[Congressional Record (Bound Edition), Volume 149 (2003), Part 21]
[House]
[Pages 29784-29802]
[From the U.S. Government Publishing Office, www.gpo.gov]




  CONFERENCE REPORT ON H.R. 2417, INTELLIGENCE AUTHORIZATION ACT FOR 
                            FISCAL YEAR 2004

  Mr. GOSS (during consideration of motion to instruct conferees on 
H.R. 1) submitted the following conference report and statement on the 
bill (H.R. 2417) to authorize appropriations for fiscal year 2004 for 
intelligence and intelligence-related activities of the United States 
Government, the Community Management Account, and the Central 
Intelligence Agency Retirement and Disability System, and for other 
purposes:

                  Conference Report (H. Rept. 108-381)

       The committee of conference on the disagreeing votes of the 
     two Houses on the amendment of the Senate to the bill (H.R. 
     2417), to authorize appropriations for fiscal year 2004 for 
     intelligence and intelligence-related activities of the 
     United States Government, the Community Management Account, 
     and the Central Intelligence Agency Retirement and Disability 
     System, and for other purposes, having met, after full and 
     free conference, have agreed to recommend and do recommend to 
     their respective Houses as follows:
       That the House recede from its disagreement to the 
     amendment of the Senate and agree to the same with an 
     amendment as follows:
       In lieu of the matter proposed to be inserted by the Senate 
     amendment, insert the following:

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the 
     ``Intelligence Authorization Act for Fiscal Year 2004''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.

                    TITLE I--INTELLIGENCE ACTIVITIES

Sec. 101. Authorization of appropriations.
Sec. 102. Classified schedule of authorizations.
Sec. 103. Personnel ceiling adjustments.
Sec. 104. Intelligence Community Management Account.
Sec. 105. Office of Intelligence and Analysis of the Department of the 
              Treasury.
Sec. 106. Incorporation of reporting requirements.
Sec. 107. Preparation and submittal of reports, reviews, studies, and 
              plans relating to intelligence activities of Department 
              of Defense or Department of Energy.

 TITLE II--CENTRAL INTELLIGENCE AGENCY RETIREMENT AND DISABILITY SYSTEM

Sec. 201. Authorization of appropriations.

                     TITLE III--GENERAL PROVISIONS

                Subtitle A--Recurring General Provisions

Sec. 301. Increase in employee compensation and benefits authorized by 
              law.
Sec. 302. Restriction on conduct of intelligence activities.

                        Subtitle B--Intelligence

Sec. 311. Authority of Federal Bureau of Investigation to award 
              personal services contracts.
Sec. 312. Budget treatment of costs of acquisition of major systems by 
              the intelligence community.
Sec. 313. Modification of sunset of application of sanctions laws to 
              intelligence activities.
Sec. 314. Modification of notice and wait requirements on projects to 
              construct or improve intelligence community facilities.
Sec. 315. Extension of deadline for final report of the National 
              Commission for the Review of the Research and Development 
              Programs of the United States Intelligence Community.
Sec. 316. Improvement of information sharing among Federal, State, and 
              local government officials.
Sec. 317. Pilot program on analysis of signals and other intelligence 
              by intelligence analysts of various elements of the 
              intelligence community.
Sec. 318. Pilot program on recruitment and training of intelligence 
              analysts.
Sec. 319. Improvement of equality of employment opportunities in the 
              intelligence community.
Sec. 320. Sense of Congress on recruitment as intelligence community 
              personnel of members of the Armed Forces on their 
              discharge or release from duty.
Sec. 321. External Collection Capabilities and Requirements Review 
              Panel.

                    Subtitle C--Counterintelligence

Sec. 341. Counterintelligence initiatives for the intelligence 
              community.

                          Subtitle D--Reports

Sec. 351. Report on cleared insider threat to classified computer 
              networks.
Sec. 352. Report on security background investigations and security 
              clearance procedures of the Federal Government.
Sec. 353. Report on detail of civilian intelligence personnel among 
              elements of the intelligence community and the Department 
              of Defense.
Sec. 354. Report on modifications of policy and law on classified 
              information to facilitate sharing of information for 
              national security purposes.
Sec. 355. Report on strategic planning.
Sec. 356. Report on United States dependence on computer hardware and 
              software manufactured overseas.
Sec. 357. Report on lessons learned from military operations in Iraq.
Sec. 358. Reports on conventional weapons and ammunition obtained by 
              Iraq in violation of certain United Nations Security 
              Council resolutions.
Sec. 359. Report on operations of Directorate of Information Analysis 
              and Infrastructure Protection and Terrorist Threat 
              Integration Center.
Sec. 360. Report on Terrorist Screening Center.
Sec. 361. Repeal and modification of report requirements relating to 
              intelligence activities.

                       Subtitle E--Other Matters

Sec. 371. Extension of suspension of reorganization of Diplomatic 
              Telecommunications Service Program Office.
Sec. 372. Modifications of authorities on explosive materials.
Sec. 373. Modification of prohibition on the naturalization of certain 
              persons.
Sec. 374. Modification to definition of financial institution in Right 
              to Financial Privacy Act.
Sec. 375. Coordination of Federal Government research on security 
              evaluations.
Sec. 376. Treatment of classified information in money laundering 
              cases.
Sec. 377. Technical amendments.

                 TITLE IV--CENTRAL INTELLIGENCE AGENCY

Sec. 401. Amendment to certain Central Intelligence Agency Act of 1949 
              notification requirements.
Sec. 402. Protection of certain Central Intelligence Agency personnel 
              from tort liability.
Sec. 403. Repeal of obsolete limitation on use of funds in central 
              services working capital fund.
Sec. 404. Purchases by Central Intelligence Agency of products of 
              Federal Prison Industries.
Sec. 405. Postponement of Central Intelligence Agency compensation 
              reform and other matters.

          TITLE V--DEPARTMENT OF DEFENSE INTELLIGENCE MATTERS

Sec. 501. Protection of certain National Security Agency personnel from 
              tort liability.
Sec. 502. Use of funds for counterdrug and counterterrorism activities 
              for Colombia.
Sec. 503. Scene visualization technologies.
Sec. 504. Measurement and signatures intelligence research program.

[[Page 29785]]

Sec. 505. Availability of funds of National Security Agency for 
              national security scholarships.
                    TITLE I--INTELLIGENCE ACTIVITIES

     SEC. 101. AUTHORIZATION OF APPROPRIATIONS.

       Funds are hereby authorized to be appropriated for fiscal 
     year 2004 for the conduct of the intelligence and 
     intelligence-related activities of the following elements of 
     the United States Government:
       (1) The Central Intelligence Agency.
       (2) The Department of Defense.
       (3) The Defense Intelligence Agency.
       (4) The National Security Agency.
       (5) The Department of the Army, the Department of the Navy, 
     and the Department of the Air Force.
       (6) The Department of State.
       (7) The Department of the Treasury.
       (8) The Department of Energy.
       (9) The Department of Justice.
       (10) The Federal Bureau of Investigation.
       (11) The National Reconnaissance Office.
       (12) The National Geospatial-Intelligence Agency.
       (13) The Coast Guard.
       (14) The Department of Homeland Security.

     SEC. 102. CLASSIFIED SCHEDULE OF AUTHORIZATIONS.

       (a) Specifications of Amounts and Personnel Ceilings.--The 
     amounts authorized to be appropriated under section 101, and 
     the authorized personnel ceilings as of September 30, 2004, 
     for the conduct of the intelligence and intelligence-related 
     activities of the elements listed in such section, are those 
     specified in the classified Schedule of Authorizations 
     prepared to accompany the conference report on the bill H.R. 
     2417 of the One Hundred Eighth Congress.
       (b) Availability of Classified Schedule of 
     Authorizations.--The Schedule of Authorizations shall be made 
     available to the Committees on Appropriations of the Senate 
     and House of Representatives and to the President. The 
     President shall provide for suitable distribution of the 
     Schedule, or of appropriate portions of the Schedule, within 
     the executive branch.

     SEC. 103. PERSONNEL CEILING ADJUSTMENTS.

       (a) Authority for Adjustments.--With the approval of the 
     Director of the Office of Management and Budget, the Director 
     of Central Intelligence may authorize employment of civilian 
     personnel in excess of the number authorized for fiscal year 
     2004 under section 102 when the Director of Central 
     Intelligence determines that such action is necessary to the 
     performance of important intelligence functions, except that 
     the number of personnel employed in excess of the number 
     authorized under such section may not, for any element of the 
     intelligence community, exceed 2 percent of the number of 
     civilian personnel authorized under such section for such 
     element.
       (b) Notice to Intelligence Committees.--The Director of 
     Central Intelligence shall promptly notify the Select 
     Committee on Intelligence of the Senate and the Permanent 
     Select Committee on Intelligence of the House of 
     Representatives whenever the Director exercises the authority 
     granted by this section.

     SEC. 104. INTELLIGENCE COMMUNITY MANAGEMENT ACCOUNT.

       (a) Authorization of Appropriations.--There is authorized 
     to be appropriated for the Intelligence Community Management 
     Account of the Director of Central Intelligence for fiscal 
     year 2004 the sum of $221,513,000. Within such amount, funds 
     identified in the classified Schedule of Authorizations 
     referred to in section 102(a) for advanced research and 
     development shall remain available until September 30, 2005.
       (b) Authorized Personnel Levels.--The elements within the 
     Intelligence Community Management Account of the Director of 
     Central Intelligence are authorized 310 full-time personnel 
     as of September 30, 2004. Personnel serving in such elements 
     may be permanent employees of the Intelligence Community 
     Management Account or personnel detailed from other elements 
     of the United States Government.
       (c) Classified Authorizations.--
       (1) Authorization of appropriations.--In addition to 
     amounts authorized to be appropriated for the Intelligence 
     Community Management Account by subsection (a), there are 
     also authorized to be appropriated for the Intelligence 
     Community Management Account for fiscal year 2004 such 
     additional amounts as are specified in the classified 
     Schedule of Authorizations referred to in section 102(a). 
     Such additional amounts for research and development shall 
     remain available until September 30, 2005.
       (2) Authorization of personnel.--In addition to the 
     personnel authorized by subsection (b) for elements of the 
     Intelligence Community Management Account as of September 30, 
     2004, there are also authorized such additional personnel for 
     such elements as of that date as are specified in the 
     classified Schedule of Authorizations.
       (d) Reimbursement.--Except as provided in section 113 of 
     the National Security Act of 1947 (50 U.S.C. 404h), during 
     fiscal year 2004 any officer or employee of the United States 
     or a member of the Armed Forces who is detailed to the staff 
     of the Intelligence Community Management Account from another 
     element of the United States Government shall be detailed on 
     a reimbursable basis, except that any such officer, employee, 
     or member may be detailed on a nonreimbursable basis for a 
     period of less than one year for the performance of temporary 
     functions as required by the Director of Central 
     Intelligence.
       (e) National Drug Intelligence Center.--
       (1) In general.--Of the amount authorized to be 
     appropriated in subsection (a), $47,142,000 shall be 
     available for the National Drug Intelligence Center. Within 
     such amount, funds provided for research, development, 
     testing, and evaluation purposes shall remain available until 
     September 30, 2005, and funds provided for procurement 
     purposes shall remain available until September 30, 2006.
       (2) Transfer of funds.--The Director of Central 
     Intelligence shall transfer to the Attorney General funds 
     available for the National Drug Intelligence Center under 
     paragraph (1). The Attorney General shall utilize funds so 
     transferred for the activities of the National Drug 
     Intelligence Center.
       (3) Limitation.--Amounts available for the National Drug 
     Intelligence Center may not be used in contravention of the 
     provisions of section 103(d)(1) of the National Security Act 
     of 1947 (50 U.S.C. 403-3(d)(1)).
       (4) Authority.--Notwithstanding any other provision of law, 
     the Attorney General shall retain full authority over the 
     operations of the National Drug Intelligence Center.

     SEC. 105. OFFICE OF INTELLIGENCE AND ANALYSIS OF THE 
                   DEPARTMENT OF THE TREASURY.

       (a) Establishment of Office.--(1) Chapter 3 of subtitle I 
     of title 31, United States Code, is amended--
       (A) by redesignating section 311 as section 312; and
       (B) by inserting after section 310 the following:

     ``Sec. 311. Office of Intelligence and Analysis

       ``(a) Establishment.--There is established within the 
     Department of the Treasury, the Office of Intelligence and 
     Analysis (in this section referred to as the `Office'), which 
     shall--
       ``(1) be responsible for the receipt, analysis, collation, 
     and dissemination of foreign intelligence and foreign 
     counterintelligence information (within the meaning of 
     section 3 of the National Security Act of 1947 (50 U.S.C. 
     401a)) related to the operation and responsibilities of the 
     Department of the Treasury; and
       ``(2) have such other related duties and authorities as may 
     be assigned to it by the Secretary, subject to the authority, 
     direction, and control of the Secretary.
       ``(b) Assistant Secretary for Intelligence and Analysis.--
     The Office shall be headed by an Assistant Secretary, who 
     shall be appointed by the President, by and with the advice 
     and consent of the Senate. The Assistant Secretary shall 
     report directly to the Undersecretary of the Treasury for 
     Enforcement.''.
       (2) The table of sections at the beginning of chapter 3 of 
     such title is amended by striking the item relating to 
     section 311 and inserting the following new items:

``311. Office of Intelligence and Analysis.
``312. Continuing in office.''.

       (b) Construction of Authority.--Nothing in section 311 of 
     title 31, United States Code (as amended by subsection (a)), 
     shall be construed to alter the authorities and 
     responsibilities of the Director of Central Intelligence with 
     respect to the Office of Intelligence and Analysis of the 
     Department of the Treasury as an element of the intelligence 
     community.
       (c) Consultation with DCI in Appointment of Assistant 
     Secretary.--Section 106(b)(2) of the National Security Act of 
     1947 (50 U.S.C. 403-6(b)(2)) is amended by adding at the end 
     the following:
       ``(E) The Assistant Secretary for Intelligence and Analysis 
     of the Department of the Treasury.''.
       (d) Conforming Amendments.--
       (1) National security act.--Section 3(4) of the National 
     Security Act of 1947 (50 U.S.C. 401a(4)) is amended--
       (A) in subparagraph (H), by striking ``the Department of 
     the Treasury,'';
       (B) by redesignating subparagraphs (J) and (K) as 
     subparagraphs (K) and (L), respectively; and
       (C) by inserting after subparagraph (I) the following new 
     subparagraph (J):
       ``(J) the Office of Intelligence and Analysis of the 
     Department of the Treasury;''.
       (2) Title 31.--Section 301(e) of title 31, United States 
     Code, is amended by striking ``7'' and inserting ``8''.
       (3) Title 5.--Section 5315 of title 5, United States Code, 
     is amended in the item relating to Assistant Secretaries of 
     the Treasury by striking ``(7)'' and inserting ``(8)''.

     SEC. 106. INCORPORATION OF REPORTING REQUIREMENTS.

       (a) In General.--Each requirement to submit a report to the 
     congressional intelligence committees that is included in the 
     joint explanatory statement to accompany the conference 
     report on the bill H.R. 2417 of the One Hundred Eighth 
     Congress, or in the classified annex to this Act, is hereby 
     incorporated into this Act, and is hereby made a requirement 
     in law.
       (b) Congressional Intelligence Committees Defined.--In this 
     section, the term ``congressional intelligence committees'' 
     means--
       (1) the Select Committee on Intelligence of the Senate; and
       (2) the Permanent Select Committee on Intelligence of the 
     House of Representatives.

     SEC. 107. PREPARATION AND SUBMITTAL OF REPORTS, REVIEWS, 
                   STUDIES, AND PLANS RELATING TO INTELLIGENCE 
                   ACTIVITIES OF DEPARTMENT OF DEFENSE OR 
                   DEPARTMENT OF ENERGY.

       (a) Consultation in Preparation.--(1) The Director of 
     Central Intelligence shall ensure that any report, review, 
     study, or plan required to be prepared or conducted by a 
     provision of

[[Page 29786]]

     this Act, including a provision of the classified Schedule of 
     Authorizations referred to in section 102(a) or the 
     classified annex to this Act, that involves the intelligence 
     or intelligence-related activities of the Department of 
     Defense or the Department of Energy is prepared or conducted 
     in consultation with the Secretary of Defense or the 
     Secretary of Energy, as appropriate.
       (2) The Secretary of Defense or the Secretary of Energy may 
     carry out any consultation required by this subsection 
     through an official of the Department of Defense or the 
     Department of Energy, as the case may be, designated by such 
     Secretary for that purpose.
       (b) Submittal.--Any report, review, study, or plan referred 
     to in subsection (a) shall be submitted, in addition to any 
     other committee of Congress specified for submittal in the 
     provision concerned, to the following committees of Congress:
       (1) The Committees on Armed Services and Appropriations and 
     the Select Committee on Intelligence of the Senate.
       (2) The Committees on Armed Services and Appropriations and 
     the Permanent Select Committee on Intelligence of the House 
     of Representatives.
 TITLE II--CENTRAL INTELLIGENCE AGENCY RETIREMENT AND DISABILITY SYSTEM

     SEC. 201. AUTHORIZATION OF APPROPRIATIONS.

       There is authorized to be appropriated for the Central 
     Intelligence Agency Retirement and Disability Fund for fiscal 
     year 2004 the sum of $226,400,000.
                     TITLE III--GENERAL PROVISIONS
                Subtitle A--Recurring General Provisions

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

       Appropriations authorized by this Act for salary, pay, 
     retirement, and other benefits for Federal employees may be 
     increased by such additional or supplemental amounts as may 
     be necessary for increases in such compensation or benefits 
     authorized by law.

     SEC. 302. RESTRICTION ON CONDUCT OF INTELLIGENCE ACTIVITIES.

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

     SEC. 311. AUTHORITY OF FEDERAL BUREAU OF INVESTIGATION TO 
                   AWARD PERSONAL SERVICES CONTRACTS.

       (a) Authority.--(1) Title III of the National Security Act 
     of 1947 is amended by inserting after section 301 (50 U.S.C. 
     409a) the following new section:


   ``authority of federal bureau of investigation to award personal 
                           services contracts

       ``Sec. 302. (a) In General.--The Director of the Federal 
     Bureau of Investigation may enter into personal services 
     contracts if the personal services to be provided under such 
     contracts directly support the intelligence or 
     counterintelligence missions of the Federal Bureau of 
     Investigation.
       ``(b) Inapplicability of Certain Requirements.--Contracts 
     under subsection (a) shall not be subject to the annuity 
     offset requirements of sections 8344 and 8468 of title 5, 
     United States Code, the requirements of section 3109 of title 
     5, United States Code, or any law or regulation requiring 
     competitive contracting.
       ``(c) Contract To Be Appropriate Means of Securing 
     Services.--The Chief Contracting Officer of the Federal 
     Bureau of Investigation shall ensure that each personal 
     services contract entered into by the Director under this 
     section is the appropriate means of securing the services to 
     be provided under such contract.''.
       (2) The table of contents for that Act is amended by 
     inserting after the item relating to section 301 the 
     following new item:

``Sec. 302. Authority of Federal Bureau of Investigation to award 
              personal services contracts.''.

       (b) Reports on Exercise of Authority.--(1) Not later than 
     one year after the date of the enactment of this Act, and 
     annually thereafter, the Director of the Federal Bureau of 
     Investigation shall submit to the appropriate committees of 
     Congress a report on the exercise of the authority in section 
     302 of the National Security Act of 1947, as added by 
     subsection (a).
       (2) Each report under this subsection shall include, for 
     the one-year period ending on the date of such report, the 
     following:
       (A) The number of contracts entered into during the period.
       (B) The cost of each such contract.
       (C) The length of each such contract.
       (D) The types of services to be provided under each such 
     contract.
       (E) The availability, if any, of United States Government 
     personnel to perform functions similar to the services to be 
     provided under each such contract.
       (F) The efforts of the Federal Bureau of Investigation to 
     fill available personnel vacancies, or request additional 
     personnel positions, in areas relating to the intelligence or 
     counterintelligence mission of the Bureau.
       (3) Each report under this subsection shall be submitted in 
     unclassified form, but may include a classified annex.
       (4) In this subsection--
       (A) for purposes of the submittal of the classified annex 
     to any report under this subsection, the term ``appropriate 
     committees of Congress'' means--
       (i) the Select Committee on Intelligence of the Senate; and
       (ii) the Permanent Select Committee on Intelligence of the 
     House of Representatives; and
       (B) for purposes of the submittal of the unclassified 
     portion of any report under this subsection, the term 
     ``appropriate committees of Congress'' means--
       (i) the committees specified in subparagraph (A);
       (ii) the Committees on Appropriations, Governmental 
     Affairs, and the Judiciary of the Senate; and
       (iii) the Committees on Appropriations, Government Reform 
     and Oversight, and the Judiciary of the House of 
     Representatives.

     SEC. 312. BUDGET TREATMENT OF COSTS OF ACQUISITION OF MAJOR 
                   SYSTEMS BY THE INTELLIGENCE COMMUNITY.

       (a) Findings.--Congress makes the following findings:
       (1) Funds within the National Foreign Intelligence Program 
     often must be shifted from program to program and from fiscal 
     year to fiscal year to address funding shortfalls caused by 
     significant increases in the costs of acquisition of major 
     systems by the intelligence community.
       (2) While some increases in the costs of acquisition of 
     major systems by the intelligence community are unavoidable, 
     the magnitude of growth in the costs of acquisition of many 
     major systems indicates a systemic bias within the 
     intelligence community to underestimate the costs of such 
     acquisition, particularly in the preliminary stages of 
     development and production.
       (3) Decisions by Congress to fund the acquisition of major 
     systems by the intelligence community rely significantly upon 
     initial estimates of the affordability of acquiring such 
     major systems and occur within a context in which funds can 
     be allocated for a variety of alternative programs. Thus, 
     substantial increases in costs of acquisition of major 
     systems place significant burdens on the availability of 
     funds for other programs and new proposals within the 
     National Foreign Intelligence Program.
       (4) Independent cost estimates, prepared by independent 
     offices, have historically represented a more accurate 
     projection of the costs of acquisition of major systems.
       (5) Recognizing the benefits associated with independent 
     cost estimates for the acquisition of major systems, the 
     Secretary of Defense has built upon the statutory requirement 
     in section 2434 of title 10, United States Code, to develop 
     and consider independent cost estimates for the acquisition 
     of such systems by mandating the use of such estimates in 
     budget requests of the Department of Defense.
       (6) The mandatory use throughout the intelligence community 
     of independent cost estimates for the acquisition of major 
     systems will assist the President and Congress in the 
     development and funding of budgets which more accurately 
     reflect the requirements and priorities of the United States 
     Government for intelligence and intelligence-related 
     activities.
       (b) Budget Treatment of Costs of Acquisition of Major 
     Systems.--(1) Title V of the National Security Act of 1947 
     (50 U.S.C. 413 et seq.) is amended by inserting after section 
     506 the following new section:


  ``Budget treatment of costs of acquisition of major systems by the 
                         intelligence community

       ``Sec. 506A. (a) Independent Cost Estimates.--(1) The 
     Director of Central Intelligence shall, in consultation with 
     the head of each element of the intelligence community 
     concerned, prepare an independent cost estimate of the full 
     life-cycle cost of development, procurement, and operation of 
     each major system to be acquired by the intelligence 
     community.
       ``(2) Each independent cost estimate for a major system 
     shall, to the maximum extent practicable, specify the amount 
     required to be appropriated and obligated to develop, 
     procure, and operate the major system in each fiscal year of 
     the proposed period of development, procurement, and 
     operation of the major system.
       ``(3)(A) In the case of a program of the intelligence 
     community that qualifies as a major system, an independent 
     cost estimate shall be prepared before the submission to 
     Congress of the budget of the President for the first fiscal 
     year in which appropriated funds are anticipated to be 
     obligated for the development or procurement of such major 
     system.
       ``(B) In the case of a program of the intelligence 
     community for which an independent cost estimate was not 
     previously required to be prepared under this section, 
     including a program for which development or procurement 
     commenced before the date of the enactment of the 
     Intelligence Authorization Act for Fiscal Year 2004, if the 
     aggregate future costs of development or procurement (or any 
     combination of such activities) of the program will exceed 
     $500,000,000 (in current fiscal year dollars), the program 
     shall qualify as a major system for purposes of this section, 
     and an independent cost estimate for such major system shall 
     be prepared before the submission to Congress of the budget 
     of the President for the first fiscal year thereafter in 
     which appropriated funds are anticipated to be obligated for 
     such major system.
       ``(4) The independent cost estimate for a major system 
     shall be updated upon--
       ``(A) the completion of any preliminary design review 
     associated with the major system;
       ``(B) any significant modification to the anticipated 
     design of the major system; or
       ``(C) any change in circumstances that renders the current 
     independent cost estimate for the major system inaccurate.

[[Page 29787]]

       ``(5) Any update of an independent cost estimate for a 
     major system under paragraph (4) shall meet all requirements 
     for independent cost estimates under this section, and shall 
     be treated as the most current independent cost estimate for 
     the major system until further updated under that paragraph.
       ``(b) Preparation of Independent Cost Estimates.--(1) The 
     Director shall establish within the Office of the Deputy 
     Director of Central Intelligence for Community Management an 
     office which shall be responsible for preparing independent 
     cost estimates, and any updates thereof, under subsection 
     (a), unless a designation is made under paragraph (2).
       ``(2) In the case of the acquisition of a major system for 
     an element of the intelligence community within the 
     Department of Defense, the Director and the Secretary of 
     Defense shall provide that the independent cost estimate, and 
     any updates thereof, under subsection (a) be prepared by an 
     entity jointly designated by the Director and the Secretary 
     in accordance with section 2434(b)(1)(A) of title 10, United 
     States Code.
       ``(c) Utilization in Budgets of President.--(1) If the 
     budget of the President requests appropriations for any 
     fiscal year for the development or procurement of a major 
     system by the intelligence community, the President shall, 
     subject to paragraph (2), request in such budget an amount of 
     appropriations for the development or procurement, as the 
     case may be, of the major system that is equivalent to the 
     amount of appropriations identified in the most current 
     independent cost estimate for the major system for obligation 
     for each fiscal year for which appropriations are requested 
     for the major system in such budget.
       ``(2) If the amount of appropriations requested in the 
     budget of the President for the development or procurement of 
     a major system is less than the amount of appropriations 
     identified in the most current independent cost estimate for 
     the major system for obligation for each fiscal year for 
     which appropriations are requested for the major system in 
     such budget, the President shall include in the budget 
     justification materials submitted to Congress in support of 
     such budget--
       ``(A) an explanation for the difference between the amount 
     of appropriations requested and the amount of appropriations 
     identified in the most current independent cost estimate;
       ``(B) a description of the importance of the major system 
     to the national security;
       ``(C) an assessment of the consequences for the funding of 
     all programs of the National Foreign Intelligence Program in 
     future fiscal years if the most current independent cost 
     estimate for the major system is accurate and additional 
     appropriations are required in future fiscal years to ensure 
     the continued development or procurement of the major system, 
     including the consequences of such funding shortfalls on the 
     major system and all other programs of the National Foreign 
     Intelligence Program; and
       ``(D) such other information on the funding of the major 
     system as the President considers appropriate.
       ``(d) Inclusion of Estimates in Budget Justification 
     Materials.--The budget justification materials submitted to 
     Congress in support of the budget of the President shall 
     include the most current independent cost estimate under this 
     section for each major system for which appropriations are 
     requested in such budget for any fiscal year.
       ``(e) Definitions.--In this section:
       ``(1) The term `budget of the President' means the budget 
     of the President for a fiscal year as submitted to Congress 
     under section 1105(a) of title 31, United States Code.
       ``(2) The term `independent cost estimate' means a 
     pragmatic and neutral analysis, assessment, and 
     quantification of all costs and risks associated with the 
     acquisition of a major system, which shall be based on 
     programmatic and technical specifications provided by the 
     office within the element of the intelligence community with 
     primary responsibility for the development, procurement, or 
     operation of the major system.
       ``(3) The term `major system' means any significant program 
     of an element of the intelligence community with projected 
     total development and procurement costs exceeding 
     $500,000,000 (in current fiscal year dollars), which costs 
     shall include all end-to-end program costs, including costs 
     associated with the development and procurement of the 
     program and any other costs associated with the development 
     and procurement of systems required to support or utilize the 
     program.''.
       (2) The table of contents for the National Security Act of 
     1947 is amended by inserting after the item relating to 
     section 506 the following new item:

``Sec. 506A. Budget treatment of costs of acquisition of major systems 
              by the intelligence community.''.

       (c) Effective Date.--The amendments made by subsection (b) 
     shall take effect on the date of the enactment of this Act.
       (d) Limitations.--(1)(A) For each major system for which 
     funds have been authorized for a fiscal year before fiscal 
     year 2005, or for which funds are sought in the budget of the 
     President for fiscal year 2005, as submitted to Congress 
     pursuant to section 1105(a) of title 31, United States Code, 
     and for which no independent cost estimate has been provided 
     to Congress, no contract, or option to contract, for the 
     procurement or acquisition of such major system may be 
     entered into, or option to contract be exercised, before the 
     date of the enactment of an Act to authorize appropriations 
     for fiscal year 2005 for intelligence and intelligence-
     related activities of the United States Government.
       (B) Subparagraph (A) shall not affect any contract for 
     procurement or acquisition that was entered into before the 
     date of the enactment of this Act.
       (2) Commencing as of the date of the submittal to Congress 
     of the budget of the President for fiscal year 2006 pursuant 
     to section 1105(a) of title 31, United States Code, no funds 
     may be obligated or expended for the development or 
     procurement of a major system until the President has 
     complied with the requirements of section 506A of the 
     National Security Act of 1947 (as added by subsection (b)) 
     with respect to such major system.
       (3) In this subsection, the terms ``independent cost 
     estimate'' and ``major system'' have the meaning given such 
     terms in subsection (e) of section 506A of the National 
     Security Act of 1947 (as so added).

     SEC. 313. MODIFICATION OF SUNSET OF APPLICATION OF SANCTIONS 
                   LAWS TO INTELLIGENCE ACTIVITIES.

       (a) Modification.--Section 905 of the National Security Act 
     of 1947 (50 U.S.C. 441d) is repealed.
       (b) Clerical Amendment.--The table of contents for that Act 
     is amended by striking the item relating to section 905.

     SEC. 314. MODIFICATION OF NOTICE AND WAIT REQUIREMENTS ON 
                   PROJECTS TO CONSTRUCT OR IMPROVE INTELLIGENCE 
                   COMMUNITY FACILITIES.

       (a) Increase of Thresholds for Notice.--Subsection (a) of 
     section 602 of the Intelligence Authorization Act for Fiscal 
     Year 1995 (Public Law 103-359; 108 Stat. 3432; 50 U.S.C. 403-
     2b(a)) is amended--
       (1) by striking ``$750,000'' each place it appears and 
     inserting ``$5,000,000''; and
       (2) by striking ``$500,000'' each place it appears and 
     inserting ``$1,000,000''.
       (b) Notice and Wait Requirements for Emergency Projects.--
     Subsection (b)(2) of that section is amended--
       (1) by redesignating subparagraphs (A), (B), and (C) as 
     clauses (i), (ii), and (iii), respectively;
       (2) by inserting ``(A)'' after ``(2) Report.--'';
       (3) by striking ``21-day period'' and inserting ``7-day 
     period''; and
       (4) by adding at the end the following new subparagraph:
       ``(B) Notwithstanding subparagraph (A), a project referred 
     to in paragraph (1) may begin on the date the notification is 
     received by the appropriate committees of Congress under that 
     paragraph if the Director of Central Intelligence and the 
     Secretary of Defense jointly determine that--
       ``(i) an emergency exists with respect to the national 
     security or the protection of health, safety, or 
     environmental quality; and
       ``(ii) any delay in the commencement of the project would 
     harm any or all of those interests.''.

     SEC. 315. EXTENSION OF DEADLINE FOR FINAL REPORT OF THE 
                   NATIONAL COMMISSION FOR THE REVIEW OF THE 
                   RESEARCH AND DEVELOPMENT PROGRAMS OF THE UNITED 
                   STATES INTELLIGENCE COMMUNITY.

       (a) In General.--Subsection (a) of section 1007 of the 
     Intelligence Authorization Act for Fiscal Year 2003 (Public 
     Law 107-306; 50 U.S.C. 401 note; 116 Stat. 2442) is amended 
     by striking ``September 1, 2003'' and inserting ``September 
     1, 2004''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect as if included in the enactment of section 
     1007 of the Intelligence Authorization Act for Fiscal Year 
     2003.

     SEC. 316. IMPROVEMENT OF INFORMATION SHARING AMONG FEDERAL, 
                   STATE, AND LOCAL GOVERNMENT OFFICIALS.

       (a) Training Program for State and Local Officials.--
     Section 892(c) of the Homeland Security Act of 2002 (Public 
     Law 107-296; 6 U.S.C. 482) is amended by adding at the end 
     the following new paragraph:
       ``(3)(A) The Secretary shall establish a program to provide 
     appropriate training to officials described in subparagraph 
     (B) in order to assist such officials in--
       ``(i) identifying sources of potential terrorist threats 
     through such methods as the Secretary determines appropriate;
       ``(ii) reporting information relating to such potential 
     terrorist threats to the appropriate Federal agencies in the 
     appropriate form and manner;
       ``(iii) assuring that all reported information is 
     systematically submitted to and passed on by the Department 
     for use by appropriate Federal agencies; and
       ``(iv) understanding the mission and roles of the 
     intelligence community to promote more effective information 
     sharing among Federal, State, and local officials and 
     representatives of the private sector to prevent terrorist 
     attacks against the United States.
       ``(B) The officials referred to in subparagraph (A) are 
     officials of State and local government agencies and 
     representatives of private sector entities with 
     responsibilities relating to the oversight and management of 
     first responders, counterterrorism activities, or critical 
     infrastructure.
       ``(C) The Secretary shall consult with the Attorney General 
     to ensure that the training program established in 
     subparagraph (A) does not duplicate the training program 
     established in section 908 of the USA PATRIOT Act (Public Law 
     107-56; 28 U.S.C. 509 note).
       ``(D) The Secretary shall carry out this paragraph in 
     consultation with the Director of Central Intelligence and 
     the Attorney General.''.
       (b) Report.--Not later than 60 days after the date of the 
     enactment of this Act, the Secretary

[[Page 29788]]

     of Homeland Security shall submit to Congress a report that 
     describes the Secretary's plan for implementing section 892 
     of the Homeland Security Act of 2002 and includes an 
     estimated date of completion of the implementation.

     SEC. 317. PILOT PROGRAM ON ANALYSIS OF SIGNALS AND OTHER 
                   INTELLIGENCE BY INTELLIGENCE ANALYSTS OF 
                   VARIOUS ELEMENTS OF THE INTELLIGENCE COMMUNITY.

       (a) In General.--The Director of Central Intelligence 
     shall, in coordination with the Secretary of Defense, carry 
     out a pilot program to assess the feasibility and 
     advisability of permitting intelligence analysts of various 
     elements of the intelligence community to access and analyze 
     intelligence from the databases of other elements of the 
     intelligence community in order to achieve the objectives set 
     forth in subsection (c).
       (b) Covered Intelligence.--The intelligence to be analyzed 
     under the pilot program under subsection (a) shall include 
     the following:
       (1) Signals intelligence of the National Security Agency.
       (2) Such intelligence of other elements of the intelligence 
     community as the Director shall select for purposes of the 
     pilot program.
       (c) Objectives.--The objectives set forth in this 
     subsection are as follows:
       (1) To enhance the capacity of the intelligence community 
     to undertake ``all source fusion'' analysis in support of the 
     intelligence and intelligence-related missions of the 
     intelligence community.
       (2) To reduce, to the extent possible, the amount of 
     intelligence collected by the intelligence community that is 
     not assessed, or reviewed, by intelligence analysts.
       (3) To reduce the burdens imposed on analytical personnel 
     of the elements of the intelligence community by current 
     practices regarding the sharing of intelligence among 
     elements of the intelligence community.
       (d) Commencement.--The Director shall commence the pilot 
     program under subsection (a) not later than December 31, 
     2003.
       (e) Various Mechanisms Required.--In carrying out the pilot 
     program under subsection (a), the Director shall develop and 
     utilize various mechanisms to facilitate the access to, and 
     the analysis of, intelligence in the databases of the 
     intelligence community by intelligence analysts of other 
     elements of the intelligence community, including the use of 
     so-called ``detailees in place''.
       (f) Security.--(1) In carrying out the pilot program under 
     subsection (a), the Director shall take appropriate actions 
     to protect against the disclosure and unauthorized use of 
     intelligence in the databases of the elements of the 
     intelligence community which may endanger sources and methods 
     which (as determined by the Director) warrant protection.
       (2) The actions taken under paragraph (1) shall include the 
     provision of training on the accessing and handling of 
     information in the databases of various elements of the 
     intelligence community and the establishment of limitations 
     on access to information in such databases regarding United 
     States persons.
       (g) Assessment.--Not later than February 1, 2004, after the 
     commencement under subsection (d) of the pilot program under 
     subsection (a), the Under Secretary of Defense for 
     Intelligence and the Assistant Director of Central 
     Intelligence for Analysis and Production shall jointly carry 
     out an assessment of the progress of the pilot program in 
     meeting the objectives set forth in subsection (c).
       (h) Report.--(1) The Director of Central Intelligence 
     shall, in coordination with the Secretary of Defense, submit 
     to the appropriate committees of Congress a report on the 
     assessment carried out under subsection (g).
       (2) The report shall include--
       (A) a description of the pilot program under subsection 
     (a);
       (B) the findings of the Under Secretary and Assistant 
     Director as a result of the assessment;
       (C) any recommendations regarding the pilot program that 
     the Under Secretary and the Assistant Director jointly 
     consider appropriate in light of the assessment; and
       (D) any recommendations that the Director and Secretary 
     consider appropriate for purposes of the report.
       (i) Appropriate Committees of Congress Defined.--In this 
     section, the term ``appropriate committees of Congress'' 
     means--
       (1) the Select Committee on Intelligence, the Committee on 
     Armed Services, and the Committee on Appropriations of the 
     Senate; and
       (2) the Permanent Select Committee on Intelligence, the 
     Committee on Armed Services, and the Committee on 
     Appropriations of the House of Representatives.

     SEC. 318. PILOT PROGRAM ON RECRUITMENT AND TRAINING OF 
                   INTELLIGENCE ANALYSTS.

       (a) Pilot Program.--(1) The Director of Central 
     Intelligence shall carry out a pilot program to ensure that 
     selected students or former students are provided funds to 
     continue academic training, or are reimbursed for academic 
     training previously obtained, in areas of specialization that 
     the Director, in consultation with the other heads of the 
     elements of the intelligence community, identifies as areas 
     in which the current analytic capabilities of the 
     intelligence community are deficient or in which future 
     analytic capabilities of the intelligence community are 
     likely to be deficient.
       (2) A student or former student selected for participation 
     in the pilot program shall commit to employment with an 
     element of the intelligence community, following completion 
     of appropriate academic training, under such terms and 
     conditions as the Director considers appropriate.
       (3) The pilot program shall be known as the Pat Roberts 
     Intelligence Scholars Program.
       (b) Elements.--In carrying out the pilot program under 
     subsection (a), the Director shall--
       (1) establish such requirements relating to the academic 
     training of participants as the Director considers 
     appropriate to ensure that participants are prepared for 
     employment as intelligence analysts; and
       (2) periodically review the areas of specialization of the 
     elements of the intelligence community to determine the areas 
     in which such elements are, or are likely to be, deficient in 
     analytic capabilities.
       (c) Duration.--The Director shall carry out the pilot 
     program under subsection (a) during fiscal years 2004 through 
     2006.
       (d) Limitation on Number of Members During Fiscal Year 
     2004.--The total number of individuals participating in the 
     pilot program under subsection (a) during fiscal year 2004 
     may not exceed 150 students.
       (e) Responsibility.--The Director shall carry out the pilot 
     program under subsection (a) through the Assistant Director 
     of Central Intelligence for Analysis and Production.
       (f) Reports.--(1) Not later than 120 days after the date of 
     the enactment of this Act, the Director shall submit to 
     Congress a preliminary report on the pilot program under 
     subsection (a), including a description of the pilot program 
     and the authorities to be utilized in carrying out the pilot 
     program.
       (2) Not later than one year after the commencement of the 
     pilot program, the Director shall submit to Congress a report 
     on the pilot program. The report shall include--
       (A) a description of the activities under the pilot 
     program, including the number of individuals who participated 
     in the pilot program and the training provided such 
     individuals under the pilot program;
       (B) an assessment of the effectiveness of the pilot program 
     in meeting the purpose of the pilot program; and
       (C) any recommendations for additional legislative or 
     administrative action that the Director considers appropriate 
     in light of the pilot program.
       (g) Funding.--Of the amounts authorized to be appropriated 
     by this Act, $4,000,000 shall be available until expended to 
     carry out this section.

     SEC. 319. IMPROVEMENT OF EQUALITY OF EMPLOYMENT OPPORTUNITIES 
                   IN THE INTELLIGENCE COMMUNITY.

       (a) Findings.--Congress makes the following findings:
       (1) It is the recommendation of the Joint Inquiry of the 
     Senate Select Committee on Intelligence and the House 
     Permanent Select Committee on Intelligence into Intelligence 
     Community Activities Before and After the Terrorist Attacks 
     of September 11, 2001, that the Intelligence Community should 
     enhance recruitment of a more ethnically and culturally 
     diverse workforce and devise a strategy to capitalize upon 
     the unique cultural and linguistic capabilities of first 
     generation Americans.
       (2) The Intelligence Community could greatly benefit from 
     an increased number of employees who are proficient in 
     foreign languages and knowledgeable of world cultures, 
     especially in foreign languages that are critical to the 
     national security interests of the United States. Particular 
     emphasis should be given to the recruitment of United States 
     citizens whose linguistic capabilities are acutely required 
     for the improvement of the overall intelligence collection 
     and analysis effort of the United States Government.
       (3) The Intelligence Community has a significantly lower 
     percentage of women and minorities than the total workforce 
     of the Federal government and the total civilian labor force.
       (4) Women and minorities continue to be under-represented 
     in senior grade levels, and in core mission areas, of the 
     intelligence community.
       (b) Pilot Project To Promote Equality of Employment 
     Opportunities for Women and Minorities Throughout the 
     Intelligence Community Using Innovative Methodologies.--The 
     Director of Central Intelligence shall carry out a pilot 
     project under this section to test and evaluate alternative, 
     innovative methods to promote equality of employment 
     opportunities in the intelligence community for women, 
     minorities, and individuals with diverse ethnic and cultural 
     backgrounds, skills, language proficiency, and expertise.
       (c) Methods.--In carrying out the pilot project, the 
     Director shall employ methods to increase diversity of 
     officers and employees in the intelligence community.
       (d) Duration of Project.--The Director shall carry out the 
     project under this section for a 3-year period.
       (e) Report.--Not later than 2 years after the date the 
     Director implements the pilot project under this section, the 
     Director shall submit to Congress a report on the project. 
     The report shall include--
       (1) an assessment of the effectiveness of the project; and
       (2) recommendations on the continuation of the project, as 
     well recommendations as for improving the effectiveness of 
     the project in meeting the goals of promoting equality of 
     employment opportunities in the intelligence community for 
     women, minorities, and individuals with diverse ethnic and 
     cultural backgrounds, skills, language proficiency, and 
     expertise.
       (f) Diversity Plan.--(1) Not later than February 15, 2004, 
     the Director of Central Intelligence shall submit to Congress 
     a report which

[[Page 29789]]

     describes the plan of the Director, entitled the ``DCI 
     Diversity Strategic Plan'', and any subsequent revision to 
     that plan, to increase diversity of officers and employees in 
     the intelligence community, including the short- and long-
     term goals of the plan. The report shall also provide a 
     detailed description of the progress that has been made by 
     each element of the intelligence community in implementing 
     the plan.
       (2) In implementing the plan, the Director shall 
     incorporate innovative methods for recruitment and hiring 
     that the Director has determined to be effective from the 
     pilot project carried out under this section.
       (g) Intelligence Community Defined.--In this section, the 
     term ``intelligence community'' has the meaning given that 
     term in section 3(4) of the National Security Act of 1947 (50 
     U.S.C. 401(4)).

     SEC. 320. SENSE OF CONGRESS ON RECRUITMENT AS INTELLIGENCE 
                   COMMUNITY PERSONNEL OF MEMBERS OF THE ARMED 
                   FORCES ON THEIR DISCHARGE OR RELEASE FROM DUTY.

       It is the sense of Congress that the elements of the 
     intelligence community should, in the course of their 
     civilian recruitment efforts in the United States, endeavor 
     to recruit as personnel of the intelligence community 
     citizens and, as appropriate, nationals of the United States 
     who are members of the Armed Forces who participated in 
     Operation Enduring Freedom, Operation Iraqi Freedom, and 
     other campaigns undertaken abroad upon the separation, 
     discharge, or release of such individuals from the Armed 
     Forces.

     SEC. 321. EXTERNAL COLLECTION CAPABILITIES AND REQUIREMENTS 
                   REVIEW PANEL.

       The President may establish an External Collection 
     Capabilities and Requirements Review Panel as specified in 
     the classified annex to this Act.
                    Subtitle C--Counterintelligence

     SEC. 341. COUNTERINTELLIGENCE INITIATIVES FOR THE 
                   INTELLIGENCE COMMUNITY.

       (a) In General.--(1) Title XI of the National Security Act 
     of 1947 (50 U.S.C. 401 et seq.) is amended by adding at the 
     end the following new section:


                   ``counterintelligence initiatives

       ``Sec. 1102. (a) Inspection Process.--(1) In order to 
     protect intelligence sources and methods from unauthorized 
     disclosure, the Director of Central Intelligence shall 
     establish and implement an inspection process for all 
     agencies and departments of the United States that handle 
     classified information relating to the national security of 
     the United States intended to assure that those agencies and 
     departments maintain effective operational security practices 
     and programs directed against counterintelligence activities.
       ``(2) The Director shall carry out the process through the 
     Office of the National Counterintelligence Executive.
       ``(b) Annual Review of Dissemination Lists.--(1) The 
     Director of Central Intelligence shall establish and 
     implement a process for all elements of the intelligence 
     community to review, on an annual basis, individuals included 
     on distribution lists for access to classified information. 
     Such process shall ensure that only individuals who have a 
     particularized `need to know' (as determined by the Director) 
     are continued on such distribution lists.
       ``(2) Not later than October 15 of each year, the Director 
     shall certify to the congressional intelligence committees 
     that the review required under paragraph (1) has been 
     conducted in all elements of the intelligence community 
     during the preceding fiscal year.
       ``(c) Completion of Financial Disclosure Statements 
     Required for Access to Certain Classified Information.--(1) 
     The Director of Central Intelligence shall establish and 
     implement a process by which each head of an element of the 
     intelligence community directs that all employees of that 
     element, in order to be granted access to classified 
     information referred to in subsection (a) of section 1.3 of 
     Executive Order No. 12968 (August 2, 1995; 60 F.R. 40245; 50 
     U.S.C. 435 note), submit financial disclosure forms as 
     required under subsection (b) of such section.
       ``(2) The Director shall carry out paragraph (1) through 
     the Office of the National Counterintelligence Executive.
       ``(d) Arrangements To Handle Sensitive Information.--The 
     Director of Central Intelligence shall establish, for all 
     elements of the intelligence community, programs and 
     procedures by which sensitive classified information relating 
     to human intelligence is safeguarded against unauthorized 
     disclosure by employees of those elements.''.
       (2) The table of contents contained in the first section of 
     such Act is amended in the items relating to title XI by 
     adding at the end the following new item:

``Sec. 1102. Counterintelligence initiatives.''.

       (b) Intelligence and National Security Aspects of Espionage 
     Prosecutions.--The Attorney General, acting through the 
     Office of Intelligence Policy and Review of the Department of 
     Justice, and in consultation with the Director of Central 
     Intelligence, acting through the Office of the National 
     Counterintelligence Executive, shall establish policies and 
     procedures to assist the Attorney General in the 
     consideration of intelligence and national security-related 
     equities in the development of charging documents and related 
     pleadings in espionage prosecutions.
                          Subtitle D--Reports

     SEC. 351. REPORT ON CLEARED INSIDER THREAT TO CLASSIFIED 
                   COMPUTER NETWORKS.

       (a) Report Required.--The Director of Central Intelligence 
     and the Secretary of Defense shall jointly submit to the 
     appropriate committees of Congress a report on the risks to 
     the national security of the United States of the current 
     computer security practices of the elements of the 
     intelligence community and of the Department of Defense.
       (b) Assessments.--The report under subsection (a) shall 
     include an assessment of the following:
       (1) The vulnerability of the computers and computer systems 
     of the elements of the intelligence community, and of the 
     Department of Defense, to various threats from foreign 
     governments, international terrorist organizations, and 
     organized crime, including information warfare (IW), 
     Information Operations (IO), Computer Network Exploitation 
     (CNE), and Computer Network Attack (CNA).
       (2) The risks of providing users of local area networks 
     (LANs) or wide-area networks (WANs) of computers that include 
     classified information with capabilities for electronic mail, 
     upload and download, or removable storage media without also 
     deploying comprehensive computer firewalls, accountability 
     procedures, or other appropriate security controls.
       (3) Any other matters that the Director and the Secretary 
     jointly consider appropriate for purposes of the report.
       (c) Information on Access to Networks.--The report under 
     subsection (a) shall also include information as follows:
       (1) An estimate of the number of access points on each 
     classified computer or computer system of an element of the 
     intelligence community or the Department of Defense that 
     permit unsupervised uploading or downloading of classified 
     information, set forth by level of classification.
       (2) An estimate of the number of individuals utilizing such 
     computers or computer systems who have access to input-output 
     devices on such computers or computer systems.
       (3) A description of the policies and procedures governing 
     the security of the access points referred to in paragraph 
     (1), and an assessment of the adequacy of such policies and 
     procedures.
       (4) An assessment of the viability of utilizing other 
     technologies (including so-called ``thin client servers'') to 
     achieve enhanced security of such computers and computer 
     systems through more rigorous control of access to such 
     computers and computer systems.
       (d) Recommendations.--The report under subsection (a) shall 
     also include such recommendations for modifications or 
     improvements of the current computer security practices of 
     the elements of the intelligence community, and of the 
     Department of Defense, as the Director and the Secretary 
     jointly consider appropriate as a result of the assessments 
     under subsection (b) and the information under subsection 
     (c).
       (e) Submittal Date.--The report under subsection (a) shall 
     be submitted not later than February 15, 2004.
       (f) Form.--The report under subsection (a) may be submitted 
     in classified or unclassified form, at the election of the 
     Director.
       (g) Definitions.--In this section:
       (1) The term ``appropriate committees of Congress'' means--
       (A) the Select Committee on Intelligence and the Committee 
     on Armed Services of the Senate; and
       (B) the Permanent Select Committee on Intelligence and the 
     Committee on Armed Services of the House of Representatives.
       (2) The term ``elements of the intelligence community'' 
     means the elements of the intelligence community set forth in 
     or designated under section 3(4) of the National Security Act 
     of 1947 (50 U.S.C. 401a(4)).

     SEC. 352. REPORT ON SECURITY BACKGROUND INVESTIGATIONS AND 
                   SECURITY CLEARANCE PROCEDURES OF THE FEDERAL 
                   GOVERNMENT.

       (a) Report Required.--The Director of Central Intelligence, 
     the Secretary of Defense, the Attorney General, the Director 
     of the Office of Personnel Management, and the heads of other 
     appropriate Federal departments and agencies (as determined 
     by the President) shall jointly submit to the appropriate 
     committees of Congress a report on the utility and 
     effectiveness of the current security background 
     investigations and security clearance procedures of the 
     Federal Government in meeting the purposes of such 
     investigations and procedures.
       (b) Particular Report Matters.--The report shall address in 
     particular the following:
       (1) A comparison of the costs and benefits of conducting 
     background investigations for Secret clearance with the costs 
     and benefits of conducting full field background 
     investigations.
       (2) The standards governing the revocation of security 
     clearances.
       (c) Recommendations.--The report under subsection (a) shall 
     include such recommendations for modifications or 
     improvements of the current security background 
     investigations or security clearance procedures of the 
     Federal Government as are considered appropriate as a result 
     of the preparation of the report under that subsection.
       (d) Submittal Date.--The report under subsection (a) shall 
     be submitted not later than February 15, 2004.
       (e) Appropriate Committees of Congress Defined.--In this 
     section, the term ``appropriate committees of Congress'' 
     means--
       (1) the Select Committee on Intelligence and the Committees 
     on Armed Services and the Judiciary of the Senate; and
       (2) the Permanent Select Committee on Intelligence and the 
     Committees on Armed Services

[[Page 29790]]

     and the Judiciary of the House of Representatives.

     SEC. 353. REPORT ON DETAIL OF CIVILIAN INTELLIGENCE PERSONNEL 
                   AMONG ELEMENTS OF THE INTELLIGENCE COMMUNITY 
                   AND THE DEPARTMENT OF DEFENSE.

       (a) Report Required.--The Director of Central Intelligence 
     shall, in consultation with the heads of the elements of the 
     intelligence community, submit to the appropriate committees 
     of Congress a report on means of improving the detail or 
     transfer of civilian intelligence personnel between and among 
     the various elements of the intelligence community for the 
     purpose of enhancing the flexibility and effectiveness of the 
     intelligence community in responding to changes in 
     requirements for the collection, analysis, and dissemination 
     of intelligence.
       (b) Report Elements.--The report under subsection (a) 
     shall--
       (1) set forth a variety of proposals on means of improving 
     the detail or transfer of civilian intelligence personnel as 
     described in that subsection;
       (2) identify the proposal or proposals determined by the 
     heads of the elements of the intelligence community most 
     likely to meet the purpose described in that subsection; and
       (3) include such recommendations for such legislative or 
     administrative action as the heads of the elements of the 
     intelligence community consider appropriate to implement the 
     proposal or proposals identified under paragraph (2).
       (c) Submittal Date.--The report under subsection (a) shall 
     be submitted not later than February 15, 2004.
       (d) Definitions.--In this section:
       (1) The term ``appropriate committees of Congress'' means--
       (A) the Select Committee on Intelligence and the Committees 
     on Armed Services, Governmental Affairs, and the Judiciary of 
     the Senate; and
       (B) the Permanent Select Committee on Intelligence and the 
     Committees on Armed Services, Government Reform, and the 
     Judiciary of the House of Representatives.
       (2) The term ``elements of the intelligence community'' 
     means the elements of the intelligence community set forth in 
     or designated under section 3(4) of the National Security Act 
     of 1947 (50 U.S.C. 401a(4)).
       (3) The term ``heads of the elements of the intelligence 
     community'' includes the Secretary of Defense with respect to 
     each element of the intelligence community within the 
     Department of Defense or the military departments.

     SEC. 354. REPORT ON MODIFICATIONS OF POLICY AND LAW ON 
                   CLASSIFIED INFORMATION TO FACILITATE SHARING OF 
                   INFORMATION FOR NATIONAL SECURITY PURPOSES.

       (a) Report.--Not later than four months after the date of 
     the enactment of this Act, the President shall submit to the 
     appropriate committees of Congress a report that--
       (1) identifies impediments in current policy and 
     regulations to the sharing of classified information 
     horizontally across and among Federal departments and 
     agencies, and vertically between the Federal Government and 
     agencies of State and local governments and the private 
     sector, for national security purposes, including homeland 
     security; and
       (2) proposes appropriate modifications of policy, law, and 
     regulations to eliminate such impediments in order to 
     facilitate such sharing of classified information for 
     national security purposes, including homeland security.
       (b) Considerations.--In preparing the report under 
     subsection (a), the President shall--
       (1) consider the extent to which the reliance on a 
     document-based approach to the protection of classified 
     information impedes the sharing of classified information; 
     and
       (2) consider the extent to which the utilization of a 
     database-based approach, or other electronic approach, to the 
     protection of classified information might facilitate the 
     sharing of classified information.
       (c) Coordination With Other Information Sharing 
     Activities.--In preparing the report under subsection (a), 
     the President shall, to the maximum extent practicable, take 
     into account actions being undertaken under the Homeland 
     Security Information Sharing Act (subtitle I of title VIII of 
     Public Law 107-296; 116 Stat. 2252; 6 U.S.C. 481 et seq.).
       (d) Appropriate Committees of Congress Defined.--In this 
     section, the term ``appropriate committees of Congress'' 
     means--
       (1) the Select Committee on Intelligence and the Committees 
     on Armed Services, Governmental Affairs, and the Judiciary of 
     the Senate; and
       (2) the Permanent Select Committee on Intelligence, the 
     Select Committee on Homeland Security, and the Committees on 
     Armed Services and the Judiciary of the House of 
     Representatives.

     SEC. 355. REPORT ON STRATEGIC PLANNING.

       (a) Report.--Not later than February 15, 2004, the 
     Secretary of Defense and the Director of Central Intelligence 
     shall jointly submit to the appropriate committees of 
     Congress a report that assesses progress in the following:
       (1) The development by the Department of Defense and the 
     intelligence community of a comprehensive and uniform 
     analytical capability to assess the utility and advisability 
     of various sensor and platform architectures and capabilities 
     for the collection of intelligence.
       (2) The improvement of coordination between the Department 
     and the intelligence community on strategic and budgetary 
     planning.
       (b) Form.--The report under subsection (a) may be submitted 
     in classified form.
       (c) Appropriate Committees of Congress Defined.--In this 
     section, the term ``appropriate committees of Congress'' 
     means--
       (1) the Select Committee on Intelligence and the Committee 
     on Armed Services of the Senate; and
       (2) the Permanent Select Committee on Intelligence and the 
     Committee on Armed Services of the House of Representatives.

     SEC. 356. REPORT ON UNITED STATES DEPENDENCE ON COMPUTER 
                   HARDWARE AND SOFTWARE MANUFACTURED OVERSEAS.

       (a) Report.--Not later than February 15, 2004, the Director 
     of Central Intelligence shall submit to the appropriate 
     committees of Congress a report on the extent of United 
     States dependence on computer hardware or software that is 
     manufactured overseas.
       (b) Elements.--The report under subsection (a) shall 
     address the following:
       (1) The extent to which the United States currently depends 
     on computer hardware or software that is manufactured 
     overseas.
       (2) The extent to which United States dependence, if any, 
     on such computer hardware or software is increasing.
       (3) The vulnerabilities of the national security and 
     economy of the United States as a result of United States 
     dependence, if any, on such computer hardware or software.
       (4) Any other matters relating to United States dependence, 
     if any, on such computer hardware or software that the 
     Director considers appropriate.
       (c) Consultation With Private Sector.--(1) In preparing the 
     report under subsection (a), the Director may consult, and is 
     encouraged to consult, with appropriate persons and entities 
     in the computer hardware or software industry and with other 
     appropriate persons and entities in the private sector.
       (2) Consultations of the Director with persons or entities 
     under paragraph (1) shall not be treated as the activities of 
     an advisory committee for purposes of the Federal Advisory 
     Committee Act (5 U.S.C. App.).
       (d) Form.--(1) The report under subsection (a) shall be 
     submitted in unclassified form, but may include a classified 
     annex.
       (2) The report may be in the form of a National 
     Intelligence Estimate.
       (e) Appropriate Committees of Congress Defined.--In this 
     section, the term ``appropriate committees of Congress'' 
     means--
       (1) the Select Committee on Intelligence and the Committee 
     on Armed Services of the Senate; and
       (2) the Permanent Select Committee on Intelligence and the 
     Committee on Armed Services of the House of Representatives.

     SEC. 357. REPORT ON LESSONS LEARNED FROM MILITARY OPERATIONS 
                   IN IRAQ.

       (a) Report.--As soon as possible, but not later than one 
     year after the date of the enactment of this Act, the 
     Director of Central Intelligence shall submit to the 
     appropriate committees of Congress a report on the 
     intelligence lessons learned as a result of Operation Iraqi 
     Freedom, including lessons relating to the following:
       (1) The tasking, collection, processing, exploitation, 
     analysis, and dissemination of intelligence.
       (2) The accuracy, timeliness, and objectivity of 
     intelligence analysis.
       (3) The intelligence support available to policymakers and 
     members of the Armed Forces in combat.
       (4) The coordination of intelligence activities and 
     operations with military operations.
       (5) The strengths and limitations of intelligence systems 
     and equipment.
       (6) Such other matters as the Director considers 
     appropriate.
       (b) Recommendations.--The report under subsection (a) shall 
     include such recommendations on improvement in the matters 
     described in subsection (a) as the Director considers 
     appropriate.
       (c) Appropriate Committees of Congress Defined.--In this 
     section, the term ``appropriate committees of Congress'' 
     means--
       (1) the Permanent Select Committee on Intelligence and the 
     Committee on Armed Services of the House of Representatives; 
     and
       (2) the Select Committee on Intelligence and the Committee 
     on Armed Services of the Senate.

     SEC. 358. REPORTS ON CONVENTIONAL WEAPONS AND AMMUNITION 
                   OBTAINED BY IRAQ IN VIOLATION OF CERTAIN UNITED 
                   NATIONS SECURITY COUNCIL RESOLUTIONS.

       (a) Preliminary Report.--Not later than 90 days after the 
     date of the enactment of this Act, the Director of the 
     Defense Intelligence Agency shall, after such consultation 
     with the Secretary of State and the Attorney General as the 
     Director considers appropriate, submit to the appropriate 
     committees of Congress a preliminary report on all 
     information obtained by the Department of Defense and the 
     intelligence community on the conventional weapons and 
     ammunition obtained by Iraq in violation of applicable 
     resolutions of the United Nations Security Council adopted 
     since the invasion of Kuwait by Iraq in August 1990.
       (b) Final Report.--(1) Not later than one year after the 
     date of the enactment of this Act, the Director shall submit 
     to the appropriate committees of Congress a final report on 
     the information described in subsection (a).
       (2) The final report under paragraph (1) shall include such 
     updates of the preliminary report under subsection (a) as the 
     Director considers appropriate.
       (c) Elements.--Each report under this section shall set 
     forth, to the extent practicable, with

[[Page 29791]]

     respect to each shipment of weapons or ammunition addressed 
     in such report the following:
       (1) The country of origin.
       (2) Any country of transshipment.
       (d) Form.--Each report under this section shall be 
     submitted in unclassified form, but may include a classified 
     annex.
       (e) Appropriate Committees of Congress Defined.--In this 
     section, the term ``appropriate committees of Congress'' 
     means--
       (1) the Select Committee on Intelligence and the Committees 
     on Armed Services and Foreign Relations of the Senate; and
       (2) the Permanent Select Committee on Intelligence and the 
     Committees on Armed Services and International Relations of 
     the House of Representatives.

     SEC. 359. REPORT ON OPERATIONS OF DIRECTORATE OF INFORMATION 
                   ANALYSIS AND INFRASTRUCTURE PROTECTION AND 
                   TERRORIST THREAT INTEGRATION CENTER.

       (a) Report Required.--The President shall submit to the 
     appropriate committees of Congress a report on the operations 
     of the Directorate of Information Analysis and Infrastructure 
     Protection of the Department of Homeland Security and the 
     Terrorist Threat Integration Center. The report shall include 
     the following:
       (1) An assessment of the operations of the Directorate and 
     the Center, including the capabilities of each--
       (A) to meet personnel requirements, including requirements 
     to employ qualified analysts, and the status of efforts to 
     employ qualified analysts;
       (B) to share intelligence information with the other 
     elements of the intelligence community, including the sharing 
     of intelligence information through secure information 
     technology connections between the Directorate, the Center, 
     and the other elements of the intelligence community;
       (C) to disseminate intelligence information, or analyses of 
     intelligence information, to other departments and agencies 
     of the Federal Government and, as appropriate, to State and 
     local governments;
       (D) to coordinate with State and local counterterrorism and 
     law enforcement officials;
       (E) to receive information from Federal, State, and local 
     officials, and private sector entities, relating to the 
     respective responsibilities and authorities of the 
     Directorate and the Center; and
       (F) to access information, including intelligence and law 
     enforcement information, from the departments and agencies of 
     the Federal Government, including the ability of the 
     Directorate to access, in a timely and efficient manner, all 
     information authorized by section 202 of the Homeland 
     Security Act of 2002 (Public Law 107-296; 6 U.S.C. 122).
       (2) An assessment of the ability of the Center to fulfill 
     the responsibilities assigned to it by the President given 
     its structure, authorities, current assets, and capabilities.
       (3) An assessment of the ability of the Directorate to 
     fulfill the responsibilities set forth in section 201 of the 
     Homeland Security Act of 2002 (6 U.S.C. 121) given its 
     current assets and capabilities.
       (4) A plan of action (including appropriate milestones, 
     funding, and sources of funding) for bringing the Center to 
     its full operational capacity as called for in the 
     Information on the State of the Union given by the President 
     to Congress under section 3 of Article II of the Constitution 
     of the United States in 2003.
       (5) A delineation of the responsibilities and duties of the 
     Directorate and of the responsibilities and duties of the 
     Center.
       (6) A delineation and summary of the areas in which the 
     responsibilities and duties of the Directorate, the Center, 
     and other elements of the Federal Government overlap.
       (7) An assessment of whether the areas of overlap, if any, 
     delineated under paragraph (6) represent an inefficient 
     utilization of resources.
       (8) A description of the policies and procedures to ensure 
     that the Directorate and the Center comply with the 
     Constitution and applicable statutes, Executive orders, and 
     regulations of the United States.
       (9) The practical impact, if any, of the operations of the 
     Center on individual liberties and privacy.
       (10) Such information as the President considers 
     appropriate to explain the basis for the establishment and 
     operation of the Center as a ``joint venture'' of 
     participating agencies rather than as an element of the 
     Directorate reporting directly to the Secretary of Homeland 
     Security through the Under Secretary of Homeland Security for 
     Information Analysis and Infrastructure Protection.
       (b) Submittal Date.--The report required by this section 
     shall be submitted not later than May 1, 2004.
       (c) Form.--The report required by this section shall be 
     submitted in unclassified form, but may include a classified 
     annex.
       (d) Appropriate Committees of Congress Defined.--In this 
     section, the term ``appropriate committees of Congress'' 
     means--
       (1) the Select Committee on Intelligence and the Committees 
     on Governmental Affairs, the Judiciary, and Appropriations of 
     the Senate; and
       (2) the Permanent Select Committee on Intelligence, the 
     Select Committee on Homeland Security, and the Committees on 
     the Judiciary and Appropriations of the House of 
     Representatives.

     SEC. 360. REPORT ON TERRORIST SCREENING CENTER.

       (a) Report.--Not later than September 16, 2004, the 
     President shall submit to Congress a report on the 
     establishment and operation of the Terrorist Screening 
     Center, established on September 16, 2003, by Homeland 
     Security Presidential Directive 6, including the matters 
     described in subsection (b).
       (b) Covered Matters.--The matters referred to in subsection 
     (a) are the following:
       (1) An analysis of the operations of the Terrorist 
     Screening Center to ensure that the Terrorist Screening 
     Center does not violate the Constitution, or any statute, 
     Executive order, or regulation of the United States.
       (2) A description of the architecture of the database 
     system of the Terrorist Screening Center, including the 
     number of databases maintained, operated, or administered by 
     the Terrorist Screening Center, and the extent to which these 
     databases have been integrated.
       (3) A determination of whether data from all watch lists 
     detailed in the April 2003 report of the Comptroller General 
     of the United States, entitled ``Information Technology: 
     Terrorist Watch Lists should be Consolidated to promote 
     Better Integration and Sharing,'' have been incorporated into 
     the Terrorist Screening Center database system.
       (4) A determination of whether there remain any relevant 
     databases that are not yet part of the Terrorist Screening 
     Center database system.
       (5) A schedule that specifies the dates on which each 
     Federal watch list database identified in the report referred 
     to in paragraph (3), or determined under paragraph (4) to be 
     not yet part of the Terrorist Screening Center database 
     system, were, or will be, integrated into the Terrorist 
     Screening Center database system.
       (6) A description of the protocols in effect to ensure the 
     protection of classified and sensitive information contained 
     in the Terrorist Screening Center database system.
       (7) A description of--
       (A) the process by which databases in the Terrorist 
     Screening Center database system are reviewed for accuracy 
     and timeliness of data and the frequency of updates of such 
     reviews; and
       (B) the mechanism used to ensure that data within a 
     particular database is synchronized and replicated throughout 
     the database system of the Terrorist Screening Center.
       (8) A description of the extent to which the Terrorist 
     Screening Center makes information available to the private 
     sector and critical infrastructure components, and the 
     criteria for determining which private sector and critical 
     infrastructure components receive that information.
       (9) The number of individuals listed in the Terrorist 
     Screening Center database system.
       (10) The estimated operating budget of, and sources of 
     funding for, the Terrorist Screening Center for each of 
     fiscal years 2004, 2005, and 2006.
       (11) An assessment of the impact of the Terrorist Screening 
     Center on current law enforcement systems.
       (12) The practical impact, if any, of the operations of the 
     Terrorist Screening Center on individual liberties and 
     privacy.
       (13) Such recommendations as the President considers 
     appropriate for modifications of law or policy to ensure the 
     continuing operation of the Terrorist Screening Center.
       (c) Form of Report.--The report required by subsection (a) 
     shall be submitted in unclassified form, but may include a 
     classified annex.

     SEC. 361. REPEAL AND MODIFICATION OF REPORT REQUIREMENTS 
                   RELATING TO INTELLIGENCE ACTIVITIES.

       (a) Annual Evaluation of Performance and Responsiveness of 
     Intelligence Community.--Section 105 of the National Security 
     Act of 1947 (50 U.S.C. 403-5) is amended by striking 
     subsection (d).
       (b) Periodic Reports on Disclosure of Intelligence 
     Information to United Nations.--Section 112(b) of the 
     National Security Act of 1947 (50 U.S.C. 404g(b)(1)) is 
     amended--
       (1) in the subsection caption, by striking ``Periodic'' and 
     inserting ``Annual'';
       (2) in paragraph (1), by striking ``semiannually'' and 
     inserting ``annually''; and
       (3) in paragraph (3), by striking ``periodic'' and 
     inserting ``the annual''.
       (c) Annual Report on Intelligence Community Cooperation 
     With Counterdrug Activities.--Section 114 of the National 
     Security Act of 1947 (50 U.S.C. 404i) is amended--
       (1) by striking subsection (a); and
       (2) by redesignating subsections (b) through (f) as 
     subsections (a) through (e), respectively.
       (d) Annual Report on Covert Leases.--Section 114 of the 
     National Security Act of 1947, as amended by this section, is 
     further amended--
       (1) by striking subsection (d); and
       (2) by redesignating subsection (e) as subsection (d).
       (e) Annual Report on Certain Foreign Companies Involved in 
     Proliferation of Weapons of Mass Destruction.--Section 827 of 
     the Intelligence Authorization Act for Fiscal Year 2003 
     (Public Law 107-306; 116 Stat. 2430; 50 U.S.C. 404n-3) is 
     repealed.
       (f) Annual Report on Intelligence Activities of People's 
     Republic of China.--Section 308 of the Intelligence 
     Authorization Act for Fiscal Year 1998 (Public Law 105-107; 
     111 Stat. 2253; 50 U.S.C. 402a note) is repealed.
       (g) Annual Report on Coordination of Counterintelligence 
     Matters With FBI.--Section 811(c) of the Counterintelligence 
     and Security Enhancements Act of 1994 (title VIII of Public 
     Law 103-359; 50 U.S.C. 402a(c)) is amended--
       (1) by striking paragraph (6); and
       (2) by redesignating paragraphs (7) and (8) as paragraphs 
     (6) and (7), respectively.
       (h) Annual Report on Postemployment Assistance for 
     Terminated Intelligence Employees.--Section 1611 of title 10, 
     United States Code, is amended by striking subsection (e).

[[Page 29792]]

       (i) Annual Report on Activities of FBI Personnel Outside 
     the United States.--Section 540C of title 28, United States 
     Code, is repealed.
       (j) Annual Report on Exceptions to Consumer Disclosure 
     Requirements for National Security Investigations.--Section 
     604(b)(4) of the Fair Credit Reporting Act (15 U.S.C. 
     1681b(b)(4)) is amended--
       (1) by striking subparagraphs (D) and (E); and
       (2) by redesignating subparagraph (F) as subparagraph (D).
       (k) Reports on Acquisition of Technology Relating to 
     Weapons of Mass Destruction and Advanced Conventional 
     Munitions.--Subsection (b)(1) of section 721 of the 
     Intelligence Authorization Act for Fiscal Year 1997 (Public 
     Law 104-293; 50 U.S.C. 2366) is amended by striking ``a 
     semiannual'' and inserting ``an annual''.
       (l) Conforming Amendments.--Section 507 of the National 
     Security Act of 1947 (50 U.S.C. 415b) is amended--
       (1) in subsection (a)--
       (A) in paragraph (1)--
       (i) by striking subparagraphs (A), (C), (G), (I), (J), and 
     (L);
       (ii) by redesignating subparagraphs (B), (D), (E), (H), 
     (K), (M), and (N) as subparagraphs (A), (C), (D), (G), (H), 
     and (I), respectively;
       (iii) by inserting after subparagraph (A), as so 
     redesignated, the following new subparagraph (B):
       ``(B) The annual report on intelligence provided to the 
     United Nations required by section 112(b)(1).''; and
       (iv) by inserting after subparagraph (D), as so 
     redesignated, the following new subparagraph (E):
       ``(E) The annual report on the acquisition of technology 
     relating to weapons of mass destruction and advanced 
     conventional munitions required by section 721 of the 
     Intelligence Authorization Act for Fiscal Year 1997 (Public 
     Law 104-293; 50 U.S.C. 2366).''; and
       (B) in paragraph (2)--
       (i) in subparagraph (A), by striking ``section 114(b)'' and 
     inserting ``section 114(a)'';
       (ii) in subparagraph (B), by striking ``section 114(d)'' 
     and inserting ``section 114(c)'';
       (iii) by striking subparagraphs (C), (E), and (F); and
       (iv) by redesignating subparagraphs (D) and (G) as 
     subparagraphs (C) and (D), respectively; and
       (2) in subsection (b)--
       (A) by striking paragraphs (1) and (4); and
       (B) by redesignating paragraphs (2), (3), (5), (6), (7), 
     and (8) as paragraphs (1), (2), (3), (4), (5), and (6), 
     respectively.
       (m) Clerical Amendments.--
       (1) National security act of 1947.--The table of contents 
     for the National Security Act of 1947 is amended by striking 
     the item relating to section 603.
       (2) Title 28, united states code.--The table of sections at 
     the beginning of chapter 33 of title 28, United States Code, 
     is amended by striking the item relating to section 540C.
       (n) Effective Date.--The amendments made by this section 
     shall take effect on December 31, 2003.
                       Subtitle E--Other Matters

     SEC. 371. EXTENSION OF SUSPENSION OF REORGANIZATION OF 
                   DIPLOMATIC TELECOMMUNICATIONS SERVICE PROGRAM 
                   OFFICE.

       Section 311 of the Intelligence Authorization Act for 
     Fiscal Year 2002 (Public Law 107-108; 22 U.S.C. 7301 note) is 
     amended--
       (1) in the heading, by striking ``TWO-YEAR'' before 
     ``SUSPENSION OF REORGANIZATION''; and
       (2) in the text, by striking ``ending on October 1, 2003'' 
     and inserting ``ending on the date that is 60 days after the 
     appropriate congressional committees of jurisdiction (as 
     defined in section 324(d) of that Act (22 U.S.C. 7304(d)) are 
     notified jointly by the Secretary of State (or the 
     Secretary's designee) and the Director of the Office of 
     Management and Budget (or the Director's designee) that the 
     operational framework for the office has been terminated''.

     SEC. 372. MODIFICATIONS OF AUTHORITIES ON EXPLOSIVE 
                   MATERIALS.

       (a) Clarification of Aliens Authorized To Distribute 
     Explosive Materials.--Section 842(d)(7) of title 18, United 
     States Code, is amended--
       (1) in subparagraph (A), by striking ``or'' at the end;
       (2) in subparagraph (B)--
       (A) by inserting ``or'' at the end of clause (i); and
       (B) by striking clauses (iii) and (iv); and
       (3) by adding the following new subparagraphs:
       ``(C) is a member of a North Atlantic Treaty Organization 
     (NATO) or other friendly foreign military force, as 
     determined by the Attorney General in consultation with the 
     Secretary of Defense, who is present in the United States 
     under military orders for training or other military purpose 
     authorized by the United States and the shipping, 
     transporting, possession, or receipt of explosive materials 
     is in furtherance of the authorized military purpose; or
       ``(D) is lawfully present in the United States in 
     cooperation with the Director of Central Intelligence, and 
     the shipment, transportation, receipt, or possession of the 
     explosive materials is in furtherance of such cooperation;''.
       (b) Clarification of Aliens Authorized To Possess or 
     Receive Explosive Materials.--Section 842(i)(5) of title 18, 
     United States Code, is amended--
       (1) in subparagraph (A), by striking ``or'' at the end;
       (2) in subparagraph (B)--
       (A) by inserting ``or'' at the end of clause (i); and
       (B) by striking clauses (iii) and (iv); and
       (3) by adding the following new subparagraphs:
       ``(C) is a member of a North Atlantic Treaty Organization 
     (NATO) or other friendly foreign military force, as 
     determined by the Attorney General in consultation with the 
     Secretary of Defense, who is present in the United States 
     under military orders for training or other military purpose 
     authorized by the United States and the shipping, 
     transporting, possession, or receipt of explosive materials 
     is in furtherance of the authorized military purpose; or
       ``(D) is lawfully present in the United States in 
     cooperation with the Director of Central Intelligence, and 
     the shipment, transportation, receipt, or possession of the 
     explosive materials is in furtherance of such cooperation;''.

     SEC. 373. MODIFICATION OF PROHIBITION ON THE NATURALIZATION 
                   OF CERTAIN PERSONS.

       Section 313(e)(4) of the Immigration and Nationality Act (8 
     U.S.C. 1424(e)(4)) is amended--
       (1) by inserting ``when Department of Defense activities 
     are relevant to the determination'' after ``Secretary of 
     Defense''; and
       (2) by inserting ``and the Secretary of Homeland Security'' 
     after ``Attorney General''.

     SEC. 374. MODIFICATION TO DEFINITION OF FINANCIAL INSTITUTION 
                   IN RIGHT TO FINANCIAL PRIVACY ACT.

       (a) Modification of Definition.--Section 1114 of the Right 
     to Financial Privacy Act of 1978 (12 U.S.C. 3414) is amended 
     by adding at the end the following:
       ``(d) For purposes of this section, and sections 1115 and 
     1117 insofar as they relate to the operation of this section, 
     the term `financial institution' has the same meaning as in 
     subsections (a)(2) and (c)(1) of section 5312 of title 31, 
     United States Code, except that, for purposes of this 
     section, such term shall include only such a financial 
     institution any part of which is located inside any State or 
     territory of the United States, the District of Columbia, 
     Puerto Rico, Guam, American Samoa, the Commonwealth of the 
     Northern Mariana Islands, or the United States Virgin 
     Islands.''.
       (b) Cross Reference Modification.--Section 1101(1) of such 
     Act (12 U.S.C. 3401(1)) is amended by inserting ``, except as 
     provided in section 1114,'' before ``means any office''.

     SEC. 375. COORDINATION OF FEDERAL GOVERNMENT RESEARCH ON 
                   SECURITY EVALUATIONS.

       (a) Workshops for Coordination of Research.--The National 
     Science Foundation and the Office of Science and Technology 
     Policy shall jointly sponsor not less than two workshops on 
     the coordination of Federal Government research on the use of 
     behavioral, psychological, and physiological assessments of 
     individuals in the conduct of security evaluations.
       (b) Deadline for Completion of Activities.--The activities 
     of the workshops sponsored under subsection (a) shall be 
     completed not later than March 1, 2004.
       (c) Purposes.--The purposes of the workshops sponsored 
     under subsection (a) are as follows:
       (1) To provide a forum for cataloging and coordinating 
     federally funded research activities relating to the 
     development of new techniques in the behavioral, 
     psychological, or physiological assessment of individuals to 
     be used in security evaluations.
       (2) To develop a research agenda for the Federal Government 
     on behavioral, psychological, and physiological assessments 
     of individuals, including an identification of the research 
     most likely to advance the understanding of the use of such 
     assessments of individuals in security evaluations.
       (3) To distinguish between short-term and long-term areas 
     of research on behavioral, psychological, and physiological 
     assessments of individuals in order to maximize the utility 
     of short-term and long-term research on such assessments.
       (4) To identify the Federal agencies best suited to support 
     research on behavioral, psychological, and physiological 
     assessments of individuals.
       (5) To develop recommendations for coordinating future 
     federally funded research for the development, improvement, 
     or enhancement of security evaluations.
       (d) Advisory Group.--(1) In order to assist the National 
     Science Foundation and the Office of Science and Technology 
     Policy in carrying out the activities of the workshops 
     sponsored under subsection (a), there is hereby established 
     an interagency advisory group with respect to such workshops.
       (2) The advisory group shall be composed of the following:
       (A) A representative of the Social, Behavioral, and 
     Economic Directorate of the National Science Foundation.
       (B) A representative of the Office of Science and 
     Technology Policy.
       (C) The Secretary of Defense, or a designee of the 
     Secretary.
       (D) The Secretary of State, or a designee of the Secretary.
       (E) The Attorney General, or a designee of the Attorney 
     General.
       (F) The Secretary of Energy, or a designee of the 
     Secretary.
       (G) The Secretary of Homeland Security, or a designee of 
     the Secretary.

[[Page 29793]]

       (H) The Director of Central Intelligence, or a designee of 
     the Director.
       (I) The Director of the Federal Bureau of Investigation, or 
     a designee of the Director.
       (J) The National Counterintelligence Executive, or a 
     designee of the National Counterintelligence Executive.
       (K) Any other official assigned to the advisory group by 
     the President for purposes of this section.
       (3) The members of the advisory group under subparagraphs 
     (A) and (B) of paragraph (2) shall jointly head the advisory 
     group.
       (4) The advisory group shall provide the Foundation and the 
     Office such information, advice, and assistance with respect 
     to the workshops sponsored under subsection (a) as the 
     advisory group considers appropriate.
       (5) The advisory group shall not be treated as an advisory 
     committee for purposes of the Federal Advisory Committee Act 
     (5 U.S.C. App.).
       (e) FOIA Exemption.--All files of the National Science 
     Foundation and the Office of Science and Technology Policy 
     for purposes of administering this section, including any 
     files of a Federal, State, or local department or agency or 
     of a private sector entity provided to or utilized by a 
     workshop or advisory group under this section, shall be 
     exempt from the provisions of section 552 of title 5, United 
     States Code, that require publication, disclosure, search, or 
     review in connection therewith.
       (f) Report.--Not later than March 1, 2004, the National 
     Science Foundation and the Office of Science and Technology 
     Policy shall jointly submit to Congress a report on the 
     results of activities of the workshops sponsored under 
     subsection (a), including the findings and recommendations of 
     the Foundation and the Office as a result of such activities.
       (g) Funding.--(1) Of the amount authorized to be 
     appropriated for the Intelligence Community Management 
     Account by section 104(a), $500,000 shall be available to the 
     National Science Foundation and the Office of Science and 
     Technology Policy to carry out this section.
       (2) The amount authorized to be appropriated by paragraph 
     (1) shall remain available until expended.

     SEC. 376. TREATMENT OF CLASSIFIED INFORMATION IN MONEY 
                   LAUNDERING CASES.

       Section 5318A of title 31, United States Code, is amended 
     by adding at the end the following:
       ``(f) Classified Information.--In any judicial review of a 
     finding of the existence of a primary money laundering 
     concern, or of the requirement for 1 or more special measures 
     with respect to a primary money laundering concern, made 
     under this section, if the designation or imposition, or 
     both, were based on classified information (as defined in 
     section 1(a) of the Classified Information Procedures Act (18 
     U.S.C. App.), such information may be submitted by the 
     Secretary to the reviewing court ex parte and in camera. This 
     subsection does not confer or imply any right to judicial 
     review of any finding made or any requirement imposed under 
     this section.''.

     SEC. 377. TECHNICAL AMENDMENTS.

       (a) National Security Act of 1947.--Section 112(d)(1) of 
     the National Security Act of 1947 (50 U.S.C. 404g(d)(1)) is 
     amended by striking ``section 103(c)(6)'' and inserting 
     ``section 103(c)(7)''.
       (b) Central Intelligence Agency Act of  1949.--(1) Section 
     5(a)(1) of the Central Intelligence Agency Act of 1949 (50 
     U.S.C. 403f(a)(1)) is amended by striking ``(c)(6)'' each 
     place it appears and inserting ``(c)(7)''.
       (2) Section 6 of that Act (50 U.S.C. 403g) is amended by 
     striking ``section 103(c)(6) of the National Security Act of 
     1947 (50 U.S.C. 403-3(c)(6))'' and inserting ``section 
     103(c)(7) of the National Security Act of 1947 (50 U.S.C. 
     403-3(c)(7))''.
       (3) Section 15 of that Act (50 U.S.C. 403o) is amended--
       (A) in subsection (a)(1), by striking ``special policemen 
     of the General Services Administration perform under the 
     first section of the Act entitled `An Act to authorize the 
     Federal Works Administrator or officials of the Federal Works 
     Agency duly authorized by him to appoint special policeman 
     for duty upon Federal property under the jurisdiction of the 
     Federal Works Agency, and for other purposes'(40 U.S.C. 
     318),'' and inserting ``officers and agents of the Department 
     of Homeland Security, as provided in section 1315(b)(2) of 
     title 40, United States Code,''; and
       (B) in subsection (b), by striking ``the fourth section of 
     the Act referred to in subsection (a) of this section (40 
     U.S.C. 318c)'' and inserting ``section 1315(c)(2) of title 
     40, United States Code''.
       (c) National Security Agency Act of  1959.--Section 11 of 
     the National Security Agency Act of 1959 (50 U.S.C. 402 note) 
     is amended--
       (1) in subsection (a)(1), by striking ``special policemen 
     of the General Services Administration perform under the 
     first section of the Act entitled `An Act to authorize the 
     Federal Works Administrator or officials of the Federal Works 
     Agency duly authorized by him to appoint special policeman 
     for duty upon Federal property under the jurisdiction of the 
     Federal Works Agency, and for other purposes'(40 U.S.C. 
     318)'' and inserting ``officers and agents of the Department 
     of Homeland Security, as provided in section 1315(b)(2) of 
     title 40, United States Code,''; and
       (2) in subsection (b), by striking ``the fourth section of 
     the Act referred to in subsection (a) (40 U.S.C. 318c)'' and 
     inserting ``section 1315(c)(2) of title 40, United States 
     Code''.
       (d) Intelligence Authorization Act for Fiscal Year 2003.--
     Section 343 of the Intelligence Authorization Act for Fiscal 
     Year 2003 (Public Law 107-306; 116 Stat. 2399; 50 U.S.C. 
     404n-2) is amended--
       (1) in subsection (c), by striking ``section 103(c)(6) of 
     the National Security Act of 1947 (50 U.S.C. 403-3(c)(6))'' 
     and inserting ``section 103(c)(7) of the National Security 
     Act of 1947 (50 U.S.C. 403-3(c)(7))''; and
       (2) in subsection (e)(2), by striking ``section 103(c)(6)'' 
     and inserting ``section 103(c)(7)''.
       (e) Federal Information Security Management Act of 2002.--
     Section 3535(b)(1) of title 44, United States Code, as added 
     by section 1001(b)(1) of the Homeland Security Act of 2002 
     (Public Law 107-296), and section 3545(b)(1) of title 44, 
     United States Code, as added by section 301(b)(1) of the E-
     Government Act of 2002 (Public Law 107-347), are each amended 
     by inserting ``or any other law'' after ``1978''.
       (f) Public Law 107-173.--Section 201(c)(3)(F) of the 
     Enhanced Border Security and Visa Entry Reform Act of 2002 
     (Public Law 107-173; 116 Stat. 548; 8 U.S.C. 1721(c)(3)(F)) 
     is amended by striking ``section 103(c)(6) of the National 
     Security Act of 1947 (50 U.S.C. 403-3(c)(6))'' and inserting 
     ``section 103(c)(7) of the National Security Act of 1947 (50 
     U.S.C. 403-3(c)(7))''.
                 TITLE IV--CENTRAL INTELLIGENCE AGENCY

     SEC. 401. AMENDMENT TO CERTAIN CENTRAL INTELLIGENCE AGENCY 
                   ACT OF 1949 NOTIFICATION REQUIREMENTS.

       Section 4(b)(5) of the Central Intelligence Agency Act of 
     1949 (50 U.S.C. 403e(b)(5)) is amended by inserting ``, other 
     than regulations under paragraph (1),'' after 
     ``Regulations''.

     SEC. 402. PROTECTION OF CERTAIN CENTRAL INTELLIGENCE AGENCY 
                   PERSONNEL FROM TORT LIABILITY.

       Section 15 of the Central Intelligence Agency Act of 1949 
     (50 U.S.C. 403o) is amended by adding at the end the 
     following new subsection:
       ``(d)(1) Notwithstanding any other provision of law, any 
     Agency personnel designated by the Director under subsection 
     (a), or designated by the Director under section 5(a)(4) to 
     carry firearms for the protection of current or former Agency 
     personnel and their immediate families, defectors and their 
     immediate families, and other persons in the United States 
     under Agency auspices, shall be considered for purposes of 
     chapter 171 of title 28, United States Code, or any other 
     provision of law relating to tort liability, to be acting 
     within the scope of their office or employment when such 
     Agency personnel take reasonable action, which may include 
     the use of force, to--
       ``(A) protect an individual in the presence of such Agency 
     personnel from a crime of violence;
       ``(B) provide immediate assistance to an individual who has 
     suffered or who is threatened with bodily harm; or
       ``(C) prevent the escape of any individual whom such Agency 
     personnel reasonably believe to have committed a crime of 
     violence in the presence of such Agency personnel.
       ``(2) Paragraph (1) shall not affect the authorities of the 
     Attorney General under section 2679 of title 28, United 
     States Code.
       ``(3) In this subsection, the term `crime of violence' has 
     the meaning given that term in section 16 of title 18, United 
     States Code.''.

     SEC. 403. REPEAL OF OBSOLETE LIMITATION ON USE OF FUNDS IN 
                   CENTRAL SERVICES WORKING CAPITAL FUND.

       Section 21(f)(2) of the Central Intelligence Agency Act of 
     1949 (50 U.S.C. 403u(f)(2)) is amended--
       (1) in subparagraph (A), by striking ``(A) Subject to 
     subparagraph (B), the Director'' and inserting ``The 
     Director''; and
       (2) by striking subparagraph (B).

     SEC. 404. PURCHASES BY CENTRAL INTELLIGENCE AGENCY OF 
                   PRODUCTS OF FEDERAL PRISON INDUSTRIES.

       Notwithstanding section 4124 of title 18, United States 
     Code, purchases by the Central Intelligence Agency from 
     Federal Prison Industries shall be made only if the Director 
     of Central Intelligence determines that the product or 
     service to be purchased from Federal Prison Industries best 
     meets the needs of the Agency.

     SEC. 405. POSTPONEMENT OF CENTRAL INTELLIGENCE AGENCY 
                   COMPENSATION REFORM AND OTHER MATTERS.

       (a) Postponement of Compensation Reform Plan.--Section 
     402(a)(2) of the Intelligence Authorization Act for Fiscal 
     Year 2003 (Public Law 107-306; 116 Stat. 2403; 50 U.S.C. 403-
     4 note) is amended by striking ``February 1, 2004,'' and all 
     that follows through the end and inserting ``the date of the 
     enactment of the Intelligence Authorization Act for Fiscal 
     Year 2005.''.
       (b) Contribution by CIA Employees of Certain Bonus Pay to 
     Thrift Savings Plan.--
       (1) Civil service retirement system participants.--Section 
     8351(d) of title 5, United States Code, is amended--
       (A) by inserting ``(1)'' after ``(d)''; and
       (B) by adding at the end the following new paragraph:
       ``(2)(A) Only those employees of the Central Intelligence 
     Agency participating in the pilot project required by section 
     402(b) of the Intelligence Authorization Act for Fiscal Year 
     2003 (Public Law 107-306; 50 U.S.C. 403-4 note) and making 
     contributions to the Thrift Savings Fund out of basic pay may 
     also contribute (by direct transfer to the Fund) any part of 
     bonus pay received by the employee as part of the pilot 
     project.
       ``(B) Contributions under this paragraph are subject to 
     section 8432(d) of this title.''.
       (2) Federal employees' retirement system participants.--
     Section 8432 of title 5, United States Code, is amended by 
     adding at the end the following new subsection:
       ``(k)(1) Only those employees of the Central Intelligence 
     Agency participating in the pilot

[[Page 29794]]

     project required by section 402(b) of the Intelligence 
     Authorization Act for Fiscal Year 2003 (Public Law 107-306; 
     50 U.S.C. 403-4 note) and making contributions to the Thrift 
     Savings Fund out of basic pay may also contribute (by direct 
     transfer to the Fund) any part of bonus pay received by the 
     employee as part of the pilot project.
       ``(2) Contributions under this subsection are subject to 
     subsection (d).
       ``(3) For purposes of subsection (c), basic pay of an 
     employee of the Central Intelligence Agency participating in 
     the pilot project referred to in paragraph (1) shall include 
     bonus pay received by the employee as part of the pilot 
     project.''.
       (c) Report.--(1) The Director of Central Intelligence shall 
     submit to the congressional intelligence committees a report 
     on the amount of compensation (including basic pay, bonuses, 
     and employer contributions to the Thrift Savings Plan) of 
     each employee of the Central Intelligence Agency 
     participating in the pilot project required by section 402(b) 
     of the Intelligence Authorization Act for Fiscal Year 2003 
     (Public Law 107-306; 116 Stat. 2403; 50 U.S.C. 403-4 note), 
     and on the amount that each such employee would have received 
     had such employee received compensation under the existing 
     system of compensation used by the Agency.
       (2) The report required by paragraph (1) shall be submitted 
     together with the report required by paragraph (3) of such 
     section 402(b).
       (3) In this subsection, the term ``congressional 
     intelligence committees'' has the meaning given that term in 
     section 402(d) of the Intelligence Authorization Act for 
     Fiscal Year 2003.
          TITLE V--DEPARTMENT OF DEFENSE INTELLIGENCE MATTERS

     SEC. 501. PROTECTION OF CERTAIN NATIONAL SECURITY AGENCY 
                   PERSONNEL FROM TORT LIABILITY.

       Section 11 of the National Security Agency Act of 1959 (50 
     U.S.C. 402 note) is amended by adding at the end the 
     following new subsection:
       ``(d)(1) Notwithstanding any other provision of law, agency 
     personnel designated by the Director of the National Security 
     Agency under subsection (a) shall be considered for purposes 
     of chapter 171 of title 28, United States Code, or any other 
     provision of law relating to tort liability, to be acting 
     within the scope of their office or employment when such 
     agency personnel take reasonable action, which may include 
     the use of force, to--
       ``(A) protect an individual in the presence of such agency 
     personnel from a crime of violence;
       ``(B) provide immediate assistance to an individual who has 
     suffered or who is threatened with bodily harm; or
       ``(C) prevent the escape of any individual whom such agency 
     personnel reasonably believe to have committed a crime of 
     violence in the presence of such agency personnel.
       ``(2) Paragraph (1) shall not affect the authorities of the 
     Attorney General under section 2679 of title 28, United 
     States Code.
       ``(3) In this subsection, the term `crime of violence' has 
     the meaning given that term in section 16 of title 18, United 
     States Code.''.

     SEC. 502. USE OF FUNDS FOR COUNTERDRUG AND COUNTERTERRORISM 
                   ACTIVITIES FOR COLOMBIA.

       (a) Authority.--Funds designated for intelligence or 
     intelligence-related purposes for assistance to the 
     Government of Colombia for counterdrug activities for fiscal 
     year 2004, and any unobligated funds available to any element 
     of the intelligence community for such activities for a prior 
     fiscal year, shall be available--
       (1) to support a unified campaign by the Government of 
     Colombia against narcotics trafficking and against activities 
     by organizations designated as terrorist organizations (such 
     as the Revolutionary Armed Forces of Colombia (FARC), the 
     National Liberation Army (ELN), and the United Self-Defense 
     Forces of Colombia (AUC)); and
       (2) to take actions to protect human health and welfare in 
     emergency circumstances, including undertaking rescue 
     operations.
       (b) Applicability of Certain Laws and Limitations.--The use 
     of funds pursuant to the authority in subsection (a) shall be 
     subject to the following:
       (1) Sections 556, 567, and 568 of the Foreign Operations, 
     Export Financing, and Related Programs Appropriations Act, 
     2002 (Public Law 107-115; 115 Stat. 2160, 2165, and 2166).
       (2) Section 8077 of the Department of Defense 
     Appropriations Act, 2004 (Public Law 108-87; 117 Stat. 1090).
       (3) The numerical limitations on the number of United 
     States military personnel and United States individual 
     civilian contractors in section 3204(b)(1) of the Emergency 
     Supplemental Act, 2000 (division B of Public Law 106-246; 114 
     Stat. 575), as amended by the Foreign Operations, Export 
     Financing, and Related Programs Appropriations Act, 2002 (115 
     Stat. 2131).
       (c) Limitation on Participation of United States 
     Personnel.--No United States Armed Forces personnel or United 
     States civilian contractor employed by the United States 
     Armed Forces will participate in any combat operation in 
     connection with assistance made available under this section, 
     except for the purpose of acting in self defense or during 
     the course of search and rescue operations for United States 
     citizens.

     SEC. 503. SCENE VISUALIZATION TECHNOLOGIES.

       Of the amount authorized to be appropriated by this Act, 
     $2,500,000 shall be available for the National Geospatial-
     Intelligence Agency (NGA) for scene visualization 
     technologies.

     SEC. 504. MEASUREMENT AND SIGNATURES INTELLIGENCE RESEARCH 
                   PROGRAM.

       (a) Research Program.--(1) The Secretary of Defense and the 
     Director of Central Intelligence shall jointly carry out a 
     program to incorporate the results of basic research on 
     sensors into the measurement and signatures intelligence 
     systems of the United States, to the extent the results of 
     such research are applicable to such systems.
       (2) In carrying out paragraph (1), the Secretary of Defense 
     and the Director of Central Intelligence shall act through 
     the Director of the Defense Intelligence Agency's Directorate 
     for MASINT and Technical Collection (hereinafter in this 
     section referred to as the ``Director'').
       (b) Program Components.--The program under subsection (a) 
     shall review and assess basic research on sensors and 
     technologies conducted both by the United States Government 
     and by non-governmental entities. In carrying out the 
     program, the Director shall protect intellectual property 
     rights, maintain organizational flexibility, and establish 
     research projects, funding levels, and potential benefits in 
     an equitable manner through the Directorate.
       (c) Advisory Panel.--(1) The Director shall establish an 
     advisory panel to assist the Director in carrying out the 
     program under subsection (a).
       (2) The advisory panel shall be headed by the Director who 
     shall determine the selection, review, and assessment of the 
     research projects under the program.
       (3)(A) The Director shall appoint as members of the 
     advisory panel representatives of each entity of the MASINT 
     community, and may appoint as such members representatives of 
     national laboratories, universities, and private sector 
     entities.
       (B) For purposes of this subsection the term ``MASINT 
     community'' means academic, professional, industrial, and 
     government entities that are committed towards the 
     advancement of the sciences in measurement and signatures 
     intelligence.
       (C) The term for a member of the advisory panel shall be 
     established by the Director, but may not exceed a period of 5 
     consecutive years.
       (D) Members of the advisory panel may not receive 
     additional pay, allowances, or benefits by reason of their 
     service on the advisory panel, but may receive per diem in 
     lieu of subsistence, in accordance with applicable provisions 
     under subchapter I of chapter 57 of title 5, United States 
     Code.
       (4) The Director may accept contributions from non-
     governmental participants on the advisory panel to defray the 
     expenses of the advisory panel.
       (5) The Federal Advisory Committee Act (5 U.S.C. App.) 
     shall not apply to the activities of the advisory panel 
     established under this subsection.
       (d) FOIA Exemption.--All files in the possession of the 
     Defense Intelligence Agency for purposes of administering the 
     program under this section, including any files of a Federal, 
     State, or local department or agency or of a private sector 
     entity provided to or utilized by the program, shall be 
     exempt from the provisions of section 552 of title 5, United 
     States Code, that require publication, disclosure, search, or 
     review in connection therewith.

     SEC. 505. AVAILABILITY OF FUNDS OF NATIONAL SECURITY AGENCY 
                   FOR NATIONAL SECURITY SCHOLARSHIPS.

       (a) Availability of Funds.--Any funds authorized to be 
     appropriated for the National Security Agency for a fiscal 
     year after fiscal year 2003 may be made available to the 
     Independent College Fund of Maryland (also known as the ``I-
     Fund'') for the purpose of the establishment and provision of 
     national security scholarships to the extent such funds are 
     specifically authorized for that purpose.
       (b) Mechanisms of Availability.--Funds may be made 
     available to the Independent College Fund of Maryland under 
     subsection (a) by grant, contract, cooperative agreement, or 
     such other appropriate mechanisms as the Director of the 
     National Security Agency considers appropriate.
       And the Senate agree to the same.

       From the Permanent Select Committee on Intelligence, for 
     consideration of the House bill and the Senate amendment, and 
     modifications committed to conference:
     Porter J. Goss,
     Doug Bereuter,
     Sherwood Boehlert,
     Jim Gibbons,
     Ray LaHood,
     Randy ``Duke'' Cunningham,
     Pete Hoekstra,
     Richard Burr,
     Terry Everett,
     Elton Gallegly,
     Mac Collins,
     Jane Harman,
     Alcee L. Hastings,
     Silvestre Reyes,
     Leonard L. Boswell,
     Collin C. Peterson,
     Bud Cramer,
     Anna G. Eshoo,
     Rush Holt,
     C.A. Dutch Ruppersberger.
     From the Committee on Armed Services, for consideration of 
     defense tactical intelligence and related activities:
     Duncan Hunter,
     Curt Weldon,
                                Managers on the Part of the House.

     From the Select Committee on Intelligence:

[[Page 29795]]

     Pat Roberts,
     Orrin Hatch,
     Mike DeWine,
     Christopher S. Bond,
     Trent Lott,
     Olympia Snowe,
     Chuck Hagel,
     Saxby Chambliss,
     John Warner,
     Jay Rockefeller,
     Carl Levin,
     Dianne Feinstein,
     Ron Wyden,
     Dick Durbin,
     Evan Bayh,
     John Edwards,
     Barbara A. Mikulski.
     From the Committee on Armed Services:
     Wayne Allard,
     Bill Nelson.
                               Managers on the Part of the Senate.

       JOINT EXPLANATORY STATEMENT OF THE COMMITTEE OF CONFERENCE

       The managers on the part of the Senate and House at the 
     conference on the disagreeing votes of the two Houses on the 
     amendment of the Senate to the bill (H.R. 2417), to authorize 
     appropriations for fiscal year 2004 for intelligence and 
     intelligence-related activities of the United States 
     Government, the Community Management Account, and the Central 
     Intelligence Agency Retirement and Disability System, and for 
     other purposes, submit the following joint statement to the 
     Senate and House in explanation of the effect of the action 
     agreed upon by the managers and recommended in the 
     accompanying conference report.
       The managers agree that the congressionally directed 
     actions described in the House bill, the Senate amendment, 
     the respective committee reports, and classified annexes 
     accompanying H.R. 2417 and S. 1025, should be undertaken to 
     the extent that such congressionally directed actions are not 
     amended, altered, substituted, or otherwise specifically 
     addressed in either this joint Explanatory Statement or in 
     the classified annex to the conference report on the bill 
     H.R. 2417.
       The Senate amendment struck all of the House bill after the 
     enacting clause and inserted a substitute text.
       The House recedes from its disagreement to the amendment of 
     the Senate with an amendment that is a substitute for the 
     House bill and the Senate amendment. The differences between 
     the House bill, the Senate amendment, and the substitute 
     agreed to in conference are noted below, except for clerical 
     corrections, conforming changes made necessary by agreements 
     reached by the Conferees, and minor drafting and clarifying 
     changes.

                    TITLE I--INTELLIGENCE ACTIVITIES

     Sec. 101. Authorization of appropriations
       Section 101 of the conference report lists the departments, 
     agencies, and other elements of the United States Government 
     for whose intelligence and intelligence-related activities 
     the Act authorizes appropriations for fiscal year 2004. The 
     list illustrates the oversight and legislative jurisdiction 
     exercised by the Intelligence Committees in both Houses. It 
     also reflects the primary jurisdiction of the Senate Select 
     Committee on Intelligence over all presidential nominations 
     within the intelligence elements of all departments, 
     agencies, and other entities of the United States Government. 
     The managers note that this conference report marks the first 
     appearance of the Department of Homeland Security in an 
     intelligence authorization bill. This reflects the 
     jurisdiction of the Intelligence Committees in both Houses 
     over the intelligence activities and components of that 
     Department as established by Congress in the ``Homeland 
     Security Act of 2002'' (P.L. 107-296), and as designated by 
     the President in Executive Order 13284 (January 23, 2003). 
     The Conferees have also included the Department of Justice 
     (DoJ) in this section to better reflect the fact that 
     Intelligence Committee jurisdiction of both Houses extends to 
     the intelligence activities and components of DoJ, including, 
     particularly, the Office of Intelligence Policy and Review, 
     which directly supports numerous National Foreign 
     Intelligence Program (NFIP) activities across the 
     Intelligence Community. Section 101 is identical to Section 
     101 of the House bill.
     Sec. 102. Classified schedule of authorizations
       Section 102 of the conference report makes clear that the 
     details of the amounts authorized to be appropriated for 
     intelligence and intelligence-related activities and 
     applicable personnel ceilings covered under this Title for 
     fiscal year 2004 are contained in a classified Schedule of 
     Authorizations. The classified Schedule of Authorizations is 
     incorporated into the Act by this section. The Schedule of 
     Authorizations shall be made available to the Committees on 
     Appropriations of the Senate and House of Representatives and 
     to the President. The classified annex provides details of 
     the Schedule. Section 102 is identical to Section 102 of the 
     House bill.
     Sec. 103. Personnel ceiling adjustments
       Section 103 of the conference report authorizes the 
     Director of Central Intelligence (DCI), with the approval of 
     the Director of the Office of Management and Budget, in 
     fiscal year 2004, to authorize employment of civilian 
     personnel in excess of the personnel ceilings applicable to 
     the components of the Intelligence Community under Section 
     102 by an amount not to exceed two percent of the total of 
     the ceilings applicable under Section 102. The DCI may 
     exercise this authority only if necessary to the performance 
     of important intelligence functions. Any exercise of this 
     authority must be reported to the Intelligence Committees of 
     the Congress.
       The Conferees emphasize that the authority conferred by 
     Section 103 is not intended to permit wholesale increases in 
     personnel strength in any intelligence component. Rather, the 
     section provides the DCI with flexibility to adjust personnel 
     levels temporarily for contingencies and for overages caused 
     by an imbalance between hiring new employees and attrition of 
     current employees. The Conferees do not expect the DCI to 
     allow heads of intelligence components to plan to exceed 
     levels set in the Schedule of Authorizations except for the 
     satisfaction of clearly identified hiring needs that are 
     consistent with the authorization of personnel strengths in 
     this bill. In no case is this authority to be used to provide 
     for positions denied by this bill. Section 103 of the House 
     bill and Section 103 of the Senate amendment are identical.
     Sec. 104. Intelligence Community Management Account
       Section 104 of the conference report authorizes 
     appropriations for the Intelligence Community Management 
     Account (CMA) of the DCI and sets the personnel end-strength 
     for the Intelligence Community Management Staff for fiscal 
     year 2004.
       Subsection (a) authorizes appropriations of $221,513,000 
     for fiscal year 2004 for the activities of the CMA of the 
     DCI.
       Subsection (b) authorizes 310 full-time personnel for the 
     Intelligence Community Management Staff for fiscal year 2004 
     and provides that such personnel may be permanent employees 
     of the Staff or detailed from various elements of the United 
     States Government.
       Subsection (c) authorizes additional appropriations and 
     personnel for the CMA as specified in the classified Schedule 
     of Authorizations and permits additional amounts to remain 
     available for research and development through September 30, 
     2005. Subsection (c) of the House bill provided only for one-
     year research and development funds. The House recedes to the 
     Senate.
       Subsection (d) requires that, except as provided in Section 
     113 of the National Security Act of 1947, during fiscal year 
     2004, personnel from another element of the United States 
     Government be detailed to an element of the CMA on a 
     reimbursable basis, or for temporary situations of less than 
     one year on a non-reimbursable basis.
       Subsection (e) authorizes $47,142,000 of the amount 
     authorized in subsection (a) to be made available for the 
     National Drug Intelligence Center (NDIC). Subsection (e) 
     requires the DCI to transfer these funds to the Attorney 
     General to be used for NDIC activities under the authority of 
     the Attorney General and subject to Section 103 (d) (1) of 
     the National Security Act.
       Although a DoJ organization, the NDIC is authorized and 
     funded entirely through NFIP funds. The Conferees expect NDIC 
     to be better integrated into the Intelligence Community, 
     particularly with respect to counter-narcotics activities and 
     strategic planning.
     Sec. 105. Office of Intelligence and Analysis of the 
         Department of the Treasury
       Section 105 is similar to Section 105 of the House bill. 
     The Senate amendment had no similar provision. The Senate 
     recedes with slight modifications. Section 105 authorizes the 
     establishment of an Office of Intelligence and Analysis 
     within the Department of the Treasury (Treasury) to be headed 
     by a presidentially appointed and Senate-confirmed Assistant 
     Secretary. Subsection (c) requires that the Secretary of the 
     Treasury consult with the DCI before recommending to the 
     President an individual to be nominated to the position.
       As a result of the findings of the ``Joint Inquiry into 
     Intelligence Community Activities Before and After the 
     Terrorist Attacks of September 11, 2001'' (Joint Inquiry), 
     the Conferees seek to ensure that there is full, appropriate, 
     and timely sharing of information and analysis within the 
     U.S. Government concerning financial networks associated with 
     international terrorism. Since the September 11, 2001, 
     terrorist attacks, the U.S. Government has blocked the assets 
     of over 260 individuals and groups supporting terrorist 
     causes. It has also frozen approximately $120 million in 
     terrorist-related assets.
       Currently, there is no single Executive Branch office 
     tasked by statute with ensuring that all elements of the 
     intelligence and law enforcement communities cooperate and 
     coordinate in the identification and the targeting of 
     terrorist financial assets. Moreover, coordination on 
     terrorist financing issues within Treasury, and between 
     Treasury and the Intelligence Community, while improving, is 
     currently uneven and disjointed. The Conferees are convinced 
     that Treasury must be more effective in articulating the 
     counterterrorist financing mission. Treasury must also 
     implement the mission requirements from an intelligence 
     sharing and operational perspective more effectively.

[[Page 29796]]

       The managers recognize that the staffs of the Office of 
     Foreign Assets Control (OFAC) and the Financial Crimes 
     Enforcement Network (FinCEN) possess unique analytical 
     capabilities regarding terrorist financial targets and that 
     this resource should be leveraged across the Intelligence 
     Community. Treasury's access to Intelligence Community 
     information, however, must be enhanced if it is to fulfill 
     this mission. Treasury's analytical products need to be more 
     effectively coordinated with, and disseminated throughout, 
     the Intelligence Community. The Conferees note that the 
     Chairman of the House Committee on Financial Services has 
     provided valuable input on the language of Section 105.
       The Conferees seek to establish a new office to accomplish 
     this requirement within Treasury. The Conferees are hopeful 
     that the creation of this new office will streamline and 
     centralize the U.S. Government's capabilities to track 
     terrorist financing networks across the globe. The Conferees 
     further expect that the new office will be treated as a full 
     partner in the Intelligence Community, receiving all 
     intelligence, law enforcement, and other information 
     necessary for it to carry out its important task.
       The Conferees also insist that the requirements of the 
     ``Intelligence Authorization Act for Fiscal Year 2003'' (FY 
     03 Act) (P.L. 107-306) are met. Section 341 of the FY 03 Act 
     requires that the DCI establish a Foreign Terrorist Asset 
     Tracking Center (FTAT-C) within the Central Intelligence 
     Agency (CIA). Establishment of a Treasury Bureau of 
     Intelligence and Analysis should markedly strengthen FTAT-C's 
     analytic capacity. Section 342 of the FY 03 Act also directed 
     that the Secretary of the Treasury submit semiannual reports 
     concerning U.S. Government operations against terrorist 
     financial networks. The first Section 342 report was due on 
     February 1, 2003, but was not completed until May 12, 2003. 
     The Conferees expect that the establishment of the Office of 
     Intelligence and Analysis within Treasury will make future 
     Section 342 reports more timely and informative with respect 
     to U.S. Government progress against terrorist-related 
     financial targets.
     Sec. 106. Incorporation of reporting requirements
       Section 106 is similar to Section 105 of the Senate 
     amendment. The House bill had no similar provision. The House 
     recedes to the Senate position. Section 106 incorporates into 
     the Act by reference each requirement to submit a report 
     contained in the joint explanatory statement to accompany the 
     conference report or in the associated classified annex to 
     this Conference Report.
     Sec. 107. Preparation and submittal of reports, reviews, 
         studies, and plans relating to intelligence activities of 
         Department of Defense or Department of Energy
       Section 107 is identical to Section 106 of the Senate 
     amendment. The House bill had no similar provision. The House 
     recedes.

 TITLE II--CENTRAL INTELLIGENCE AGENCY RETIREMENT AND DISABILITY SYSTEM

     Sec. 201. Authorization of appropriations
       Section 201 authorizes appropriations of $226,400,000 for 
     the Central Intelligence Agency Retirement and Disability 
     Fund. Section 201 of the House bill and Section 201 of the 
     Senate amendment are identical.

                     TITLE III--GENERAL PROVISIONS

                Subtitle A--Recurring General Provisions

     Sec. 301. Increase in employee compensation and benefits 
         authorized by law
       Section 301 is identical to Section 301 of the Senate 
     amendment and Section 301 of the House bill.
     Sec. 302. Restriction on conduct of intelligence activities
       Section 302 is identical to Section 302 of the Senate 
     amendment and Section 302 of the House bill.

                        Subtitle B--Intelligence

     Sec. 311. Authority of Federal Bureau of Investigation to 
         award personal services contracts
       Section 311 would grant the Federal Bureau of Investigation 
     (FBI) specific statutory authority to enter into personal 
     services contracts for the procurement of services that are 
     only in direct support of an intelligence or 
     counterintelligence mission. The Conferees expect that such 
     services will be used, among other things, to provide the FBI 
     with needed expertise in asset validation, counterterrorism 
     investigations, counterespionage activities, 
     counterintelligence damage assessments, counterintelligence 
     training, and related technical support. The Conferees 
     anticipate that this authority will be used as a contracting 
     mechanism when other contracting mechanisms are insufficient 
     to meet the national security requirements of the FBI. The 
     Conferees also note that this provision does not modify 
     existing restrictions on the use of contractors to perform 
     ``inherently governmental functions.'' This authority should 
     not be used by the FBI to avoid or forestall the currently 
     aggressive efforts to recruit and hire qualified staff 
     employees to fill personnel vacancies.
       The Conferees believe that this authority is consistent 
     with the public's desire that the FBI operate with greater 
     flexibility with respect to its national security mission 
     following the September 11th attacks. The Conferees believe, 
     however, that the FBI should use the increased flexibility 
     afforded under this section carefully. The FBI should 
     implement this section in a manner that strictly reflects the 
     unique nature of the authorization. The Conferees require 
     that before a contract can be entered into, the Chief 
     Contracting Officer must determine that a personal service 
     contract is ``the appropriate means of securing'' the needed 
     services. Additionally, the Conferees expect that the 
     Director of the FBI will ensure that the authority granted by 
     this section is exercised in a prudent manner and with 
     appropriate oversight.
       Neither the House bill nor the Senate amendment contained a 
     similar provision. This provision is similar to the authority 
     afforded to certain Department of Defense elements in Section 
     841 of the Conference Report accompanying the ``Defense 
     Authorization Act for Fiscal Year 2004.'' The Conferees 
     agreed to include this section, however, after learning that 
     the increased pace and amount of work in the post-September 
     11th environment has created a need for this authority for 
     the FBI. The Conferees believe there exists an operational 
     imperative for the FBI to enter into personal services 
     contracts to support its counterterrorism, counterespionage, 
     and counterintelligence missions.
       The Conferees note that the Chairman of the House Committee 
     on the Judiciary has indicated that although he would prefer 
     that this provision be carried in the ``Department of Justice 
     Appropriations Authorization Act, Fiscal Years 2004-2006'' 
     (H.R. 3036), he has ``no substantive objection'' to the 
     provision. Additionally, the Chairman of the House Committee 
     on Government Reform has submitted a letter in support of 
     including this provision in this Conference Report.
       Congress, through the statutory annual reporting 
     requirement contained in this section, and through its 
     general oversight authority, will monitor the FBI's use of 
     this authority closely and will not hesitate to revise the 
     authority if exercised irresponsibly or otherwise abused.
       The Conferees expect that the unclassified report to all 
     specified congressional committees will be substantially the 
     same, except that intelligence source and methods information 
     should be included only in a classified annex provided to the 
     Intelligence Committees.
     Sec. 312. Budget treatment of costs of acquisition of major 
         systems by the intelligence community
       Section 312 was added to the Senate amendment on the Senate 
     floor. As amended by the Conferees, the House recedes to this 
     provision.
       The Conferees are concerned about the cost growth of major 
     Intelligence Community acquisitions, which result in a 
     reshuffling of the NFIP on an almost annual basis to address 
     consequential budget shortfalls.
       Funding requests submitted in the President's budget 
     generally reflect an estimate that has been prepared by the 
     same Intelligence Community component that is responsible for 
     the acquisition and operation of the system. The magnitude 
     and consistency of the growth of recent acquisitions 
     indicates a systemic bias on the part of Intelligence 
     Community components to underestimate the funding required 
     for major acquisitions. Because of ``perceived 
     affordability,'' more acquisitions are started, and as a 
     result, the NFIP is burdened with more content than available 
     resources can support.
       In contrast, the Secretary of Defense has implemented a 
     successful program requiring the development of independent 
     cost estimates for major acquisitions. The Secretary has 
     mandated the use of such estimates in the Department of 
     Defense budget requests. Section 2434 of Title 10, United 
     States Code, provides that ``The Secretary of Defense may not 
     approve the system development and demonstration, or 
     production and deployment, of a major defense acquisition 
     program unless an independent estimate of the full life-cycle 
     cost of the program and a manpower estimate for the program 
     [has] been considered by the Secretary.'' Further, Title 10 
     requires that the independent estimate be prepared ``by an 
     office or other entity that is not under the supervision, 
     direction, or control of the military department, Defense 
     Agency, or other component of the Department of Defense that 
     is directly responsible for carrying out the development or 
     acquisition of the program. * * *''
       The Conferees note, with approval, that the DCI has already 
     established an organization within the Office of the Deputy 
     Director of Central Intelligence for Community Management to 
     provide an independent cost analysis capability. This is a 
     significant development because, historically, independent 
     cost estimates have represented a much more accurate 
     projection of the costs of major acquisitions. The budget 
     submitted to Congress, however, has typically reflected the 
     Intelligence Community operational component's cost estimate, 
     which in general has been significantly lower than a 
     corresponding independent estimate.

[[Page 29797]]

       Section 312 formalizes the process for developing 
     independent cost estimates for major Intelligence Community 
     acquisitions.
       The Conferees have included at subsection (d) a restriction 
     on the use of appropriated funds with respect to major 
     acquisitions for which independent cost estimates have not 
     been prepared, or for which the requirements of Section 312 
     have not been followed.
       DoJ raised an objection to a subsection in the Senate-
     passed bill requiring that the President's budget request for 
     the development or procurement of a major intelligence system 
     must be an amount equivalent to the most current independent 
     cost estimate. DoJ noted that such a requirement would 
     violate the Recommendations Clause of the Constitution 
     (Article II, Section 3), which provides that the President 
     shall recommend to Congress such legislative measures as he 
     deems necessary.
       To address DoJ's Recommendations Clause objection, the 
     Conferees modified the provision. The provision included in 
     this Conference Report now only requires that the President 
     provide additional information to the Congress if the budget 
     request is less than the amount set forth in the most current 
     independent cost estimate for the program. This additional 
     information, which is required to be included in the budget 
     justification materials submitted to Congress, would (1) 
     explain the difference between the amount requested and the 
     independent cost estimate; (2) describe the importance of the 
     system to national security; (3) provide an assessment of the 
     impact on funding intelligence programs if the independent 
     cost estimate is accurate; and (4) provide any other 
     information the President considers appropriate.
       The Intelligence Committees received a DoJ letter regarding 
     the modified provision on the eve of conference. The letter 
     expresses DoJ's judgment that, as modified, the provision 
     does not present any Recommendations Clause concern. DoJ, 
     however, maintains a reservation with respect to the 
     requirement in the modified provision that the budget 
     justification explain the difference between the President's 
     budget request and the independent cost estimate. The 
     Conferees have considered DoJ's position and are satisfied 
     that Section 312, as modified, represents an appropriate 
     accommodation of the interests at stake. The provision 
     respects the President's authority given by the 
     Recommendations Clause and is consistent with Congress's 
     powers and authority under Article I of the Constitution to 
     obtain information from the Executive Branch necessary for 
     the consideration of legislation, particularly legislation 
     regarding budgetary matters.
     Sec. 313. Modification of sunset of application of sanctions 
         laws to intelligence activities
       Neither the House bill nor the Senate amendment included a 
     similar provision. The Conferees have included, at Section 
     313, a provision to strike Section 905 of the National 
     Security Act of 1947 (50 U.S.C. 441d). This action revives 
     Title IX of the National Security Act, which has been dormant 
     since January 6, 2000.
     Sec. 314. Modification of notice and wait requirements on 
         projects to construct or improve intelligence community 
         facilities
       Section 314 was similar to versions passed as House Section 
     311 and Senate amendment Section 312. The House recedes with 
     minor amendments.
       Section 314 amends congressional notification requirements 
     for certain unprogrammed construction and improvement 
     projects based on the cost of the project. These adjustments 
     take into account higher construction costs.
       Section 314 would also allow the DCI and the Secretary of 
     Defense together, or the DO alone with respect to a project 
     primarily for the CIA, to initiate certain unprogrammed 
     construction and improvement projects seven days after 
     notifying Congress. Currently there is a 21-day notification 
     period. In emergencies, these projects can be commenced 
     without prior notice. Use of this emergency authority is 
     expected to be rare.
     Sec. 315. Extension of deadline for final report of the 
         National Commission for the Review of the Research and 
         Development Programs of the United States Intelligence 
         Community
       The House bill and the Senate amendment contained similar 
     provisions. The House recedes with minor amendments.
     Sec. 316. Improvement of information sharing among Federal, 
         State, and local government officials
       The House bill contained a similar provision. The Senate 
     amendment had no such provision. The Senate recedes with 
     amendments.
       Section 316 authorizes the Secretary of Homeland Security, 
     in consultation with the DCI and the Attorney General, to 
     implement a program to improve the sharing of intelligence 
     collected by the Federal government with State and local 
     officials. This program is intended to complement 
     implementation of the ``Homeland Security Information Sharing 
     Act'' (P.L. 107-296, Title VIII, Subtitle I).
       The program should be designed to encourage State and local 
     officials, and certain private sector representatives, to 
     share with each other and with appropriate Federal officials 
     lawfully collected information vital to the prevention of 
     terrorist attacks against the United States. The training 
     provided to officials and representatives should help these 
     individuals to identify sources of potential threats, to 
     report information related to potential threats to the 
     appropriate agencies in the appropriate form and manner, and 
     to assure that reported information is systematically 
     submitted to the Department of Homeland Security and 
     disseminated to all appropriate Federal departments and 
     agencies. A report on the status of implementation of Section 
     892 of the ``Homeland Security Act of 2002'' (Public Law 107-
     296) is also required under this section. The project grants 
     no new authorities to any department or agency for the 
     collection of information.
     Sec. 317. Pilot program on analysis of signals and other 
         intelligence by intelligence analysts of various elements 
         of the intelligence community
       This Section is similar to Section 313 of the Senate 
     amendment. The House bill had no such provision. The House 
     recedes with minor amendments.
     Sec. 318. Pilot program on recruitment and training of 
         intelligence analysts
       This section is similar to Section 314 of the Senate 
     amendment. The House recedes with amendments. Upon enactment, 
     the pilot program will be known as the Pat Roberts 
     Intelligence Scholars Program.
     Sec. 319. Improvement of equality of employment opportunities 
         in the intelligence community
       Section 319 is similar to Section 337 of the House bill. 
     The Senate amendment had no similar provision. The Senate 
     recedes with minor amendments. The provision is intended to 
     develop programs that will enhance ethnic and cultural 
     diversity throughout the Intelligence Community through the 
     recruitment of individuals with diverse ethnic and cultural 
     backgrounds, skill sets, and language proficiency.
     Sec. 320. Sense of Congress on recruitment as intelligence 
         community personnel of members of the Armed Forces on 
         their discharge or release from duty
       Section 320 was added by the Conferees. Neither the House 
     bill nor the Senate amendment contained a similar provision. 
     With Section 320, the Conferees encourage the Intelligence 
     Community to recruit among American armed forces veterans of 
     Operation Enduring Freedom, Operation Iraqi Freedom, and 
     other military service to take advantage of the unique 
     national security, military, and technical experience of such 
     personnel, and to try to keep the experience from being lost 
     to the U.S. Government upon their discharge or release from 
     active duty.
     Sec. 321. External Collection Capabilities and Requirements 
         Review Panel
       Section 321 was added by the Conferees. The provision 
     permits the President to establish an External Capabilities 
     and Requirements Review Panel as specified in the Classified 
     Annex.

                    Subtitle C--Counterintelligence

     Sec. 341. Counterintelligence initiatives for the 
         intelligence community
       Section 341 contains several counterintelligence reforms 
     included in Section 321 of the House-passed bill. The Senate 
     amendment contained no such provision. The Senate recedes 
     with amendments.
       In addition to the statutory requirements added by Section 
     341, the Conferees direct the National Counterintelligence 
     Executive (NCIX) to consult with all components of the 
     Intelligence Community on the status of current policies and 
     procedures for conducting investigative reviews of 
     production, marking, handling, storage, and communication of 
     classified information, as well as training on related 
     security matters to protect intelligence sources and methods. 
     Not later than April 1, 2004, NCIX shall provide a written 
     report to the intelligence committees with an assessment of 
     the adequacy of Intelligence Community components' 
     investigation of their handling of classified information and 
     the adequacy of training on related security matters. In this 
     report, NCIX shall include proposed uniform policies and 
     procedures for all Intelligence Community components to 
     conduct annual inspections of each agency's handling of 
     classified information, to include, as appropriate, 
     prohibitions on employees' bringing items such as cameras, 
     document scanners, and personal electronic devices into 
     Intelligence Community facilities. After NCIX has reported to 
     Congress uniform policies and procedures for the conduct of 
     annual inspections of the handling of classified information, 
     NCIX may carry out its responsibility to implement an 
     inspection process by delegating to Intelligence Community 
     components the task of carrying out the inspections. NCIX 
     shall closely monitor, and report to the intelligence 
     committees on, the performance of those inspections.
       As passed by the House, the counterintelligence reforms 
     required by this section would have required the Attorney 
     General, acting through the FBI Director, to establish an FBI 
     Office of Counterintelligence to investigate potential 
     espionage activities within the FBI. The Conferees understand 
     that the FBI has recently established such an office. Because 
     of this development, the

[[Page 29798]]

     Conferees agreed to drop the statutory requirement for such 
     an office. The Conferees reaffirm their commitment to a fully 
     empowered Office of Counterintelligence and expect to be 
     provided periodic reports on the resource needs and 
     operations of the office.
       Subsection (b) of Section 341 of the conference report 
     would require the Attorney General, acting through DoJ's 
     Office of Intelligence Policy and Review, in consultation 
     with the DCI, acting through the Office of the NCIX, to 
     establish written policies and procedures to assist the 
     Attorney General's consideration of intelligence and national 
     security equities in the development of indictments and 
     related pleadings in espionage prosecutions. The Conferees 
     note, however, that DoJ should and does consult closely with 
     the Intelligence Community on all aspects of espionage 
     investigations, not just in the development of indictments 
     and related pleadings.
       The Conferees also note that although the decision as to 
     whether and whom to prosecute is ultimately and properly left 
     to the discretion of the Attorney General there are 
     significant and strategic intelligence equities at stake in 
     these types of cases. The Conferees believe it is unwise for 
     operational and prosecutorial decisions to proceed without 
     close consultation at every stage. The Conferees are 
     cognizant of the coordination that already occurs with 
     respect to the disclosure of classified information in the 
     presentation of such cases. DoJ and the other elements of the 
     Intelligence Community are commended for this.
       The Conferees believe, however, that the Attorney General 
     should have the benefit of the perspective of 
     counterintelligence professionals before making his decision 
     on how much previously classified or sensitive information 
     should be included in a charging document or in other 
     pleadings. The Conferees note that the United States could 
     lose its ability to learn more about the extent to which a 
     spy has given away our national security secrets because so 
     much information is contained in these types of documents. 
     The Conferees highlight the Robert Hanssen case as an 
     example. The Conferees recognize that there may be tactical 
     or legal requirements for including some such information. 
     The Conferees are concerned that some charging documents or 
     pleadings include information that goes beyond that required 
     by either criteria. The Conferees do not seek to vitiate any 
     prerogatives of the Attorney General in determining whom to 
     charge criminally, or how a matter should be charged. The 
     NCIX is not required to concur in the Attorney General's 
     decisions in these matters. The Conferees simply seek to 
     improve the process by which the Attorney General makes these 
     decisions when it involves a counterintelligence or an 
     espionage matter. When the Attorney General makes a decision 
     to include information beyond that meeting the minimum 
     requirements of the Constitution for purposes of charging an 
     individual, the Conferees merely seek to provide the Attorney 
     General with as much insight as possible on the effects of 
     those decisions on national security.
       In addition to the statutory modifications in Section 341, 
     the Conferees recommend that the Executive Branch move 
     expeditiously to implement further counterintelligence 
     reforms. In particular, the Conferees have serious concerns 
     with several aspects of the handling of the Hanssen espionage 
     case and other investigations.
       The NCIX damage assessment in the Hanssen matter also 
     included a reference to the effect of Section 8318 of Title 
     5, United States Code, with respect to a spy's cooperation 
     with the U.S. Government. The Conferees are interested 
     whether an amendment to this section should be made so that 
     both the spouse and the individual whose action caused the 
     forfeiture of an annuity, or retired pay, under 5 U.S.C. 8312 
     and 8313 must cooperate fully with the U.S. Government in any 
     lawful investigation or damage assessment in order to 
     maintain the spouse's eligibility for benefits. The Conferees 
     direct the DCI and the Attorney General, jointly, to provide 
     to the House and Senate Intelligence Committees, no later 
     than February 1, 2004, a written assessment of their views on 
     this particular question and how such an amendment would 
     assist their respective organizations.

                          Subtitle D--Reports

     Sec. 351. Report on cleared insider threat to classified 
         computer networks
       Section 351 is similar to Section 331 of the Senate 
     amendment. The House bill had no similar provision. The House 
     recedes, with minor amendments.
     Sec. 352. Report on security background investigations and 
         security clearance procedures of the Federal Government
       Section 352 is similar to Section 332 of the Senate 
     amendment. The House bill had no similar provision. The House 
     recedes with amendments.
     Sec. 353. Report on detail of civilian intelligence personnel 
         among elements of the intelligence community and the 
         Department of Defense
       Section 353 is similar to Section 333 of the Senate 
     amendment. The House bill had no similar provision. The House 
     recedes.
     Sec. 354. Report on modifications of policy and law on 
         classified information to facilitate sharing of 
         information for national security purposes
       Section 354 is similar to Section 334 of the Senate 
     amendment. The House bill had no similar provision. The House 
     recedes with minor amendments.
     Sec. 355. Report on strategic planning
       Section 355 is similar to Section 335 of the Senate 
     amendment. The House bill had no similar provision. The House 
     recedes with minor amendments.
     Sec. 356. Report on United States dependence on computer 
         hardware and software manufactured overseas
       Section 356 is similar to Section 336 of the Senate 
     amendment. The House bill had no similar provision. The House 
     recedes with minor amendments.
     Sec. 357. Report on lessons learned from military operations 
         in Iraq
       Section 357 represents a combination of Section 337 of the 
     Senate amendment and Section 344 of the House bill. The 
     Senate recedes with minor amendments. The Conferees also 
     expect that the House and Senate Intelligence Committees will 
     receive in writing from the DCI in a timely fashion any and 
     all status reports and updates concerning the activities of 
     the Iraq Survey Group on a regular, periodic basis.
     Sec. 358. Reports on conventional weapons and ammunition 
         obtained by Iraq in violation of certain United Nations 
         Security Council resolutions
       Section 358 is similar to Section 338 of the Senate 
     amendment. The House had no similar provision. The House 
     recedes with minor amendments.
     Sec. 359. Report on operations of Directorate of Information 
         Analysis and Infrastructure Protection and Terrorist 
         Threat Integration Center
       Section 359 is similar to Section 340 of the Senate 
     amendment. The House bill had no similar provision. The House 
     recedes with amendments.
     Sec. 360. Report on Terrorist Screening Center
       Section 360 is similar to Section 345 of the House bill. 
     The Senate amendment had no similar provision. The Senate 
     recedes with amendments.
     Sec. 361. Repeal and modification of report requirements 
         relating to intelligence activities
       Section 361 is similar to both Section 339 of the Senate 
     amendment and Section 342 of the House bill. Each House 
     recedes in part, with minor amendments.

                       Subtitle E--Other Matters

     Sec. 371. Extension of suspension of reorganization of 
         Diplomatic Telecommunications Service Program Office
       Section 371 is identical to Section 351 of the Senate 
     amendment and Section 331 of the House bill.
     Sec. 372. Modifications of authorities on explosive materials
       Section 372 is identical to Section 352 of the Senate 
     amendment. It is similar to Section 332 of the House bill. 
     The House recedes.
     Sec. 373. Modification of prohibition of the naturalization 
         of certain persons
       Section 373 is identical to Section 353 of the Senate 
     amendment and to Section 333 of the House bill.
     Sec. 374. Modification to definition of financial institution 
         in Right to Financial Privacy Act
       Section 374 is similar to both Section 354 of the Senate 
     amendment and to Section 334 of the House bill. Section 374 
     of the Conference Report expands the definition of 
     ``financial institution'' for purposes of section-1 114 of 
     the Right to Financial Privacy Act (12 U.S.C. 3414 (RFPA). It 
     provides enhanced authority for authorized Intelligence 
     Community collection activities designed to prevent, deter, 
     and disrupt terrorism and espionage directed against the U.S. 
     and to enhance foreign intelligence efforts.
       The Conferees believe this new definition is necessary for 
     effective counterintelligence, foreign intelligence, and 
     international terrorism operations of the United States. 
     Section 1114 currently permits U.S. Government authorities 
     engaged in counterintelligence or foreign intelligence 
     activities to use ``National Security Letters,'' approved by 
     a senior government official, to obtain certain financial 
     records from defined ``financial institutions.'' The 
     definition of ``financial institution'' in the RFPA has been 
     essentially unmodified since the RFPA became law in 1978. 
     This amendment updates the definition to include those 
     entities that today provide financial services to 
     individuals, but would not be covered by the current 
     definition. Financial records maintained by these entities 
     are not currently covered by the RFPA and, thus, are not 
     accessible by intelligence elements of the United States 
     Government using this authority. In order to expand the 
     definition of ``financial institution'' for purposes only of 
     section 1114, this subsection adopts, in part, the definition 
     of ``financial institution'' found in section 5312 (a) (2) of 
     Title 31, United States Code. It is important to highlight 
     that this definition also is consistent with the definition 
     used in section 804(5) of the Counterintelligence and

[[Page 29799]]

     Security Enhancements Act of 1994 (50 U.S.C. 438).
       The Conferees intend that this authority be used for 
     accessing records and information from financial institutions 
     for counterintelligence, foreign intelligence, and 
     international terrorism investigations. The Conferees note, 
     with approval, the significant actions of the U.S. Government 
     in tracking terrorist finances. The Conferees believe that 
     the authority granted by this section will enhance the 
     Government's efforts in this regard. This provision allows 
     the U.S. Government to have, through use of ``National 
     Security Letters,'' greater access to a larger universe of 
     information that goes beyond traditional financial records, 
     but is nonetheless crucial in tracking terrorist finances or 
     espionage activities. The Conferees understand that this 
     authority should be used for accessing records and 
     information for the purposes of identifying an individual's 
     financial relationship with the specified financial 
     institutions.
       Section 3414 (a) (5) (C) of the RFPA requires the Attorney 
     General to ``fully inform'' the Congressional Intelligence 
     Committees semiannually concerning all requests made pursuant 
     to the provision. To date, the Attorney General has limited 
     these reports to statistical information. The Conferees 
     accordingly request that the Attorney General, pursuant to 
     his responsibility to ``fully inform'' the House and Senate 
     Intelligence Committees, include in his next semiannual 
     report to these particular committees information about the 
     process and standards for approving National Security 
     Letters. The Conferees also request that the next semiannual 
     report include a description of issues (if any) concerning 
     the scope of such letters, or financial institution 
     compliance with such letters, that have arisen in Federal and 
     State judicial, administrative, and regulatory settings, or 
     otherwise.
       The Conferees have amended the provision that appeared in 
     both the House bill and Senate amendment to ensure that all 
     financial institutions covered by the amended National 
     Security Letters provision are also protected by the cost 
     reimbursement and immunity provisions of the Act (12 U.S.C. 
     3415, 3417). With those amendments, the House recedes.
     Sec. 375. Coordination of Federal Government research on 
         security evaluations
       Section 375 is similar to Section 355 of the Senate 
     amendment. The House bill had no similar provision. The House 
     recedes with amendments to ensure that classified information 
     considered during the research initiative is protected from 
     unauthorized disclosure.
     Sec. 376. Treatment of classified information in money 
         laundering cases
       Section 376 is identical to Section 357 of the Senate 
     amendment. The House bill had no similar provision. The House 
     recedes.
       Section 376 amends section 5318A of title 31, United States 
     Code. That section, which was added in Section 311 of P.L. 
     107-56 (Oct. 26, 2001), permits the Secretary of the Treasury 
     to take targeted action against countries, institutions, 
     transactions, or types of accounts the Secretary of the 
     Treasury finds to be of ``primary money-laundering concern.'' 
     The new amendment will permit the Secretary of the Treasury, 
     in a judicial review proceeding, to submit any classified 
     information on which such a finding, or related action, is 
     based to the court ex party and in camera. This permission 
     parallels the authority granted to the Secretary to submit 
     classified information to a reviewing court in connection 
     with any proceedings under the International Emergency 
     Economic Powers Act. In administering a proceeding in which 
     classified information is submitted to a court under this 
     provision, the Conferees intend that a court will fashion 
     procedures, necessary to assure a moving party due process of 
     law, that resemble those already required in similar 
     situations in which the government, or another party, seeks 
     to base a claim or defense on classified information.
     Sec. 377. Technical amendments
       Section 377 is similar to Section 356 of the Senate 
     amendment and to Section 343 of the House bill. The Senate 
     recedes with amendments, including the addition of a 
     technical amendment to the ``Federal Information Security 
     Management Act of 2002'' (P.L. 107-296 and P.L. 107-347) 
     which was included in the Senate amendment as Section 404.

                 TITLE IV--CENTRAL INTELLIGENCE AGENCY

     Sec. 401. Amendment to certain Central Intelligence Agency 
         Act of 1949 notification requirements
       Section 401 is identical to'Section 401 of the Senate 
     amendment. The House had no similar provision. The House 
     recedes.
     Sec. 402. Protection of certain Central Intelligence Agency 
         personnel from tort liability
       Section 402 is similar to Section 402 of the Senate 
     amendment and Section 401 of the House bill. The House 
     recedes with minor amendments. The Conferees note that this 
     protection against tort liability extends only to officials 
     of the Central Intelligence Agency who are Agency personnel 
     designated by the Director under Section 15 (a) of the 
     ``Central Intelligence Agency Act of 1949'' (CIA Act) (50 
     U.S.C. 403o), or designated by the Director under Section 5 
     (a) (4) of the CIA Act (50 U.S.C. 4030 to carry firearms for 
     the protection of current or former Agency personnel and 
     their immediate families, defectors, and their immediate 
     families, and other persons in the United States under Agency 
     auspices.
     Sec. 403. Repeal of obsolete limitation on use of funds in 
         central services working capital fund
       Section 403 is identical to Section 403 of the Senate 
     amendment and to Section 402 of the House bill.
     Sec. 404. Purchases by the Central Intelligence Agency of 
         products of Federal Prison Industries
       Section 404 is an amended version of Section 335 contained 
     in the House bill. The Conferees modified the provision to 
     better reflect actual Central Intelligence Agency procurement 
     practices, which already conform to the goals envisioned by 
     Section 335 of the House bill. The Senate amendment had no 
     similar provision. The Senate recedes, with amendments as 
     noted.
     Sec. 405. Postponement of Central Intelligence Agency 
         compensation reform and other matters
       Section 405 contains language that is similar to Section 
     405 of the Senate amendment. The House bill had no similar 
     provision. Section 405 includes certain statutory limitations 
     and reporting requirements designed to address misgivings 
     regarding the Central Intelligence Agency Compensation Reform 
     program. The Conferees have concerns regarding the efforts of 
     the DCI to revise and reform the compensation structure of 
     the Central Intelligence Agency. The DCI's Compensation 
     Reform program also has engendered anxiety among employees 
     due to the perceived impact the system may have on retirement 
     benefits and compensation, in general.
       Subsection (b) of Section 405 addresses the potential for 
     decreases in employee retirement benefits. The provision 
     permits those CIA employees designated by the DCI for 
     participation in the congressionally-directed Compensation 
     Reform pilot program to contribute to Thrift Savings Plan 
     accounts any part of their pay which they receive from bonus 
     monies under the program.
       Generally, under current law, Federal employees can only 
     contribute ``basic pay'' to their Thrift Savings Plans, not 
     bonus monies. As a result, the Conferees note that pilot 
     program participants have not been contributing bonus monies 
     to their Thrift Savings Plans. Under the CIA's Compensation 
     Reform pilot program, however, participating employees will 
     likely receive a higher percentage of their yearly 
     compensation as performance bonuses. Treating these 
     performance bonuses as ``basic pay'' will permit these 
     employees to take full advantage of their ability to 
     contribute to their Thrift Savings Plans, consistent with 
     existing limitations on the amount of contributions to 
     certain retirement accounts. The Conferees acknowledge that 
     while this provision will not compensate employees for the 
     potential reduction in their federal annuities due to 
     possible decreases in basic pay under the Compensation Reform 
     pilot program, it will encourage increased utilization of 
     Thrift Savings Plans and, thus, partially offset any 
     retirement annuity reductions.
       The Conferees are cognizant of, and generally supportive 
     of, the desire of the Administration to move to a 
     compensation structure across government that rewards top 
     performers (i.e., ``pay-for-performance''). The Conferees are 
     encouraged by the fact that the CIA has sought input and 
     guidance from the Office of Personnel Management and Office 
     of Management and Budget with respect to any restructuring of 
     CIA's compensation system. Prior to any Agency-wide 
     implementation of Compensation Reform, the pilot program must 
     first be completed, and the Conferees direct that the results 
     of the pilot be provided to the Intelligence Committees in a 
     written report within 45 days of the conclusion of the pilot 
     program, as required by Section 402 (b) (3) of the FY 03 Act. 
     The House and Senate Intelligence Committees will scrutinize 
     closely the written report on the pilot program. The 
     Committees must have an opportunity to weigh fully the costs 
     and benefits associated with this particular Compensation 
     Reform plan.
       To ensure that the Intelligence Committees have a full 
     opportunity to conduct this important review and carefully 
     consider the results of the pilot program, the Conferees have 
     included a provision that delays implementation of 
     Compensation Reform across the Agency until after enactment 
     of the ``Intelligence Authorization Act for Fiscal Year 
     2005.'' Implementation of the program before the Intelligence 
     Committees have rigorously reviewed the results of the pilot, 
     would frustrate the intent of Congress in establishing the 
     pilot program and requiring a report on its results. The 
     Conferees note that this provision restricts implementation 
     of the program across the CIA until the specified date. This 
     is anticipated to be a delay of a little less than a year, at 
     the most.
       The Conferees note, however, that ultimate acceptance (or 
     specific statutory restrictions on implementation) of this 
     Compensation Reform proposal certainly remains

[[Page 29800]]

     an open question. The answer to this question will very much 
     depend on the information provided to the Intelligence 
     Committees during the interim period, as well as the 
     willingness of the DCI and Senior CIA managers to 
     constructively and cooperatively engage in discussions with 
     the Intelligence Committees on this Compensation Reform 
     proposal. The Conferees note with approval the DCI's 
     continued expression of his willingness to consult and 
     cooperate with Congress in its ongoing review of this 
     proposal. The Conferees take him at his word. As noted, the 
     Conferees support generally the concept that the CIA 
     compensation system needs to be reformed. The question is 
     whether this is the right system to be adopted.
       The Conferees also have added two additional reporting 
     requirements to ensure the House and Senate Intelligence 
     Committees are fully advised of the effects that Compensation 
     Reform will have on employees.
       The first report will compare amounts that each employee 
     participating in the pilot program would have earned under 
     the pre-existing compensation structure at the CIA with 
     amounts actually earned under the pilot program.
       Second, the Conferees direct the DCI to conduct a blind 
     survey utilizing an independent, external human resource or 
     personnel consulting organization. This survey shall be 
     completed not later than March 31, 2004. The purpose for the 
     survey is (1) To gauge the level of concern among all CIA 
     employees (both within the pilot program and throughout the 
     CIA) with the Compensation Reform program as currently 
     proposed and (2) to ascertain how many employees currently 
     under the pilot program, having the benefit of their 
     participation in such program, would choose to ``opt out'' of 
     the program if they were to be given that option. The 
     Conferees direct that all of the questions to be presented in 
     the survey shall be provided in full, and in writing, to the 
     Committees before the survey is taken. Moreover, the 
     Conferees direct that the results of the survey shall be 
     provided in full, and in writing, to the Intelligence 
     Committees within 30 days of the survey's completion.
       The Conferees further note that the DCI has indicated his 
     intention to keep employees currently assigned to the pilot 
     program within that program until such time as Compensation 
     Reform is permitted to be implemented across the CIA or its 
     implementation Agency-wide is otherwise restricted by 
     Congress.
       The Conferees believe that it would be appropriate for the 
     DCI to permit employees who have been compensated under the 
     pilot program to ``opt out'' of the system at the end of the 
     pilot program's first year, if they desire to do so. 
     Additionally, the Conferees believe that it would be 
     appropriate for the DCI to provide supplemental compensation 
     or benefits necessary to ensure that those employees who 
     might ``opt out'' of the pilot program and who actually lost 
     compensation, or experienced a reduction in other benefits 
     because of their directed participation in the pilot program, 
     are ``made whole'' by receiving an amount of compensation and 
     benefits equivalent to what they would have received under 
     CIA's pre-existing compensation structure.
       The Conferees have not directed by statute or otherwise 
     that the DCI provide the ``opt out'' or ``make whole'' 
     options to those affected employees. The Conferees do, 
     however, believe these options would be a fair method of 
     reimbursing those employees who may have been subjected to 
     adverse financial circumstances based on their directed 
     participation in the pilot program. The Conferees commit the 
     decision to institute such measures solely to the DCI's 
     discretion.

          TITLE V--DEPARTMENT OF DEFENSE INTELLIGENCE MATTERS

     Sec. 501. Protection of certain National Security Agency 
         personnel from tort liability
       Section 501 is similar to Section 502 of the Senate 
     amendment and to Section 504 of the House bill. The House 
     recedes with amendments.
     Sec. 502. Use of funds for counterdrug and counterterrorism 
         activities for Colombia
       Section 502 is similar to both Section 503 of the Senate 
     amendment and to Section 501 of the House bill. The House 
     recedes with amendments.
       The Conferees believe that Colombian President Alvaro 
     Uribe's approach to ending Colombia's long running terrorist 
     insurgency and reducing narcotics production and trafficking 
     is the best chance for that country to overcome the legacy of 
     violence it has endured for decades. President Uribe's 
     steadfastness in pursuing these goals takes on even greater 
     significance when observed in the light of the sheer 
     brutality of terrorist attacks perpetrated on innocent 
     Colombians by narco-terrorists. Terrorist attacks on his 
     inauguration ceremonies in Bogota make manifest the fact that 
     Uribe himself remains a target of terrorist violence.
       Section 502 allows funds available for intelligence and 
     intelligence-related activities to be used to support a 
     unified campaign against drug traffickers and terrorist 
     organizations. The Administration has chosen to pursue a 
     policy in Colombia that recognizes the inseparable nature of 
     these two threats. The Conferees endorse this approach. This 
     section is an indication of the confidence the Conferees 
     place in President's Uribe's aggressive pursuit of the twin 
     goals of ending the insurgency and battling drug trafficking.
     Sec. 503. Scene visualization technologies
       Section 503 is identical to Section 504 of the Senate 
     amendment. There was no similar provision in the House bill. 
     The House recedes.
     Sec. 504. Measurement and signatures intelligence research 
         program
       Section 504 is similar to Section 505 of the House bill. 
     There is no similar provision in the Senate amendment. The 
     Senate recedes with amendments, including amendments to 
     ensure that classified information considered during the 
     research initiative is protected from unauthorized 
     disclosure.
     Sec. 505. Availability of funds of National Security Agency 
         for national security scholarships
       Section 505 has no counterpart in the Senate amendment or 
     in the House bill. It is a provision adopted by the Managers 
     during the conference.

                             OTHER MATTERS

     Reaffirming the functional definition of covert action
       The Conferees have taken note of the text on covert action 
     contained in the classified annex to S. 1025, as reported on 
     May 8, 2003, by the Senate Select Committee on Intelligence 
     (annex text). The Conferees intend the following language to 
     substitute for the annex text:
       The Conferees attach critical importance to the 
     requirements for covert action approval and notification in 
     the National Security Act of 1947 (Act). In addition to the 
     information and oversight value of mandatory notification, 
     fulfilling these notification requirements fosters great 
     confidence in Executive Branch covert action programs.
       The Administration has amply and repeatedly demonstrated 
     its commitment to adhere to the approval and notification 
     requirements of the National Security Act. Neither the 
     Administration nor the Conferees have sought or agreed to 
     modify, amend, or reinterpret the scope of the Act, or 
     approval and notification requirements under the Act. The 
     Conferees expect all departments and agencies of the U.S. 
     Government to continue to comply fully with the Act and its 
     legislative history.
     Manned airborne reconnaissance aircraft replacement
       Recent military operations in Iraq and Afghanistan, along 
     with broader requirements to support the global war on 
     terrorism, and standing global reconnaissance requirements 
     have placed enormous operational tempo demands on manned 
     airborne reconnaissance platforms operated by the U.S. Army, 
     Navy, and Air Force. The limited number of these assets and 
     the large number of requirements placed on them have led to 
     their designation as ``high demand/low density'' assets that 
     have to be intensively managed by the Department of Defense 
     (DOD) to ensure their most productive, efficient use. While 
     many of these airborne reconnaissance platforms were 
     initially developed for service-specific reconnaissance 
     requirements, they have evolved over time into a patchwork 
     airborne reconnaissance architecture that is not optimized to 
     support national and combatant commanders' intelligence 
     requirements.
       Congress established the position of Under Secretary of 
     Defense for Intelligence (USD(I)) in the National Defense 
     Authorization Act for Fiscal Year 2003 (P.L. 107-314). A 
     clear intent of that action was to create a position and an 
     organization in DOD that would better assess service and 
     Defense-wide intelligence requirements and better develop, 
     coordinate and integrate current and projected DOD 
     intelligence capabilities in support of service, joint, and 
     national intelligence collection requirements. The Conferees 
     expect the USD(I) to move expeditiously to establish 
     requirements for the development of a fully integrated manned 
     and unmanned airborne reconnaissance architecture for the 
     future, with adequate capabilities and availability to meet 
     projected requirements, minimize unnecessary duplication of 
     effort, and maximize operational efficiency.
       Some of these platforms, such as the Navy's EP-3E and the 
     Army's RC-12 Guardrail, are nearing the end of their expected 
     service lives and are in urgent need of replacement. The 
     Conferees are concerned that while the need to recapitalize 
     manned airborne reconnaissance platforms in a coordinated, 
     integrated fashion is well known within the DOD, only the 
     Army has established a formal program for replacing its 
     legacy manned airborne signals intelligence reconnaissance 
     platforms by the competitive development and production of 
     the Aerial Common Sensor (ACS).
       The Conferees are aware that the Navy is interested in 
     taking advantage of the work done by the Army on ACS, and is 
     considering the adoption of an ACS-based solution for 
     replacement of the EP-3E. The Conferees applaud the Navy 
     efforts to establish a joint program with the Army, but are 
     concerned that a thorough analysis of options has not yet 
     been conducted. While the Navy did commission an initial 
     analysis of options, the Conferees feel a more rigorous, 
     thorough

[[Page 29801]]

     analysis is warranted for such an important program.
       The Conferees direct the Secretary of Defense to conduct a 
     thorough analysis of options to replace the EP-3E mission 
     capability. The analysis should be conducted as expeditiously 
     as possible in order to avoid delaying an EP-3E replacement. 
     The Conferees expect that the analysis should evaluate: (1) 
     all reasonable alternatives, including all manned and 
     unmanned replacement alternatives, such as the RC-135 Rivet 
     Joint, Global Hawk unmanned aerial vehicle, and the ACS; (2) 
     the consistency of the cost methodology; and, (3) a solution 
     that maximizes signals intelligence capability, low life-
     cycle costs, and increases interoperability. In order to 
     ensure the Navy makes a well-founded acquisition decision, 
     the Conferees direct the Secretary of the Navy not to proceed 
     with the acquisition of an EP-3E replacement until this 
     analysis is complete and the Defense Acquisition Board 
     approval has been granted. The Navy should use additional 
     funding that may be available to expedite the study, 
     analysis, and decision making processes.
       The Conferees are also concerned that the Air Force has not 
     moved more aggressively to analyze program alternatives for 
     replacing or modernizing the RC-135, which will also be 
     required in future years. The Conferees believe that, when it 
     is time to replace the RC-135 platform, DOD could avail 
     itself of more modern platforms that use state of the art 
     technology in aircraft and intelligence collection systems, 
     emphasize lower operating costs, and take full advantage of 
     robust communications capabilities to reduce platform size, 
     weight, and operational costs.
       The Conferees direct the Secretary of Defense to conduct a 
     formal Analysis of Alternatives (AOA) for replacement or 
     modernization of the RC-135 mission. The AOA shall consider 
     all manned and unmanned replacement alternatives, including 
     high altitude, long endurance unmanned aerial vehicles, an 
     ACS-based option, and more cutting edge technologies such as 
     high altitude aero-bodies. The AOA should also specifically 
     address the option of forming a joint program with Army, 
     Navy, and Air Force participation.
       The Conferees expect these analyses will be coordinated 
     with the Under Secretary of Defense for Acquisition, 
     Technology and Logistics and the USD(I), and will be a 
     consistent part of the comprehensive effort by the USD(I), in 
     consultation, as appropriate, with the DCI, to establish 
     requirements for the development of a fully integrated manned 
     and unmanned airborne reconnaissance architecture that makes 
     appropriate use of reach-back technology.
     Development of sophisticated analytic tools
       Following the terrorist attacks of September 11, 2001, the 
     Intelligence Committees have repeatedly emphasized the 
     importance of developing sophisticated new analytic tools to 
     ensure the rapid processing and analysis of foreign 
     intelligence information, as well as increased collaboration 
     among the diverse national security elements of the Federal 
     government. The potential value of such tools for 
     ``connecting the dots'' is clear. The Conferees recognize, 
     however, that advanced analytic tools, if misused, could 
     impact the privacy of U.S. persons. Efforts by the Defense 
     Department and other agencies to develop these tools have 
     come under intense scrutiny for this reason. To address 
     reservations concerning possible encroachments on individual 
     liberties, the Fiscal Year 2003 and Fiscal Year 2004 
     Department of Defense Appropriations Acts (P.L. 108-7 
     (Division M) and P.L. 108-87, respectively) contained 
     limitations on the development and use of certain ``data-
     mining'' activities.
       In Section 8131 of the Department of Defense Appropriations 
     Act for Fiscal Year 2004, and in its accompanying classified 
     annex, the Defense Advanced Research Projects Agency's 
     Terrorist Information Awareness program was terminated and 
     requested funds were expressly provided to the National 
     Foreign Intelligence Program (NFIP) to develop 
     ``[p]rocessing, analysis, and collaboration tools for 
     counterterrorism foreign intelligence.'' Section 8131 
     prohibited ``deployment and implementation'' of these tools 
     except for
       (1) Lawful military operations of the United States 
     conducted outside the United States; or
       (2) Lawful foreign intelligence activities conducted wholly 
     overseas, or wholly against nonUnited States citizens.
       The Conferees do not interpret the restriction contained in 
     Section 8131 as a restriction on the development of analytic 
     tools for ``processing, analysis, and collaboration tools for 
     counterterrorism foreign intelligence.'' Instead, the 
     Conferees recognize this language as a restriction on 
     ``deployment and implementation.''
       In the Classified Annex accompanying this Act, the 
     Conferees have specifically authorized the use of the funds 
     appropriated to the NFIP to continue development of advanced 
     processing, analysis, and collaboration tools. The Conferees 
     direct that any experiments or efforts to test these tools 
     should be conducted only against U.S. Government databases 
     containing foreign intelligence information lawfully 
     collected, analyzed, retained, or disseminated under existing 
     statutes, regulations, Executive orders, or Attorney General 
     guidelines governing such activities, including all 
     applicable restrictions concerning the collection, analysis, 
     retention, or dissemination of U.S. person information. The 
     Conferees encourage active participation in these 
     developmental efforts by all elements of the Intelligence 
     Community.
       The Conferees are convinced, however, that an analysis of 
     the policies and procedures necessary to safeguard individual 
     liberties and privacy should occur concurrently with the 
     development of these analytic tools, not as an afterthought. 
     The Conferees recognize that current restrictions on the 
     conduct of intelligence and law enforcement activities, as 
     well as the protections afforded U.S. persons under 
     applicable laws, regulations, and Executive orders, can be 
     applied to these new tools. The Administration should also 
     consider whether new policies and procedures are necessary to 
     ensure privacy protections when these advanced information 
     technology tools are utilized in intelligence and law 
     enforcement activities. This examination should include 
     diverse opinion and expertise and should be conducted with as 
     much transparency as possible, recognizing the importance of 
     protecting intelligence sources and methods.
       The Conferees direct that the Attorney General and the DCI 
     jointly provide an unclassified report, with a classified 
     annex, as necessary, to the Intelligence Committees regarding 
     the application of the Constitution, laws, regulations, 
     Executive orders, and guidelines of the United States to the 
     use of these advanced analytic tools by the Intelligence 
     Community. This report should specifically address existing 
     protections for the collection, analysis, retention, and 
     dissemination of U.S. person information. Although the 
     Conferees have not authorized the development, testing, or 
     deployment of these advanced analytic tools against databases 
     which contain information other than foreign intelligence 
     information, including private sector databases, the report 
     should address the application of existing laws or policies 
     to searches of such databases, whether publicly or privately 
     held, as well as any proposed modifications to laws or 
     policies that may be necessary in the future to ensure 
     appropriate protections for U.S. persons. The report should 
     include an analysis of law, regulation, and policy that takes 
     into account potential technological advances that will 
     protect privacy interests, such as selective revelation 
     technologies, enhanced access controls and audit trails, and 
     techniques to ``anonymize'' U.S. person information. The 
     Conferees believe that the Attorney General and DCI should 
     seek input from experts in law, technology, public policy, 
     and national security when drafting this report. This report 
     should be provided to the Intelligence Committees no later 
     than one year after enactment of this Act.

       From the Permanent Select Committee on Intelligence, for 
     consideration of the House bill and the Senate amendment, and 
     modifications committed to conference:
     Porter J. Goss,
     Doug Bereuter,
     Sherwood Boehlert,
     Jim Gibbons,
     Ray LaHood,
     Randy ``Duke'' Cunningham,
     Pete Hoekstra,
     Richard Burr,
     Terry Everett,
     Elton Gallegly,
     Mac Collins,
     Jane Harman,
     Alcee L. Hastings,
     Silvestre Reyes,
     Leonard L. Boswell,
     Collin C. Peterson,
     Bud Cramer,
     Anna G. Eshoo,
     Rush Holt,
     C.A. Dutch Ruppersberger,
     From the Committee on Armed Services, for consideration of 
     defense tactical intelligence and related activities:
     Duncan Hunter,
     Curt Weldon,
                                Managers on the Part of the House.

     From the Select Committee on Intelligence:
     Pat Roberts,
     Orrin Hatch,
     Mike DeWine,
     Christopher S. Bond,
     Trent Lott,
     Olympia Snowe,
     Chuck Hagel,
     Saxby Chambliss,
     John Warner,
     Jay Rockefeller,
     Carl Levin,
     Dianne Feinstein,
     Ron Wyden,
     Dick Durbin,
     Evan Bayh,
     John Edwards,
     Barbara A. Mikulski,
     From the Committee on Armed Services:
     Wayne Allard,
     Bill Nelson,
                               Managers on the Part of the Senate.

[[Page 29802]]



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