You might want to proceed, if you think you can complete your 
testimony in less than one minute. [Laughter.]
    I am prepared to miss the vote, out of courtesy, if you 
are, and I am the record, if my constituents asked why I 
missed. Do you want to miss them both?
    Mr. Serrano. On a Democratic substitute that is going to 
change the way we operate this country?
    Mr. Wolf. No, I do not know really what the issue is. But 
we would be basically pairing, is what I am saying.
    Mr. Serrano. I do not know.
    Mr. Wolf. Well, you think about it, and you can begin. You 
can check and see what it is.
    Go ahead; your full statement will appear in the record, as 
read.
    Ms. Savage. Mr. Chairman, Congressman Serrano, thank you 
very much for inviting me here to testify today, to offer my 
perspectives.
    Mr. Wolf. Excuse me, how is your schedule, if we do have to 
break for one-half hour?
    Ms. Savage. I am fine.
    Mr. Wolf. Your fine, okay, good.
    Ms. Savage. I am here to testify today, to offer my 
perspective and that of my members on the recently announced 
FBI reorganization plan.
    My name is Nancy Savage, and I will try to condense this 
statement, since everything is going to be put on the record. I 
am assigned as a special agent in the Portland, Oregon Division 
of the FBI. I have worked for the FBI for 25 years.
    I am currently President of the FBI Agent's Association. We 
represent about 75 percent of active duty FBI agents, and a 
number of retired agents, as well.
    I want to make clear today to this body that I am 
testifying as a representative of the FBI Agents' Association, 
and not as an official representative of the FBI. I do not 
coordinate my testimony nor my comments with Director Mueller, 
or anyone on his staff.
    I commend and thank him for his leadership in this very, 
very difficult time, and also for the reorganization plan which 
we, as street agents, and the managers we represent, as well, 
believe will make us that much more effective as a law 
enforcement agency.
    I wanted to say that I think it is a substantial plan, and 
it is going to affect our ability and, in a very positive way, 
our ability to react to any kind of future terrorist threats 
and ongoing plans and conspiracies that are present in the 
United States and worldwide today.
    The FBI is responsible for investigating and preventing a 
wide variety of crimes, including espionage, computer 
intrusions, white collar crime, bank robbery, and many others. 
We do this every day, 365 days a year, across the country, and 
around the globe, with a force of agents approximately one-
fourth the size of the New York City Police Department.
    As has been mentioned here today, since September 11th, all 
of our employees have been working extremely long hours under 
very stressful conditions, with the knowledge that the job that 
we do could possibly save many American lives.
    The special agents, both in the field and here at FBI 
headquarters in Washington, D.C., are very much aware of the 
extent of the terrorist threat in the United States; and this 
knowledge drives us to ensure ultimate victory in this affair.
    But not all FBI agents will be directly assigned to 
counter-terrorism activities. I want to let the individuals 
here know, and make it a matter of record, I not only have 
spent 25 years in the FBI, but I am a ``Bureau brat.'' My 
father, and my uncle before him, were FBI agents. My uncle 
served in the FBI during World War II, when we once before were 
threatened very seriously by enemy attacks on this nation.
    In those situations, obviously, we have a long history of 
responding to terrorists threats and responding to enemy alien 
threats, somewhat similar to what we are having to respond to 
since September 11th.
    In each one of those situations, the FBI has adjusted. We 
are very mission oriented. When our Director tells us, this is 
the path we are going down, there is no resistance to that. We 
may provide advice or guidance how to get down that path, based 
on our seasoned law enforcement experience, or may let him know 
that there is a particular problem in a particular part of the 
country.
    But as far as being able to change our mission or change 
our way of doing things, when presented with a real immediate 
security threat to this country, it is just not a cultural 
issue. It is not one for us, on the street.
    As far as being able to adjust our responses and change how 
we do business, in terms of preventing terrorists threats or 
preventing other loss of life, that is second nature in the 
FBI.
    Our criminal investigators, especially in violent crime and 
terrorism, very much on the criminal side of the house, 
constantly get calls that alert us to a threat; whether it is a 
murder-for-hire, an extortion, a kidnapping, and it is just 
part of what we do to take the white collar crime that we are 
working on, and put it under the desk, and work in a relentless 
type of manner, to make sure that we do not have that loss of 
life.
    What we did not have, before this reorganization, however, 
was a concentrated, funded response to an intelligence gap. We 
have been funded for operational investigations. We were not 
funded for agents and managers and analysts to be out there 
looking on the horizon, to see what the next threat was for.
    I think sometimes, people in Congress do not know how much 
we really do pay attention to what you fund, and the programs 
you fund, and where those bodies go. We very, very much do, and 
it trickles on down, not only from a divisional basis, but to 
each individual squad. We know we are funded to do that.
    This reorganization very, very simply funds intelligence. 
It funds terrorism, and it gives them program status, and makes 
it very, very important for individuals at Headquarters, and 
for individuals in the field office to be out there, assessing 
the threat, and then reacting and putting resources so that we 
can react effectively to that threat.
    Mr. Wolf. We are going to have to recess. I apologize.
    Ms. Savage. Okay.
    Mr. Wolf. It is going to be a very close vote, so both of 
us may very well be needed. So we will go to vote, and I think 
that is probably the responsible thing to do.
    We will recess. There will be a series of three votes. They 
are near the end of the first vote. We will be back here about 
2:15.
    I apologize to the Director and those of you who have to 
stay. This is a very inefficient place, but it works very well, 
overall. So we are just going to recess for half an hour.
    Ms. Savage. I understand.
    [Recess.]
    Mr. Wolf. The committee will reconvene. I apologize for the 
break. It was unavoidable. But you may finish, and we will have 
a few questions, and then I will just make a couple of 
comments. Mr. Mueller, we are not going to bring you back up, 
unless Mr. Serrano does. But I would want to make a couple 
comments at the end.
    Ms. Savage, you may go ahead.
    Ms. Savage. Okay, again, I think when we left off, I was 
talking about sort of family history, and how the FBI had 
responded during our history to any changes. We do try to be 
very, very responsive, not only to our Director, but to 
Congress.
    I can say that from a street agent perspective, I have been 
directed by my supervisor and by our SACs in our field offices 
that these are what are priorities are, and we are going to 
work on them. It is not something culturally that the FBI is 
going to have any problem with these type of changes.
    They are self-evident to us, because of the unfortunate 
circumstances that happened, and we believe that this 
reorganization by funding intelligence and the additional 
reorganization to prioritize the Office of Intelligence, as 
well as some of the technical changes and security office 
changes are going to do what the FBI needs to be doing, without 
it being a huge issue.
    The FBI has a long and proud history, but it also is a 
dynamic history. It has evolved with the changing face of crime 
and national priorities.
    We believe that the FBI remains America's first line of 
defense against national and international criminals, and that 
this will continue, and probably be even more emphasized in our 
fight in counterterrorism.
    Finally, Mr. Chairman, let me say a brief word about the 
recent criticisms of FBI Headquarters, and the numerous largely 
media generated discussions over finger-pointing and worse 
regarding the FBI, as well as other law enforcement and 
intelligence agencies in our country. I have worked for the FBI 
for over 25 years, and look forward to finishing my 
professional career with the FBI.
    During those years, I had the opportunity to work with 
hundreds of FBI agents, and analysts, as well as law 
enforcement intelligence personnel from a variety of other 
agencies.
    I can honestly say that I have never been prouder of the 
women and men with whom I have been privileged to serve and 
continue to serve. With very few exceptions, they are highly 
intelligent, motivated, competent, and very patriotic.
    We have adjusted to a changing world, and now we are asking 
you in Congress to allow us to institutionalize those 
adjustments. The FBI culture is one of hard work, dedication to 
the citizens of this country, and excellence in its endeavors. 
It does not need changing.
    Our automation and some of our legal constraints needs 
changing but not our culture. Problems will arise in any 
organization, but our ability to identify and respond to those 
problems is one of our strengths, not our weaknesses.
    I would also urge that you look not just at the 
organizational structure of the FBI and other federal law 
enforcement agencies, but also at the people in those agencies, 
and what motivates them to be here and make the sacrifices that 
they do.
    Several of our other panel members here today, Mr. Walker 
and Mr. Thornburgh, recognize that we have personnel issues 
that need to be dealt with in the FBI and other law enforcement 
agencies. While pride of service is clearly the motivator, 
these agents must also be able to earn a decent living for 
themselves and for their family. There are a number of 
proposals before Congress that we hope you consider favorably 
in this regard.
    Thank you, Mr. Chairman, and I am happy to answer any of 
your questions.
    [The information follows:]

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    Mr. Wolf. Well, thank you very much. I appreciate your 
testimony. Maybe I should ask you the same thing, if the 
Agent's Association would come back a year from now to make 
some comments at the hearing that we have?
    Ms. Savage. If we would come back a year from now?
    Mr. Wolf. Yes, we are going to have another hearing a year 
from now. It may not be on this exact date. It may be day later 
or a day earlier, or maybe a week earlier. But we would like to 
have the same panel come back, to make an evaluation of the 
reorganization.
    Ms. Savage. We would be absolutely very, very happy to do 
so.

                           SHIFTING OF AGENTS

    Mr. Wolf. On the issue of shifting agents, we really want 
to be careful. Does it concern you with taking 400 agents off 
the streets, who are responsible for drug investigations?
    Ms. Savage. It concerns us. It concerns us to have any 
shifting of priorities. I do not think we had enough agents, to 
begin with, to respond to the crimes facing this country, that 
are part of the FBI's jurisdiction.
    I have had personal cases where I have heard from sources 
where the subjects of those investigations have said, oh, the 
FBI is worried about terrorism. Nancy is not going to be 
bothering me now.
    You know, that gets you very incensed, and makes you give 
up Sunday afternoon, to make sure that they are not right in 
what they are planning on doing.
    The word is out there, that we are concentrating on 
terrorism, so we believe that we have to continue to respond to 
other areas. My firm belief is that the FBI has responded to 
these additional threats, mainly by giving up pretty much any 
personal life this last year.
    Mr. Wolf. Well, but that cannot continue though.
    Ms. Savage. I would hope not.
    Mr. Wolf. You cannot give your family up forever.
    Ms. Savage. Exactly, that is why we are looking for 
additional bodies.
    Mr. Wolf. So you may need more agents.
    Ms. Savage. We may need more agents.
    Mr. Wolf. And more support people.
    Ms. Savage. That is exactly what I was going to say: more 
analytical personnel. You appropriators, I do not know that you 
are necessarily getting all the bang for your buck, if you just 
look at hiring agents.
    Mr. Wolf. I agree.
    Ms. Savage. A lot of times, with professional support 
employees, the analysts, not only the intelligence research 
analysts, but the financial analysts and general support 
employees can do what I am doing on the weekend or at nights, 
you know, in terms of some of the more analytical work, at 
probably less cost to the taxpayers, than the agent personnel. 
We do need both categories of employees.
    Mr. Wolf. So there may very well be, and I am speaking only 
for myself, a belief that there may need to be more people. 
Again, you heard us speak earlier, but this committee has put 
more money in. And as a strong supporter of the Bush 
Administration, I am very pleased that President Bush is where 
he is.
    We have provided more funding than the Administration has 
asked for, on several different occasions. I think the 
Administration has to, as important as it is, get a control 
over spending, and I want to be part of that and do everything 
that we can and hold the line.
    In certain areas in World War II, we put the resources in 
to win the war.
    Ms. Savage. Right.
    Mr. Wolf. We defeated Fascism. We defeated Communism, and 
we can defeat terrorism. But on this, I do not want to do it on 
the cheap. I think you probably will need more people.
    If those 400 agents were doing a good job, as I believe, 
and I share your feeling about agents, then to take them off of 
those cases will have an impact.
    Therefore, the Attorney General, and this is not something 
you have to answer, because the Attorney General and the 
Administration and OMB, will have to come up with some way of 
supplementing it. I just think that drug investigation cannot 
be left so short staffed.
    If you wait until the next budget cycle, you are really 
talking about taking us into the year 2004, because the next 
budget cycle comes in February, the Appropriations Bill passes 
in October, you do not have the money for the following year, 
and we are in 2004. So they would have made a tremendous, 
tremendous difference.
    I just think I will end with this and maybe recognize Mr. 
Serrano. But I do appreciate your comments, and I think you 
represent good people.
    Although we have had a lot of calls from FBI agents, I know 
a lot of people who live in Northern Virginia who are FBI 
agents and former agents. A number go to my church. There are 
problems with support people.
    I think we want to do everything we can to give you the 
resources and the ability to do what you can. You know that I 
do appreciate your good work, and we look forward to seeing you 
a year from now.
    I hope you or the Agent Association feel comfortable, as 
this thing develops, and you are reading the paper, to pick up 
the phone and give us a call.
    I think Mr. Mueller has been very open. I have been very 
impressed that he has been open to having people come forward. 
Ultimately, he will get the credit or the blame, because of his 
leadership. But he has been very, very open, and a lot of 
people are not very open to hear.
    So as something comes up, if you feel comfortable, just 
give the committee a call. If any of your members around the 
country are there, and there is a particular problem that they 
are concerned about, just give us a call. It can all be done on 
a very, very confidential basis.
    With that, Mr. Serrano?

                          SHIFT IN PRIORITIES

    Mr. Serrano. Thank you so much, Mr. Chairman.
    I just have two quick questions. One is more of a comment. 
I have been asking a question lately, and I have been getting a 
different kind of answer from the one that you just gave us.
    That is, you know, people feel that now they can get away 
with certain crimes, because we are not going to be 
concentrating on them. I would like you to comment more on 
that. You said that some people think you are not on their case 
anymore.
    Ms. Savage. They are not correct, in terms of that; but, 
there is the perception that we are all out doing terrorism 
work. Certainly, after September 11th, I heard our Director 
commenting 6,000, but I do not know anyone who was not working 
terrorism matters for a period of time.
    I think it got adjusted, other than if you had a real 
emergency or a threat to life in another type of case, that 
would demand an immediate response. Of course, we responded to 
that.
    But I believe that we have been responding to the increased 
threat on terrorism. In my personal experiences with dialogues, 
and with agents around the country, everyone has just been 
working huge amounts of hours. We are salaried, so they sort of 
own us for our time, plus with the commitment on terrorism, I 
do not think anyone wanted to do anything else but work this 
type of work, after that assault on our country.
    It was very deep and emotional. We lost our own agents in 
the World Trade Center, et cetera, et cetera, and people we 
know. It was just a tremendous tragedy, and that is what we 
wanted to be doing.
    I think there is an idea on the part of some maybe more 
deliberate criminals in this country that we will not have the 
same response to other types of crime. I think we have been 
able to handle it, heretofore, by just huge numbers of man 
hours being worked by both our support employees and our 
agents.
    As Chairman Wolf said, I do not think we can keep that up. 
I think we do need an increase, probably in personnel, a fairly 
significant increase; and even the other agencies that have 
picked up for us, because I know a lot of the other law 
enforcement agencies that we work with, and ordinarily would 
provide more support for, would call up and say, hey, we are 
handling this ourselves; can you do this one little part that 
normally the FBI would do more for?
    But the crime problem remains the same in the other areas. 
It has not diminished. Our drug problem has not diminished. Our 
white collar crime problem has not diminished. So it just makes 
sense that there needs to be an increase in Federal law 
enforcement funding to deal with it.

                   FIELD AGENT MORALE AND GUIDELINES

    Mr. Serrano. Well, I would agree. You know, at the expense 
of sounding like I am contradicting myself, Mr. Chairman, on 
one hand, I am concerned about past abuses and the possibility 
for future abuses. On the other hand, I like the fact that the 
FBI strikes fear in the hearts of some bad people who commit 
bad crimes in this country.
    If they begin to think that they can get away with it, now 
we have a problem that can rival the present problem that we 
have with terrorism. It is something of a domestic-type 
terrorism.
    You spoke about the manhours and so on. The FBI has been 
under increasing criticism on some issues. You did lose agents 
in New York. When you put all that together, what is morale 
like for the field agents?
    Ms. Savage. You know, there is concern that with the FBI, 
the good part of our culture that I spoke about, is not being 
appreciated. This is the thing that makes us go to work every 
day. It is not money. It really is not.
    We hire a lot of ``girl and boy scouts,'' who want to do 
the right thing. They want to be allowed to do the right thing.
    There is real concern that we do need to change the 
Attorney General guidelines; that we do need to change the FISA 
laws; that we do need, and I have spoken about this and written 
about it in our newsletter, that we do need to ``take the 
gloves off,'' in terrorism; and that there needs to be a public 
perception that there were some institutional problems with us 
proceeding as aggressively as we should have been allowed to 
proceed.
    Agents want to be very, very aggressive, in terms of this 
terrorist threat. I do want to sort of address some of your 
concerns that you had of the other speakers, in terms of 
violation of Constitutional rights.
    The FBI is made up of individuals such as yourself, such as 
everyone here in this room. We are a complex group of 
individuals. We are male and female. We are Republicans and 
Democrats and other political parties. We come from all 
religions.
    We are made up of a little snapshot of the United States. 
And we are as concerned, first of all, that there be no 
Constitutional violation of rights, which is one of the reasons 
why we really believe we should keep the criminal investigative 
aspects with the intelligence aspects, because we are so deeply 
schooled in the Bill of Rights in all of our investigations.

                        HEADQUARTERS' OVERSIGHT

    You spoke of Headquarters' oversight. There is oversight at 
the field office level by every supervisor who is trying to 
make sure that what each individual agent does, not only is 
effective, but does not violate any of our intelligence 
guidelines.
    The intelligence guidelines are still going to be there. We 
are not throwing away the Attorney General guidelines. We are 
just modifying those guidelines.
    There is still intelligence oversight with our attorneys at 
FBI Headquarters for us to do any type of proactive 
investigation. It is going to be reviewed there. It is going to 
be reviewed by our Chief Division Counsel first. There are 
virtual layers that that would happen.
    The other thing is, agents being agents, want to catch the 
biggest and baddest fish that they can catch. They do not want 
to spend extra time on intelligence gathering, for anything 
other than to catch the real terrorists.
    They are going to try to sift through the wheat from the 
chaff, just quickly as they can and move on from there. I mean, 
that just goes with the nature of what they do for a living and 
what we do.

                           FBI AGENT BEHAVIOR

    Mr. Serrano. Ms. Savage, I really appreciate your comments 
in defense of all agents, and I respect that. But we do have a 
history of times when the FBI, as an agency, stepped all over 
the rights of Americans.
    In all honesty, since I have never been an FBI agent, I do 
not know how that works; if these were things that people did 
on their own, or was it that at the local level somebody 
directed or decided to behave in a certain way. But it 
certainly has happened.
    I am very familiar with the issue of Puerto Rico, because 
Director Freeh opened up to us at a hearing, where I told him, 
you know, this is a problem that someday we should look at.
    He shocked me and the world by saying, you are right; here 
are the details; here is what we are going to do; and that was 
a shameful time in our history, for the agency, for the 
country. We were shocked to hear that.
    That opened 1,807,000 files. When you read them, it is 
clear by the memos that these were fabrications, in many cases, 
or in most cases, going after people.
    Say they did not like somebody, a lawyer, who said he 
believed independence for Puerto Rico, which was within the 
law. So they would go out and try to find out everything from 
did he return his library books on time, to if he had a 
girlfriend that he was not supposed to have, and let the 
information out and, in some cases, created information. Then 
there were meetings of the independence movement. I feel bad 
for those guys who were there, where there were ten people 
advocating for independence, and eight were FBI agents. The 
other two were real leaders of the movement.
    This month, the San Francisco Chronicle, and I want to be 
very careful about this, because I am not interested in 
mentioning names here, reported that the FBI, working covertly 
with the CIA and then-Governor Ronald Reagan, spent years 
unlawfully trying to quash the criticism and careers of 
students and faculty members deemed subversive at the 
University of California.
    I do not have to read the rest, because I think you folks 
know what that is all about. But they went after President 
Clark Kerr. Then, and this is what is being reported now, when 
Lyndon Johnson put him forth for Health and Education 
Secretary, his FBI background, which the FBI knew to be false, 
made Johnson withdraw his nomination.
    Now that is horrible, and it is scary. Let me tell you 
something that I tell people so often, and they get very 
nervous when I say it. I am a Member of Congress. I have been 
an elected official for 28 years, and in Congress for 12 years.
    The FBI is both an agency that I respect and love, and one 
that strikes fear into my heart. Because I know that they are 
capable, at any moment, of doing that to anybody, including me. 
Now somebody will say, oh, is he being melodramatic. He is a 
Member of Congress. It does not matter. They were doing it 
here, too, and I am no different.
    So, yes, there are people out there who are good, and the 
Agency has my support. I have said that over and over. But we 
have got to put some things in place to make sure people do not 
run away with the power they have been given.
    I believe that gentleman sitting over there, the Director, 
wants that to happen. I have to make sure that he makes it 
happen, because there are a lot of people that can run amuck 
here. Then 20 years from now, somebody will be sitting on this 
panel saying where did we go wrong?
    Ms. Savage. Well, sir, I appreciate those concerns, too. I 
did want to let you know that I believe every agent that I 
know, and I do have a long history with the FBI, but it is 
probably not quite as long as when those abuses occurred; but I 
think every agent in the FBI shares your concerns. That was 
really my point on that.
    By the way, I graduated from the University of California 
at Berkeley, and I would be very sensitive if I saw any of 
those types of investigations, as well as most of the agents I 
know would also be sensitive to it, and it would raise a red 
flag right away.
    Plus, I do believe that since they occurred, we have all 
sorts of institutional review processes on our intelligence 
investigations, to ensure that those type of abuses do not 
happen. We want those type of review processes to continue. We 
do not want to throw them away. I think they are a good process 
to have.

                      MASSIVE FBI FILES ON SINATRA

    Mr. Serrano. Mr. Chairman, thank you so much. I will close 
on this very concern of mine, and forgive me for mixing two 
issues.
    As you know, I was involved, some years ago, in getting the 
Frank Sinatra Congressional Gold Medal. During that time, I 
found out and I was told, that there was a massive FBI file on 
Frank Sinatra.
    I suspected, like so many Americans, that it had something 
to do with some guys he might have grown up with, in the old 
neighborhood or something, that people were looking at. I am 
sure that I grew up with guys that are not the nicest citizens 
in the world.
    I later became, after his death, a bigger Frank Sinatra 
fan, when I found out why Hoover put him on the list and 
followed him for many years. It was because he once advocated 
for housing for returning GIs, and another time joined Mayor 
Hubert Humphrey in trying to get some more rights for African 
Americans in Minneapolis, Minnesota.
    For that, Hoover considered him a problem, and that started 
a 20 year file on everything the man did. So why he got on the 
file, I thought, was a badge of honor. I close with that, Mr. 
Chairman.
    Mr. Wolf. I thank you.

                 INTELLIGENCE GATHERING AND TECHNOLOGY

    I was not going to make the comment, but I will follow-up, 
and then I am not going to ask Mr. Mueller to come back up. I 
will just make a couple of comments to him.
    I have been a strong supporter of the Bureau. My dad was a 
Philadelphia policeman for many, many years. I want the Bureau 
to be as honest, as ethical, as moral, as decent, and have the 
highest standards, so nobody can question it.
    But I think there have been some problems. There was the 
Hanssen case. Hanssen lived in my Congressional district. I 
cannot believe that took place. I literally cannot believe 
that.
    I was in Perm Camp 35, in a gulag, and interviewed one of 
those gentlemen. I met one of those gentlemen that Hanssen 
turned in. People actually died because of Hanssen.
    If you go back, there was a gentleman, Miller, who also 
turned bad and gave stuff to the Soviet Union, which was the 
enemy of this country. We also had a conviction of an FBI 
agent, not too long ago, up in Massachusetts. Men and women are 
human. Congress has had some people in the Congress that ought 
never to have served in the Congress.
    So it is important to be vigilant and to have high 
standards. I have said publicly, I think that Mr. Mueller has 
those standards.
    I think literally almost all of the agents are honest, and 
I will stipulate all of them, but we want to be careful to make 
sure, without me going into great detail that we never go back 
to a period of time that those things can ever happen again. 
The worst thing in the world that could happen is if the 
American people ever lost confidence in the FBI.
    There are some who would like to see a weakened FBI. I want 
to see a strengthened, strong FBI, and I think you share that 
same desire.
    That is why we are going to do everything we can here in 
the Committee and give you the resources. With regard to the 
the Director, I think there ought to be an intelligence science 
board, to give you the background and the ability.
    We are going to put legislation in, and I am going to push 
it. I am going to push it on the Appropriation Committee. I am 
going to push it on the Intelligence Committee. I am going to 
push it. We are going to get something done, so you have a 
place to go; not vendors; not people who want to sell you 
something; but similar to the defense science board.
    When we were in Afghanistan, they would take us up a hill 
and show us that with technology, they could put a laser beam 
on there; a laser beam, and a smart bomb came and took it away. 
The technology, with the bravery of the American men and women, 
made the difference. You should have technology and a place to 
go to for expert advice to somebody that does not want to sell 
you something.
    Secondly, I think you ought to look at the training at 
Quantico, to make sure it does fit into the changes that have 
taken place; all obviously within the Constitution, as Mr. 
Serrano says.
    Lastly, you are the best. If we did not have the FBI 
involved in public corruption, we would have a lot of public 
corruption. In a lot of these different issues, we cannot take 
the FBI out of the game.

                          ADDITIONAL RESOURCES

    Somehow, and it is not Mr. Mueller's responsibility, the 
Attorney General, Mr. Ashcroft, is going to have to speak out 
at OMB and at the White House, and make the case, to give you 
the resources, whether it be more agents, and whether it be 
staff and support people, to do the job that you have to do.
    Otherwise, organized crime will escalate. We are always 
pushing it. There was a major hearing on Wednesday on sexual 
trafficking; 800,000 men and woman are sexually trafficked 
around the world; 50,000 come here.
    You may say, well, take the FBI out of sexual trafficking. 
If the FBI gets out of sexual trafficking, no one will be 
involved in sexual trafficking. Young boys and young girls are 
trafficked. That's not something that we can take away from the 
FBI. White-collar crime? If the FBI wasn't involved--and look 
at some of the standards today, Enron and some of the other 
stuff that's coming--if the FBI wasn't involved, who would 
investigate?
    So we really can't have the FBI leave the field in these 
other areas. And I believe to take resources away and put them 
where they should be, you're going to need additional agents 
and additional support staff. That's going to mean additional 
money.
    And with that--Mr. Serrano, do you have any closing 
comments? I want to thank the Director particularly for coming 
and staying the entire day, which is above and beyond the call 
of duty. I want to thank NAPA and GAO and the Agents 
Association and all your members. We will have this hearing 
again in a year. We will also come up with some external 
review.
    And with that, I will recognize Mr. Serrano.
    Mr. Serrano. Sorry, Mr. Chairman. I didn't want to speak 
after you, but I didn't know you were summing up.
    Just again, to join you, as I did Chairman Rogers, in 
making sure that the Director has all the resources that he 
needs to do the work. As you heard before from my Ranking 
Member, Mr. Obey, he feels the same way. The FBI should have 
all the necessary resources. Count me as part of that team. My 
criticism and my questions go to how that work is done, but the 
work has to be done and the resources have to be there.
    Mr. Wolf. The hearing is adjourned.
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