[House Report 105-508]
[From the U.S. Government Publishing Office]



105th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     105-508
_______________________________________________________________________


 
          INTELLIGENCE AUTHORIZATION ACT FOR FISCAL YEAR 1999

                                _______
                                

  May 5, 1998.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

_______________________________________________________________________


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

                              R E P O R T

                        [To accompany H.R. 3694]

      [Including cost estimate of the Congressional Budget Office]

  The Permanent Select Committee on Intelligence, to whom was 
referred the bill (H.R. 3694) to authorize appropriations for 
fiscal year 1999 for intelligence and intelligence-related 
activities of the United States Government, the Community 
Management Account, and the Central Intelligence Agency 
Retirement and Disability System, and for other purposes, 
having considered the same, report favorably thereon with an 
amendment and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
The bill as reported.............................................     2
Purpose..........................................................     5
Overall perspective on the intelligence budget and committee 
  intent.........................................................     6
Scope of committee review........................................     6
Committee findings and recommendations...........................     7
  Areas of Special Interest......................................     9
    The National Security Agency Budget, Culture, Method of 
      Operation..................................................     9
    National Reconnaissance Program..............................    11
    The National Imagery and Mapping Agency (NIMA)...............    12
    Imagery Archiving............................................    13
    Automated Intelligence Data Fusion...........................    14
    Imagery Server Systems.......................................    14
    Defense Counterintelligence..................................    15
    Intelligence Congressional Justification Books...............    16
Joint Military Intelligence Program..............................    16
Tactical Intelligence and Related Activities.....................    28
Section-by-Section Analysis of the Bill as Reported..............    33
    Title I--Intelligence Activities.............................    33
        Section 101--Authorization of Appropriations.............    33
        Section 102--Classified Schedule of Authorizations.......    33
        Section 103--Personnel Ceiling Adjustments...............    33
        Section 104--Community Management Account................    33
     Title II--Central Intelligence Agency Retirement and 
      Disability System..........................................    35
        Section 201--Authorization of Appropriations.............    35
     Title III--General Provisions...............................    35
        Section 301--Increase in Employee Compensation and 
          Benefits Authorized by Law.............................    35
        Section 302--Restriction on Conduct of Intelligence 
          Activities.............................................    35
        Section 303--Application of Sanctions Laws to 
          Intelligence Activities................................    35
        Section 304--Sense of Congress on Intelligence Community 
          Contracting............................................    36
    Title IV--Central Intelligence Agency........................    36
        Section 401--Extension of CIA Voluntary Separation Pay 
          Act....................................................    36
        Section 402--Enhanced Protective Authority for CIA 
          Personnel and Family Members...........................    37
        Section 403--Technical Corrections.......................    38
    Title V--Department of Defense...............................    38
        Section 501--Extension of Authority to Engage in 
          Commercial Activities as Security for Intelligence 
          Collection Activities..................................    38
Committee position...............................................    39
Findings and recommendations of the Committee on Government 
  Reform and Oversight...........................................    39
Oversight findings...............................................    39
Fiscal year cost projections.....................................    39
Congressional Budget Office estimates............................    39
Committee cost estimates.........................................    41
Specific Constitutional authority for Congressional enactment of 
  this legislation...............................................    42
Changes to existing law..........................................    42
  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Intelligence 
Authorization Act for Fiscal Year 1999''.
  (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.

                    TITLE I--INTELLIGENCE ACTIVITIES

Sec. 101. Authorization of appropriations.
Sec. 102. Classified schedule of authorizations.
Sec. 103. Personnel ceiling adjustments.
Sec. 104. Community management account.

 TITLE II--CENTRAL INTELLIGENCE AGENCY RETIREMENT AND DISABILITY SYSTEM

Sec. 201. Authorization of appropriations.

                     TITLE III--GENERAL PROVISIONS

Sec. 301. Increase in employee compensation and benefits authorized by 
law.
Sec. 302. Restriction on conduct of intelligence activities.
Sec. 303. Application of sanctions laws to intelligence activities.
Sec. 304. Sense of Congress on intelligence community contracting.

                 TITLE IV--CENTRAL INTELLIGENCE AGENCY

Sec. 401. Extension of the CIA Voluntary Separation Pay Act.
Sec. 402. Enhanced protective authority for CIA personnel and family 
members.
Sec. 403. Technical amendments.

         TITLE V--DEPARTMENT OF DEFENSE INTELLIGENCE ACTIVITIES

Sec. 501. Extension of authority to engage in commercial activities as 
security for intelligence collection activities.

                    TITLE I--INTELLIGENCE ACTIVITIES

SEC. 101. AUTHORIZATION OF APPROPRIATIONS.

  Funds are hereby authorized to be appropriated for fiscal year 1999 
for the conduct of the intelligence and intelligence-related activities 
of the following elements of the United States Government:
          (1) The Central Intelligence Agency.
          (2) The Department of Defense.
          (3) The Defense Intelligence Agency.
          (4) The National Security Agency.
          (5) The Department of the Army, the Department of the Navy, 
        and the Department of the Air Force.
          (6) The Department of State.
          (7) The Department of the Treasury.
          (8) The Department of Energy.
          (9) The Federal Bureau of Investigation.
          (10) The National Reconnaissance Office.
          (11) The National Imagery and Mapping Agency.

SEC. 102. CLASSIFIED SCHEDULE OF AUTHORIZATIONS.

  (a) Specifications of Amounts and Personnel Ceilings.--The amounts 
authorized to be appropriated under section 101, and the authorized 
personnel ceilings as of September 30, 1999, for the conduct of the 
intelligence and intelligence-related activities of the elements listed 
in such section, are those specified in the classified Schedule of 
Authorizations prepared to accompany the bill H.R. 3694 of the 105th 
Congress.
  (b) Availability of Classified Schedule of Authorizations.--The 
Schedule of Authorizations shall be made available to the Committees on 
Appropriations of the Senate and House of Representatives and to the 
President. The President shall provide for suitable distribution of the 
Schedule, or of appropriate portions of the Schedule, within the 
executive branch.

SEC. 103. PERSONNEL CEILING ADJUSTMENTS.

  (a) Authority for Adjustments.--With the approval of the Director of 
the Office of Management and Budget, the Director of Central 
Intelligence may authorize employment of civilian personnel in excess 
of the number authorized for fiscal year 1999 under section 102 when 
the Director of Central Intelligence determines that such action is 
necessary to the performance of important intelligence functions, 
except that the number of personnel employed in excess of the number 
authorized under such section may not, for any element of the 
intelligence community, exceed two percent of the number of civilian 
personnel authorized under such section for such element.
  (b) Notice to Intelligence Committees.--The Director of Central 
Intelligence shall promptly notify the Permanent Select Committee on 
Intelligence of the House of Representatives and the Select Committee 
on Intelligence of the Senate whenever he exercises the authority 
granted by this section.

SEC. 104. COMMUNITY MANAGEMENT ACCOUNT.

  (a) Authorization of Appropriations.--There is authorized to be 
appropriated for the Community Management Account of the Director of 
Central Intelligence for fiscal year 1999 the sum of $139,123,000. 
Within such amount, funds identified in the classified Schedule of 
Authorizations referred to in section 102(a) for the Advanced Research 
and Development Committee shall remain available until September 30, 
2000.
  (b) Authorized Personnel Levels.--The elements within the Community 
Management Account of the Director of Central Intelligence is 
authorized 283 full-time personnel as of September 30, 1999. Personnel 
serving in such elements may be permanent employees of the Community 
Management Staff or personnel detailed from other elements of the 
United States Government.
  (c) Classified Authorizations.--
          (1) Authorization of appropriations.--In addition to amounts 
        authorized to be appropriated for the Community Management 
        Account by subsection (a), there is also authorized to be 
        appropriated for the Community Management Account for fiscal 
        year 1999 such additional amounts as are specified in the 
        classified Schedule of Authorizations referred to in section 
        102(a).
          (2) Authorization of personnel.--In addition to the personnel 
        authorized by subsection (b) for elements of the Community 
        Management Account as of September 30, 1999, there is 
        authorized such additional personnel for such elements as of 
        that date as is specified in the classified Schedule of 
        Authorizations.
  (d) Reimbursement.--Except as provided in section 113 of the National 
Security Act of 1947, during fiscal year 1999, any officer or employee 
of the United States or a member of the Armed Forces who is detailed to 
the staff of the Community Management Account from another element of 
the United States Government shall be detailed on a reimbursable basis, 
except that any such officer, employee or member may be detailed on a 
nonreimbursable basis for a period of less than one year for the 
performance of temporary functions as required by the Director of 
Central Intelligence.
  (e) National Drug Intelligence Center.--
          (1) In general.--Of the amount appropriated pursuant to the 
        authorization in subsection (a), the amount of $27,000,000 
        shall be available for the National Drug Intelligence Center. 
        Within such amount, funds provided for research, development, 
        test, and evaluation purposes shall remain available until 
        September 30, 2000, and funds provided for procurement purposes 
        shall remain available until September 30, 2001.
          (2) Transfer of funds.--The Director of Central Intelligence 
        shall transfer to the Attorney General of the United States 
        funds available for the National Drug Intelligence Center under 
        paragraph (1). The Attorney General shall utilize funds so 
        transferred for the activities of the National Drug 
        Intelligence Center.
          (3) Limitation.--Amounts available for the National Drug 
        Intelligence Center may not be used in contravention of the 
        provisions of section 103(d)(1) of the National Security Act of 
        1947 (50 U.S.C. 403-3(d)(1)).
          (4) Authority.--Notwithstanding any other provision of law, 
        the Attorney General shall retain full authority over the 
        operations of the National Drug Intelligence Center.
  (f) Transfer Authority for Funds for Security Requirements at 
Overseas Locations.--
          (1) In general.--Of the amount appropriated pursuant to the 
        authorization in subsection (a), the Director of Central 
        Intelligence may transfer funds to departments or other 
        agencies for the sole purpose of supporting certain 
        intelligence community security requirements at overseas 
        locations, as specified by the Director.
          (2) Limitation.--Amounts made available for departments or 
        agencies under paragraph (1) shall be--
                  (A) transferred to the specific appropriation;
                  (B) allocated to the specific account in the specific 
                amount, as determined by the Director;
                  (C) merged with funds in such account that are 
                available for architectural and engineering support 
                expenses at overseas locations; and
                  (D) available only for the same purposes, and subject 
                to the same terms and conditions, as the funds 
                described in subparagraph (C).

 TITLE II--CENTRAL INTELLIGENCE AGENCY RETIREMENT AND DISABILITY SYSTEM

SEC. 201. AUTHORIZATION OF APPROPRIATIONS.

  There is authorized to be appropriated for the Central Intelligence 
Agency Retirement and Disability Fund for fiscal year 1999 the sum of 
$201,500,000.

                     TITLE III--GENERAL PROVISIONS

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

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

SEC. 302. RESTRICTION ON CONDUCT OF INTELLIGENCE ACTIVITIES.

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

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

  Section 905 of the National Security Act of 1947 (50 U.S.C. 441d) is 
amended by striking out ``January 6, 1999'' and inserting in lieu 
thereof ``January 6, 2000''.

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

  It is the sense of Congress that the Director of Central Intelligence 
should continue to direct that elements of the intelligence community, 
whenever compatible with the national security interests of the United 
States and consistent with operational and security concerns related to 
the conduct of intelligence activities, and where fiscally sound, 
should competitively award contracts in a manner that maximizes the 
procurement of products properly designated as having been made in the 
United States.

                 TITLE IV--CENTRAL INTELLIGENCE AGENCY

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

  Section 2(f) of the Central Intelligence Agency Voluntary Separation 
Pay Act (Public Law 103-36, 50 U.S.C. 403-4 note) is amended by 
striking out ``September 30, 1999'' and inserting in lieu thereof 
``September 30, 2001''.

SEC. 402. ENHANCED PROTECTIVE AUTHORITY FOR CIA PERSONNEL AND FAMILY 
                    MEMBERS.

  Section 5(a)(4) of the Central Intelligence Agency Act of 1949 (50 
U.S.C. 403f(a)(4)) is amended by striking out ``and the protection of 
Agency personnel and of defectors, their families'' and inserting in 
lieu thereof ``and the protection of current and former Agency 
personnel and their immediate families, and defectors and their 
immediate families''.

SEC. 403. TECHNICAL AMENDMENTS.

  (a) Central Intelligence Agency Act of 1949.--(1) Section 5(a)(1) of 
the Central Intelligence Agency Act of 1949 (50 U.S.C. 403f(a)(1)) is 
amended--
          (A) by striking out ``subparagraphs (B) and (C) of section 
        102(a)(2)'' and inserting in lieu thereof ``paragraphs (2) and 
        (3) of section 102(a)'';
          (B) by striking out ``(c)(5)'' and inserting in lieu thereof 
        ``(c)(6)'';
          (C) by inserting ``(3),'' after ``403(a)(2),'';
          (D) by inserting ``(c)(6), (d)'' after ``403-3''; and
          (E) by inserting ``(a), (g)'' after ``403-4''.
  (2) Section 6 of such Act (50 U.S.C. 403g) is amended by striking out 
``(c)(5)'' each place it appears and inserting in lieu thereof 
``(c)(6)''.
  (b) Central Intelligence Agency Retirement Act.--Section 201(c) of 
the Central Intelligence Agency Retirement Act (50 U.S.C. 2011(c)) is 
amended by striking out ``(c)(5)'' each place it appears and inserting 
in lieu thereof ``(c)(6)''.

         TITLE V--DEPARTMENT OF DEFENSE INTELLIGENCE ACTIVITIES

SEC. 501. EXTENSION OF AUTHORITY TO ENGAGE IN COMMERCIAL ACTIVITIES AS 
                    SECURITY FOR INTELLIGENCE COLLECTION ACTIVITIES.

  Section 431(a) of title 10, United States Code, is amended by 
striking out ``December 31, 1998'' and inserting in lieu thereof 
``December 31, 2001''.

                                Purpose

    The bill would:
          (1) Authorize appropriations for fiscal year 1999 for 
        (a) the intelligence and intelligence-related 
        activities of the U.S. Government, (b) the Community 
        Management Account, and (c) the Central Intelligence 
        Agency Retirement and Disability System;
          (2) Authorize the personnel ceilings on September 30, 
        1999 for the intelligence and intelligence-related 
        activities of the U.S. Government and permit the 
        Director of Central Intelligence to authorize personnel 
        ceilings in Fiscal Year 1999 for any intelligence 
        element up to two percent above the authorized levels, 
        with the approval of the Director of the Office of 
        Management and Budget;
          (3) Authorize $27 million for the National Drug 
        Intelligence Center in Johnstown, Pennsylvania;
          (4) Extend the authority of the President to defer 
        the imposition of sanctions through January 6, 2000, 
        when to proceed without delay would seriously risk the 
        compromise of an intelligence source or method, or an 
        ongoing criminal investigation;
          (5) Extend the CIA's authority to offer ``early out'' 
        incentives to employees to enable the CIA to meet the 
        intelligence personnel needs of the next century;
          (6) Enhance the CIA's ability to provide personal 
        protection to its employees and defectors and the 
        families of such protectees in situations presenting 
        specific or credible threats of physical harm; and
          (7) Extend the current Department of Defense 
        authority to engage in commercial activities as 
        security for intelligence collection.

  Overall Perspective on the Intelligence Budget and Committee Intent

    The classified annex to this public report includes the 
classified Schedule of Authorizations and its associated 
language. The committee views the classified Annex as an 
integral part of this legislation. The classified Annex 
contains a thorough discussion of all budget issues considered 
by the committee, which underlies the funding authorization 
found in the Schedule of Authorizations. The committee intends 
that all intelligence programs discussed in the classified 
Annex to this report be conducted in accord with the guidance 
and limitations set forth as associate language therein. The 
classified Schedule is incorporated directly into this 
legislation. The classified Annex is available for review by 
all Members of the House of Representatives, subject to the 
requirements of clause 13 of rule XLIII of the House.

                       Scope of Committee Review

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

                 Committee Findings and Recommendations

    The committee completed its review of the President's 
fiscal year 1999 budget, carrying out its annual responsibility 
to prepare an authorization based on close examination of 
intelligence programs and proposed expenditures. The review 
reflected the committee's continuing belief that intelligence 
activities must be examined by function as well as by program. 
Thus, the committee's review was structured across program 
lines and intelligence disciplines and themes. The committee 
held seven full committee budget-related hearings on budgetary 
issues, including: acquisition of overhead collection systems, 
SIGINT issues, IMINT issues, Human Intelligence (HUMINT) 
issues, Analysis and Production, and Covert Action. A specific 
hearing was also held that dealt with the Future Imagery 
Architecture, and two hearings were held at which the Director 
of Central Intelligence (DCI) testified, in order to understand 
his views and plans for the future of intelligence and the 
Intelligence Community (IC). The committee also held six full-
committee briefings on areas such as commercial mapping 
technology, collection management, and the status of the space 
reconnaissance programs, in particular, and the status of IC 
acquisition processes, in general. There were, in addition, 
numerous individual briefings of Members and over 100 staff 
briefings on programs, specific activities, and budget 
requests.
    The committee continued to place heavy emphasis on 
understanding and addressing the future needs of the IC, and 
the several distinct roles that it plays in national security. 
For the past three years, the committee has discussed the fact 
that our national security is affected by a set of issues more 
broad than those emphasized for the past 50 years. Heretofore, 
some of these issues have not been identified so readily with 
our global interests. Throughout our continuing review, there 
has been a constant theme: the threats that face our nation 
demand that the IC be vigilant on both the strategic and 
tactical levels and the IC must maintain a world-wide view, 
with a highly flexible set of resources.
    The committee is struck by what can be characterized as a 
growing sense of apathy toward our national security and 
intelligence. Because the threats are less obvious and 
untraditional, many inside and outside of government believe 
that our nation has fewer worries and is somehow safer. That we 
can dramatically reduce our intelligence and defense resources, 
because we are at peace, is a concept that many endorse, 
especially when weighing such expenditures against those needed 
domestically. Unfortunately, our nation is no less at risk now 
than during the Cold War. What has changed is the nature of the 
threat. The likelihood of a major nuclear confrontation has 
receded. But other aspects of our security are at greater risk, 
including the growing possibility that a rogue nation will 
attack United States' interests, or even the United States 
itself, with a nuclear device or some other weapon of mass 
destruction.
    Two specific incidents occurred recently that have shown 
light on how much at risk, and how ill-prepared, we are. First 
is the most recent confrontation with Iraq. Yet again, the 
United States faced a dilemma in how to deal with Saddam 
Hussein, a dictator possessing weapons of mass destruction and 
a demonstrated will to use them, who has consistently 
threatened stability of a critically important, strategic 
region. The real issues in this situation could be boiled down 
to two--did we have a policy, and did we have the intelligence 
that would not only support a policy decision and its 
implementation, but would also provide the information 
necessary to develop options? Regarding the latter, the answer 
was a resounding ``no.''
    The second incident is related to our nation's 
vulnerability to technological attack. In February 1998, 
Department of Defense computer systems fell victim to 
systematic, coordinated attacks by individuals who, luckily, 
appeared to be driven by the challenge of conducting such 
attacks rather than by malicious intent. Regardless of intent, 
the attack again demonstrates that information technology has 
become this nation's strength as well as its Achilles' heel. 
Consequently, high priority must be placed on developing our 
abilities to warn, detect and defend against such attacks, as 
well as to be positioned to conduct such attacks when 
necessary. The committee stresses that this is a national 
security issue that encompasses the entirety of our nation's 
infrastructure, not just that of Defense or of the government. 
Likewise, this issue must be faced in terms of threat and 
attack, not just in terms of law enforcement. At the end of the 
day, we must be vigilant in ensuring that the IC is positioned 
to address this new challenge.
    Our intelligence capabilities have dwindled since the 
breakup of the Soviet Union, and we have failed to build new 
capabilities that will become increasingly critical. This is 
especially true in the areas of espionage, covert action, and 
in our toughest SIGINT activities. We, as a nation, cannot 
continue this course. The world is such that individuals and 
groups will continue to disrupt our foreign policy objectives 
and threaten our national security. The only thing that will 
change will be that their resources will increase and their 
capabilities will grow ever more fearsome. We must be prepared, 
by having the intelligence resources we need, well before a 
crisis occurs, and preferably in a fashion that might allow us 
to preempt it. We can do no less.
    As a result of these demands, the committee evaluated the 
budget submission with an eye toward looking at future needs 
and capabilities. Specifically, five major themes came out of 
this evaluation:
          We must invest in a recapitalization and 
        modernization of our SIGINT capabilities;
          We must invest in re-establishing and rebuilding our 
        clandestine espionage or HUMINT infrastructure;
          We must continue to invest in all-source analysis, 
        establishing a ``global,'' strategic outlook that will 
        allow for proper indications and warning for the 
        policymakers and key decision makers throughout 
        government;
          We must rebuild covert action capabilities; and,
          We must invest in advanced research and development 
        in all programs within the IC.
    Likewise, the committee's review brought to light some 
fundamental questions that are partially addressed in this 
budget, and will be specifically pursued over the next year. 
These include:
    Will the growing cost of the National Reconnaissance 
Program (NRP) continue unabated, and how is this affecting the 
other programs within the NFIP?
    Are we placing the proper requirements on the development 
of our future overhead systems? In essence, are we structuring 
it only to monitor and surveil known targets, or do we want to 
develop systems that focus on reconnaissance and uncovering 
truly secret information?
    Is financial management within the IC, specifically within 
the NRP and the National Imagery and Mapping Program, rigorous 
enough that the DCI can make needed tradeoffs?
    Is the balance of investment between overhead systems and 
other methods of collection correct, given the types of 
information that is needed for national security and foreign 
policy planning?
    Are we properly emphasizing and investing in areas such as 
processing, analysis and distribution, the activities that make 
useful the massive amounts of data that is anticipated with new 
technical collection systems?
    Is the IC approaching information operations in a fashion 
that properly positions us to face the future challenges?
    Are we investing properly in the right types of research 
and fully exploiting commercially available technologies?
    These are questions that must be addressed. They will be 
the focus of the committee's future oversight and actions.

                       Areas of Special Interest

   the national security agency budget, culture, method of operation

    The committee has concluded that very large changes in the 
National Security Agency's culture and method of operations 
need to take place, including changes in its budget 
methodology. NSA should be given credit for many changes 
already introduced, but the committee believes that the results 
have not gone far enough, and that NSA will not meet its 
Unified Cryptologic Architecture (UCA) goals without tackling 
head-on some very fundamental internal obstacles.
    Additions to the Consolidated Cryptologic Program (CCP) 
budget are being used as leverage to effect some of the 
internal reforms urgently needed. This is being done in several 
ways. First, the committee is funding and mandating external 
management reviews. Second, the committee is attempting to 
infuse fresh thought, needed expertise (especially in systems 
engineering), and greater fairness by insisting that 
significant portions of certain categories be contracted out 
and that outside proposals and expertise be solicited, notably 
in systems engineering, advanced research and development, and 
in development activities conducted by the Advanced Technology 
Centers. Third, fences have been placed on portions of the 
budget, with the prospect that a considerable amount of money 
could be reprogrammed for other IC needs if NSA does not 
develop detailed strategic and business planning.
    These steps are taken partially because the committee has 
been frustrated in attempts to start needed reforms during 
fiscal year 1998. Outside management reviews, budget cuts and 
adds to reduce acquisition cycle time, plus cuts to lower the 
budget percentage allocated to support, were initiated in the 
fiscal year 1998 authorization process, but all have met 
resistance and have been deflected from their intended purpose. 
Subsequently, the committee also found unreceptiveness to 
development of cost effectiveness analyses that could direct 
the agency's and SIGINT community's investment priorities. It 
also found that fiscal year 1998 and fiscal year 1999 
investments of money and personnel in categories critical to 
the future, continue to be minimized, at best, and that NSA 
often cannot track allocations for critical functions that 
cross the old program and bureaucratic lines, much less enforce 
implementation of DIRNSA policy priorities.
    Therefore, the committee concludes that a far more radical 
revision of the budget process than presently contemplated is 
necessary. Just as the military must train the way it will 
fight, NSA must budget according to the critical categories of 
a new and completely different architecture and mode of 
operations. Further, the old budget categories have provided 
little insight into and fulfillment of the old architecture.
    Most difficult of all, NSA must develop a new culture in 
which all team together on a new architecture, rather than 
bubbling up disparate ideas and programs from across NSA and 
expending much of its energy on probable duplication. This 
challenge cannot be minimized, because much of NSA's past 
strength has come from its localized creativity and quick-
reactioncapability, which enabled it to rise when necessary to 
overcome the stultifying effect that the bureaucracy of such a large 
organization can have.
    It has often been said, by both Congress and the 
administration, that the IC neglects processing and the entire 
``downstream'' area in favor of more exotic and interesting 
collection programs, and that this trend has worsened in recent 
years. The committee requests that, after receiving this bill, 
the Community Management Staff (CMS) organize an effort to 
provide statistics on trends for investment in collection as 
opposed to processing or downstream areas. Even if comparable 
data cannot be found to document the balance over the past ten 
years, we should establish a 1997 baseline, if practicable, and 
keep track thereafter. Eventually, we may be able to establish 
some rule of thumb for the amount of downstream investment 
required to use efficiently our investments in collection, 
although this could be subject to changing technology and the 
effect on costs at either end. The CMS is asked to explore this 
possible system for tracking SIGINT investment, in conjunction 
with NSA, which has thought about potential methodologies. CMS 
participation appears necessary because much SIGINT collection 
and processing crosses program boundaries and accumulation of 
the data would require access to information outside NSA, as 
well as the presence of an objective arbiter.
    For the same reasons, CMS is also asked to undertake 
immediately the establishment of meaningful metrics to evaluate 
henceforth the cost effectiveness of various SIGINT collection 
programs. NSA has resisted this on grounds that meaningful 
metrics cannot be found, but the committee believes they must 
be found and that NSA and other community programs must be run 
more like a corporation that systematically evaluates the 
productivity of various lines of operation, terminates or 
downgrades some accordingly, and switches available dollars to 
those that produce the most return or have the greatest 
promise. Such data is needed across the IC to determine where 
our funds should be placed, and should have been developed to 
help guide the UCA deliberations. It can still have a major 
impact on UCA implementation plans. There are many other 
potential uses, including for decisions on the elimination of 
legacy systems within NSA and for DCI and DoD consideration of 
cross-program trades.
    Finally, the committee has requested that an independent 
panel assess community-wide Electronic Intelligence (ELINT) 
planning and budgeting.

                    National Reconnaissance Program

    For several years, the committee has been concerned with 
the increasing costs of several major National Reconnaissance 
Office (NRO) programs and the NRP's growing share of the NFIP 
budget. Not seeing any relief from the tight fiscal 
environment, the committee has sought to find technological 
innovations and managerial reforms in the NRP that could reduce 
costs. This goal lay behind the committee's push to shift to 
larger numbers of smaller satellites, which the committee 
thought also would provide better performance against hard 
targets, reduce satellite vulnerability, and help to counter 
foreign denial and deception practices.
    The committee had hoped that acquisition reform and a shift 
in strategy to smaller satellites would control if not reduce 
costs in the near-term, and enable the DCI to increase 
investment elsewhere in the NFIP and the NRO to invest new 
technologies, in support of new or higher priority missions, 
like counter-proliferation. So far, however, this hope has not 
been fulfilled, but the committee still believes that this 
strategy, if properly enforced, will produce results in time. 
The committee is now exploring also the benefits of cost caps, 
believing with the DCI that they may help to discipline the 
acquisition system.
    The committee, in summary, is not satisfied that all 
appropriate measures have been taken to reduce or control costs 
in the NRP or to adequately measure the cost-effectiveness of 
all overhead collection activities. The committee believes that 
the DCI needs to exercise much more knowledgeable and diligent 
oversight of NRO programs, with an eye to freeing up funds for 
investment elsewhere, wherever possible. This oversight must 
extend from requirements tradeoffs, to cost estimating, to 
acquisition oversight. The DCI also needs to acquire the 
expertise necessary to make tradeoffs across the major NFIP 
programs. The DCI can no longer afford to rely on the major 
program managers to police their organizations and budgets. The 
committee has recommended additional funds for the DCI to 
accelerate the development of these capabilities.

             The National Imagery and Mapping Agency (NIMA)

    The committee is very concerned about incidents which cause 
it to question the adequacy of financial management at NIMA. 
Although the committee appreciates the extra information given 
in the CBJB addenda and found the data to be helpful in 
tracking general costs, it has been almost impossible to get 
consistent budget information from NIMA on detailed questions. 
There have been numerous instances over the past few months 
where NIMA has provided conflicting data on major programs and 
has been unable to reconcile the different numbers. Committee 
inquiries aside, these are basic questions that NIMA must be 
able to answer internally in order to function.
    Of further concern, the committee learned the evening 
before the committee mark that NIMA is facing a shortfall in 
fiscal year 1999 in its civilian pay, similar to that faced 
last year. Although the committee understands the difficulty in 
forecasting civilian pay, most agencies' problems occur during 
a fiscal year when promotions or new hiring outpaces attrition. 
The committee does not understand why NIMA is already 
forecasting a shortfall for fiscal year 1999, especially since 
the agency lost hundreds of employees in fiscal year 1998.
    The committee is also concerned about the internal 
reallocation of funds that NIMA has implemented, thus far, in 
fiscal year 1998. Although the committee understands that NIMA 
took its share of unallocated cuts, this does not fully explain 
the movement of money between programs, nor why reprogramming 
requests were not received. Further, the apparent ambiguity 
associated with these actions, the apparent fungibility of the 
accounts, and the fact that, on occasion, NIMA had difficulty 
explaining such actions, draws into question whether the 
management at NIMA has the ability or desire to force analytic 
rigor over the budget process.
    The committee is concerned that NIMA either simply does not 
want to tell Congress of its dealings, or it simply doesn't 
know how money is being spent and managed. Neither optionis 
good. Generally, the committee is skeptical regarding whether NIMA has 
the ability to forecast, manage, and execute its budget.
    Two factors weigh in NIMA's favor, however. First, the new 
Director of NIMA has indicated his understanding that changes, 
and some difficult decisions, must be made. He has also 
indicated his willingness and desire to work with the committee 
to take on these challenges. Second, the committee is aware of 
the DCI's budget task force on NIMA (within the Community 
Management Staff) and strongly supports this effort. The 
committee encourages the Director of NIMA to fully utilize the 
task force resources to provide concrete steps in getting NIMA 
on track. Put simply, NIMA must make significant changes in the 
way it executes and manages its budget, and relates this 
information to Congress, in order to establish any credibility.

                           Imagery Archiving

    The committee believes there is a need for a long-term, 
cohesive strategy for preserving the Nation's investment in 
space and airborne reconnaissance imagery (including all 
formats: film-based, electro-optic, infrared, radar and video). 
Currently, the responsibility of archiving imagery belongs to 
various organizations, including the NIMA, the Defense 
Intelligence Agency (DIA), and the National Archives. Each 
maintains literally millions of images in various formats.
    The committee is concerned that these archiving efforts are 
disjointed and do not provide an indefinite, cost-effective 
retention solution. Although much of the value associated with 
investments in imagery relates to short-term, national defense 
requirements, the future value to scientific and domestic 
requirements cannot be adequately estimated. The life 
expectancy of archived imagery, however, is dependent on the 
various storage media; some of these media may not survive even 
for longer-term national defense use. The committee believes 
recent technological developments in the commercial sector can 
provide economical and extremely long-life mass imagery 
storage. These technologies also provide an opportunity for 
developing and instituting a cohesive long-term strategy for 
archiving imagery.
    The committee directs the Secretary of Defense and the DCI 
to develop, and report to the congressional defense and 
intelligence committees not later than February 28, 1999, a 
cohesive and coordinated set of practices and procedures for 
storing and archiving all imagery--both U.S. reconnaissance 
and, to the extent necessary, commercially-procured imagery. 
This report will include a recommendation for consolidating 
these responsibilities under a single organization. Further, 
the report will include the new processes and technologies 
necessary for maintaining imagery ``on-line'' for national and 
military use and the processes for subsequently archiving all 
U.S. government imagery indefinitely and at the lowest cost. 
The committee recommends that the Administration investigate 
the latest data storage technologies that are capable of 
indefinitely maintaining data quality to determine whether 
their application will decrease archival costs by allowing, 
among other things, higher density storage, longer-term 
(hundreds of years) storage between restorations, and less 
stringent storage-environment requirements.

                   Automated Intelligence Data Fusion

    The committee is disturbed by the number of requests in the 
Congressional Justification Books (CJBs) that are justified by 
the development and fielding of data ``fusion'' algorithms, 
systems, and processes. Although the committee fully supports 
the need to assist human analytical processes with automated 
capabilities, the committee believes there is no intelligence 
community leadership coordinating these various developments 
and activities to ensure that the proper fusion efforts are 
being undertaken and that there are no, or at least minimal, 
duplications of effort.
    Further, the committee notes that the very notion of data 
fusion is enigmatic to the point that ``correlation'' and 
``fusion'' become interchangeable, and the very definitions 
preclude a holistic view of the issue. There have been no 
agreed goals regarding what fusion is to provide, what it is to 
accomplish or what products it is to create. Simply put, there 
is no way the Congress can fully understand the issues of 
intelligence data fusion because the IC does not seem to 
understand it.
    The committee believes that community-wide emphasis is 
necessary to address the many issues surrounding ``fusion.'' 
Therefore, the committee requests that the Deputy Director of 
Central Intelligence for Community Management (DDCI/CM) and the 
Assistant Secretary of Defense (Command, Control, 
Communications, and Intelligence)(ASD(C\3\I)) provide the 
intelligence committees with a long-term strategy and plan for 
coordinating and developing the various intelligence data 
fusion efforts. The committee believes that this plan should 
include the establishment of community-wide definitions, 
required products and services of fusion developments, a highly 
visible insight as to the numerous projects to promote 
interoperability and coordination of developments, and a 
detailed funding plan for community-wide fusion needs. The 
committee requests this plan be provided no later than April 
15, 1999.

                         Imagery Server Systems

    In response to a critical need for imagery dissemination, 
the Office of Special Technologies, ASD (C\3\I), sponsored a 
U.S. Pacific Command project to put digitized imagery on a 
server-based network. This project became known as the Demand 
Driven Direct Digital Dissemination System, or 5D. This system 
was meant as an interim solution, to eventually be incorporated 
into NIMA's Imagery Product Archive/Imagery Product Library 
(IPA/IPL) server system.
    The committee understands that, despite expectations, the 
5D imagery server system will not be replaced soon by NIMA's 
libraries program. The reasons for this are numerous, and range 
from slow software development for the IPA and the initial 
version of the IPL, to obsolete 5D hardware that cannot run the 
new IPL software. This latter issue is particularly problematic 
since it means that replacement of 5D systems requires new 
hardware procurement that is not funded in NIMA's current 
Libraries budget. In fact, there are many 5D terminals not 
included in the IPL systems currently funded in NIMA's budget.
    The committee notes that NIMA will soon field the national-
level Library and expects that 5D users will want to be able to 
interface with it immediately. As stated before, this may not 
be possible with current 5D hardware. The committee believes 
that 5D systems should be replaced as soon as possible, but 
that current users cannot afford a lapse in image product 
availability. Finally, the committee notes that NIMA funds the 
maintenance of the 5D but that the ASD(C\3\I) sponsors the 
system, and that both have informed the committee that there 
are limited funds available to keep 5D fully functional. These 
problems must be solved.
    The committee requests that ASD(C\3\I) and the Director of 
NIMA provide the committee a report on the background, status, 
direction, and cost of both the 5D and IPL systems. Further, 
the committee requests that during the preparation of the 
fiscal year 2000 budget request, a plan be prepared for 
correcting the funding and system fielding problems outlined 
above.

                      DEFENSE COUNTERINTELLIGENCE

    For several years, the committee has raised concerns about 
downsizing Department of Defense Counterintelligence (CI) 
personnel and funding at the same time that Defense CI is being 
asked to take on additional responsibilities and cope with an 
unprecedented increase in operations tempo. For example, the 
FCIP has been challenged to improve its counterterrorism and 
force protection capabilities. The revised DoD CI strategic 
plan suggests that future FCIP budgets may reflect further 
shifts in resources to support military commanders in these 
areas. At the same time, the FCIP must continue its traditional 
counterespionage activities, provide protection to U.S. 
military acquisition activities, better analyze and detect 
anomalies that might detect espionage activities and, most 
recently, develop a computer intrusion investigations 
capability and training regimen. The downsizing of CI seems to 
take place almost absent analysis of the importance of the CI 
contribution, for example, to the intelligence effort 
supporting deployed commanders. Feedback from recent 
deployments indicates that CI and HUMINT have been preeminent 
intelligence disciplines and, in fact, have been described by 
G2s and commanders as the disciplines of choice within the 
Defense Department. Yet, in the competition for funding within 
the Defense Department and across the National Foreign 
Intelligence Program, the FCIP's resource needs, in the 
committee's opinion, are frequently shortchanged.
    The program elements that fund counterintelligence within 
the Defense Department are complex and spread across the 
Department. In addition to the FCIP, CI programs can be found 
in the Tactical Intelligence and Related Activities budget. 
Dispersed CI funding has value in that tactical CI elements 
maintain close operational relationships with their assigned 
units, both in terms of presence and resources. Totally 
centralized management of CI might diminish these operational 
relationships and the responsiveness of the elements to unique 
Service requirements. However, the limited authority that the 
Office of the Secretary of Defense (OSD) focal point for CI has 
to oversee and evaluate the various CI programs within the 
Department has made it difficult to develop or sustain a 
comprehensive CI capability for Defense. This is particularly 
evident in the apparently limited ability of OSD to influence 
resource allocation decisions concerning the Department's 
aggregate CI capabilities.
    The committee understands that efforts are underway to 
centralize and improve OSD's focus on significant CI activities 
government-wide which have an impact on the Department. This is 
a step in the right direction. Yet, there may be need for more 
to be done. For example, many have been concerned that limited 
procurement dollars in the FCIP and other CI programs can make 
even modest equipment acquisition or modernization programs 
almost impossible. Repeatedly, Congress has had to increase 
funding lines so that reasonable levels of modernization or 
equipment purchases could occur. The intelligence committees 
have acted to repair shortages in funding for operational and 
investigative activities in the last few FCIP budget 
submissions, and they have expressed concern about the impact 
of continued manpower downsizing on the CI program.

             INTELLIGENCE CONGRESSIONAL JUSTIFICATION BOOKS

    In the committee report on H.R. 1119 (H. Rept. 105-132), 
the committee directed that the Congressional Justification 
Books (CJB) and the Congressional Budget Justification Books 
(CBJB) accompanying the intelligence budget request must 
contain all direct costs of a program, including the costs of 
operating and maintaining the systems or project. The committee 
notes the very good progress the Intelligence Community made in 
this respect with the fiscal year 1999 CBJBs, but that the 
materials received were still not complete with the information 
required. For example, in the CJBs, the operations and 
maintenance costs of some intelligence aircraft systems show 
the direct operating costs, but do not reflect the direct depot 
maintenance costs. Numerous service systems show procurement 
costs, but do not reflect the operations costs for fielded 
systems nor the personnel required to man them. In the CBJBs, 
there were large gaps in necessary budget crosswalks from past 
years to the current year. In fact, some of the fiscal year 
1999 CBJBs had less budget information on programs than was 
available in the fiscal year 1998 CBJB. At best, these gaps 
make understanding the total costs of a program difficult; at 
worst, this is suggestive of an attempt to hide total program 
costs.
    The committee directs, beginning with the fiscal year 2000 
budget request that the Secretary of Defense and the Director 
of Central Intelligence include all associated costs of an 
intelligence program or project within the justification 
materials. The committee will monitor progress carefully over 
the next year and will consider stronger measures as necessary.

                  Joint Military Intelligence Program

ES-3A,-$3.2 million

    The budget request contained $3.2 million in research and 
development, Defense-Wide, for continued upgrade of the SIGINT 
systems on the ES-3A aircraft.
    The committee has been informed that the Navy has decided 
to terminate this aircraft. The committee, therefore, 
recommends no funding for the requested upgrades.

Tactical Control and Analysis Center, Transfer $800,000

    The budget request included $800,000 in research and 
development, Defense-Wide, for continued development of the 
Marine Corps Tactical Control and Analysis Center (TCAC).
    The committee believes the development of an analytical 
center for Marine Corps tactical operations is more 
appropriately a Marine Corps responsibility rather than a 
National Security Agency, Defense Cryptologic Program activity. 
Therefore, the committee recommends the budget request in 
research and development, Marine Corps, line 170.

Information production, -$10.0 million

    The committee understands that NIMA is testing and 
evaluating COTS applications as part of the USIGS migration and 
firmly approves of this approach. However, it also appears that 
NIMA continues to do a substantial amount of proprietary 
development. Therefore, the committee authorizes a reduction to 
this account by $10.0 million and recommends that NIMA decrease 
its development of proprietary applications.

Information production: Product generation, -$15.0 million

Information production: Product outsourcing, +$15.0 million

Information production: Integrated product cells, +$5.0 million

    The budget request contains $740.6 million for National 
Imagery and Mapping Agency (NIMA) operations, including $391.5 
million for geospatial information production.
    The committee is very supportive of NIMA's efforts to 
outsource the acquisition of a global feature foundation 
database. Because of this, the committee believes that NIMA 
should not wait to develop the most manpower intensive of the 
production functions--NIMA's standard products--within the 
private sector. The committee authorizes an additional $15 
million to the geospatial information production request to be 
used to begin demonstrations with industry similar to the 
process whereby NIMA-qualified contractors produce its feature 
foundation data.
    The committee has also been impressed with the efficiencies 
gained in NIMA's integrated production cells, now called NIMA 
Production Cells. NIMA is only projecting an increase of about 
five new cells per year over the FYDP. The committee authorizes 
an additional $5.0 million over the budget request, to allow 
NIMA to acquire more cells in fiscal year 1999.
    As indicated above, the committee is interested in seeing 
NIMA's efficiencies increase through the use of more modern 
technologies and outsourcing. NIMA faces a funding shortfall in 
its civilian pay accounts and also must modernize its 
infrastructure to effectively produce products in a timely 
fashion. NIMA can no longer afford a disproportionate portion 
of its budget going to civilian pay and maintenance of legacy 
systems. NIMA must move more of its funds to investment. By 
outsourcing, NIMA will be able to leverage leading-edge 
commercial imaging and mapping technologies and production 
capabilities. To further encourage NIMA to address this issue 
in the near term, the committee decreases the overall amount 
requested in operations and maintenance by $15.0 million. This 
decrease may be applied as NIMA judges most appropriate, except 
that no reductions should be made to the funds authorized and 
appropriated for outsourcing or for NIMA Production Cells, and 
no more than half of the decrease may be applied to personnel. 
The committee will evaluate any potential impacts this 
reduction may have on NIMA as it prepares for conference. NIMA 
is encouraged to develop options and impact assessments for 
this purpose.

Information Applications & Systems/National Technology Alliance (NTA), 
        +$5.0 million

    The committee continues to believe that NIMA must pursue 
commercial alternatives to its legacy systems. The National 
Technology Alliance (NTA) has developed an alternative approach 
to the Defense Dissemination System (DDS) and the Enhanced 
Processing Segment (EPS) in response to the Navy's concern over 
high operations and maintenance costs for the DDS system. 
Therefore, the committee authorizes $5.0 million within the US 
Imagery and Geospatial Information System line for the NTA to 
demonstrate this capability with the Navy. The committee 
requests a progress report on this activity by January 31, 
1999, including an evaluation by the Navy's N6 organization and 
NIMA.

Sustaining capabilities, -$14.0 million

    The committee does not understand why the Joint Military 
Intelligence Program (JMIP) portion of sustaining capabilities 
is only reduced by $4.2 million between fiscal years 1998 and 
1999. NIMA lost the lease on the old DMA headquarters building 
when it consolidated at the Bethesda facility. Also, the 
Philadelphia distribution center is being closed as well as 
other Washington, DC facilities as described in the 
Congressional Justification Book. Further, the committee is 
confused as to why this activity has increased its personnel by 
65 people (all in the civilian workforce) during this same 
period, when NIMA lost about 800 people in fiscal year 1998. 
The committee assumes that, with less people in the workforce, 
corporate affairs, and management and administration would also 
need less personnel and should see a corresponding reduction, 
not an increase. Finally, the committee assumes, with the 
implementation of the Peoplesoft software that automates many 
of the functions of the human resources (HR) area, NIMA would 
be able to downsize its HR department. Given all of this, the 
committee would expect to see a larger reduction in the O&M of 
NIMA's sustaining capabilities segment and, therefore, 
recommend a reduction to this account of $14.0 million.

Geospatial database integration and display, no budgetary change

    In two studies, NIMA has concluded that the commercial 
sector has already developed innovative, high quality, 
affordable software products to integrate and display NIMA's 
digital geospatial databases. However, the services and defense 
agencies continue to invest substantial funds in government-
developed, custom products that cost the government more than 
they should, inhibit achieving a common operating picture, and 
complicate training. The committee is particularly concerned 
that the Defense Information Systems Agency (DISA) is funding a 
custom software development program for the Joint Mapping Tool 
Kit (JMTK) module of the Global Command and Control System 
(GCCS), even though commercial products already exist that can 
meet the need and even though NIMA, the functional manager with 
expertise in this area, has recommended against this 
acquisition strategy.
    The committee notes that NIMA is trying again to convince 
DISA of the wisdom of a commercial procurement. The committee 
recommends that no funds authorized and appropriated to NIMA be 
made available for the JMTK module for GCCS until the Assistant 
Secretary of Defense for Command, Control, Communications and 
Intelligence certifies that DISA will procure this module 
commercially, or reports to the Congressional intelligence and 
defense committees as to why a commercial procurement does not 
make sense. The committee requests that the Assistant Secretary 
also establish a defense-wide policy for acquiring geospatial 
database integration, display, and visualization capabilities. 
As part of this policy review, the Assistant Secretary should 
examine individual service and defense agency acquisition 
programs to ensure that they are cost-effective, and not 
duplicative.
    In addition, although NIMA is itself utilizing commercial 
visualization tools internally, the committee is concerned that 
NIMA is not aggressively taking steps to ensure that such 
database integration and display capabilities are available for 
procurement, or licensing, by its customers, apart from the 
JMTK module in GCCS. These capabilities, after all, are a 
central part of NIMA's mission and provide a primary means by 
which NIMA's customers can understand and exploit the 
underlying data and products that NIMA provides. The committee 
notes that the recent Defense Science Board study of DoD 
mapping urged that NIMA rapidly develop or acquire such 
capabilities. The committee recommends that NIMA begin to 
acquire the ability to make these products available to its 
customers in fiscal year 1999 from within available resources, 
and develop a plan to expand and sustain this effort in fiscal 
year 2000 and beyond.

Geospatial database production, no budgetary change

    The mapping strategy of the Defense Mapping Agency had been 
to meet as many of its customers' requirements for detailed, 
comprehensive mapping products in as many areas of the world as 
possible. Since resources were quite limited, however, this 
strategy meant that only a small portion of overall 
requirements could be met, and large parts of the world were 
not mapped at all or the products that were available were 
terribly out of date.
    NIMA's strategy is to try to produce a minimal set of 
mapping data for the world, or most of it, and enhance that 
data as rapidly as need arises. This strategy requires NIMA's 
customers to accept less detail and comprehensiveness in some 
geographic areas--presumably high priority ones--in exchange 
for a higher overall readiness level in much larger geographic 
areas.
    The key issues facing NIMA as it tries to implement this 
strategy are these:
    Will NIMA require additional funding up front to create the 
foundation level data base, or can it generate the necessary 
resources through internal reforms, competitive outsourcing, 
process modernization, and shifts in priorities?
    Once created, is this data base inexpensive to keep 
current, since it is less detailed than the standard products 
NIMA produces today and since much of it is automated? In other 
words, would the investment needed to create the data base 
above NIMA's planned budgets truly be a non-recurring expense?
    If additional funding is required, will the Defense 
Department agree that the requirement competes favorably with 
other defense priorities?
    If not, could less than global coverage for the foundation 
level data base be acceptable? Alternatively, is it acceptable 
for NIMA to achieve the desired level of geographic coverage 
for its foundation level data base over a longer period of 
time, without causing the data base to become stale?
    At what pace will NIMA's customers allow it to cut back on 
the production of standard products now to shift resources to 
building the foundation level data base? How far can NIMA go in 
the near-term in shifting resources to this function, given 
that NIMA will have to retain the ability to surge to enhance 
the foundation data base to support ongoing operations, 
potential major and minor contingencies, and other crises 
(since the commercial sector does not yet possess much capacity 
for this function)?
    How much efficiency will NIMA gain by modernizing its 
production processes under the so-called ``USIGS Migration'' 
program? Can these gains be realized in time to help with the 
near-term creation of the foundation level data base?
    How much will NIMA be able to reduce the time required to 
enhance the foundation data base to support crises, through 
equipment and process modernization and through outsourcing? 
Will it be enough to support the overall strategy?
    The answers to these questions will determine the pace by 
which NIMA can competitively procure a foundation level data 
base. The committee believes that these issues must be 
addressed as part of the preparation of the fiscal year 2000 
Future Years Defense Program budget. The committee requests the 
DCI and the Deputy Secretary of Defense assign these issues to 
the Intelligence Program Review Group and Expanded Defense 
Resources Board, or some other suitable forum, for resolution. 
In any event, the committee requests the NIMADirector to 
prepare answers to these questions and report to the Congressional 
intelligence and defense committees by March 1, 1999.

Endurance unmanned aerial vehicle, No budgetary change

    The budget request contained $178.7 million in PE 35205D8Z 
for endurance unmanned aerial vehicles, and included $40.6 
million for the Dark Star stealthy high altitude endurance 
(HAE) unmanned aerial vehicle (UAV), $90.1 million for Global 
Hawk HAE UAV, and $48.0 million for the common ground segment.
    The committee is aware that Global Hawk has made its first 
flight, but that continuing problems with the Dark Star 
development has prevented its continued flight test. The 
committee is concerned by continuing delays in the Dark Star 
testing, reportedly caused by a lack of redundancy of the 
aircraft's systems and a continuing series of hardware and 
software failures. Further, the committee is aware that there 
has been a tendency to describe existing advanced concept 
technology demonstration (ACTD) aircraft such as Dark Star and 
Global Hawk as systems that may, in part, replace manned 
reconnaissance aircraft. Though noting that ACTD aircraft may 
form the basis for a future capability, the committee has been 
informed by operational users that the new HAE UAVs must 
undergo a thorough user evaluation to determine military 
utility. Such demonstration aircraft are not, nor were they 
designed to be, operational aircraft. Potential users note that 
subsequent to evaluation, the ACTD aircraft design must be 
modified, as necessary, based on information gathered, to meet 
an operational requirement. Based on service requirements, they 
then must be procured using the established acquisition 
process. Predator, the first ACTD UAV to transition to 
production has followed this process. The committee reminds the 
Secretary of Defense that the ACTD program is not to be used to 
circumvent established acquisition procedures.
    The committee strongly supports continued development of 
HAE UAVs as potential replacements for manned reconnaissance 
aircraft, and recommends $178.7 million only for HAE UAV and 
common ground segment development.

Joint signals intelligence avionics family, No budgetary change

    The budget request contained $80.4 million in PE 35206D8Z 
for the joint signals intelligence avionics family (JSAF).
    The committee continues to be concerned by problems with 
JSAF developments. While the committee is encouraged by 
progress in design of the low band subsystem (LBSS), it is 
concerned by schedule delays and cost increases that have 
forced reduction of system performance to remain within budget. 
Further, the committee remains doubtful that the high band 
subsystem (HBSS) development can successfully meet its cost and 
performance goals. The committee's concerns are heightened by 
the fact that the JSAF development is the only planned upgrade 
for future airborne SIGINT reconnaissance. If JSAF fails to 
provide the needed capabilities, users ranging from theater 
tactical forces to national policy makers will be severely 
impacted.
    Executive Order 12333 charges the Director of the National 
Security Agency (NSA) to conduct ``research and development to 
meet the needs of the United States for signals intelligence * 
* *''. To ensure proper joint oversight of JSAF development, 
the committee recommends the budget request be authorized in PE 
35885G, the Defense Cryptologic Program. The committee believes 
this will allow the Air Force, as the executive agent for JSAF, 
to continue to execute the program, while providing joint 
oversight by NSA.

Tactical unmanned aerial vehicles, Funding transfers

    The budget request contained $75.6 million in PE 35204A and 
$37.2 million in PE 35204D8Z for tactical unmanned aerial 
vehicles (UAV).
    The committee notes that the Under Secretary of Defense for 
Acquisition and Technology recently provided the Congressional 
defense and intelligence committees with the Department's plan 
to implement legislative direction included in the National 
Defense Authorization Act for Fiscal Year 1998 (P.L. 105-85) 
for reorganization of the Defense Airborne Reconnaissance 
Office (DARO) and commends the Department for its prompt 
response. The National Defense Authorization Act for Fiscal 
Year 1998 (P.L. 105-85) contained further direction that the 
Department of Defense review commercial solutions for the 
various UAV requirements. The committee notes that the Navy is 
now conducting a three-phase competitive demonstration of 
vertical takeoff or landing (VTOL) UAVs to meet the Navy and 
Marine Corps VTAL UAV requirements. The committee continues to 
support this approach and urges the Navy to continue the 
multiple-participant competitive demonstration through the 
shipboard phase prior to final selection using the funds 
provided.
    The committee notes the proposed plan for transfer of DARO 
funding included in the fiscal year 1999 request to appropriate 
service accounts and recommends the following adjustments: 
$49.6 million in PE 35204A for Army tactical UAV, a decrease of 
$26.0 million; $18.0 million in PE 35204N for VTOL UAV; $37.2 
million in PE 35204N for ongoing common tactical control system 
development previously managed by the Joint Program Office; and 
$8.0 million in PE 35204M for the Marine Corps' close range 
tactical UAV.

Defense airborne reconnaissance program management,-$4.7 million

    The budget request contained $15.7 million for Defense 
Airborne Reconnaissance Program (DARP) integration and support 
in PE 35209D8Z.
    The committee notes that, subsequent to development of this 
year's budget request, the Defense Airborne Reconnaissance 
Office (DARO) has been eliminated and its functions absorbed 
within the reorganized office of the Deputy Assistant Secretary 
of Defense for Command, Control, Communications, Intelligence, 
Surveillance, and Reconnaissance and within the military 
services. The committee supports actions that adhere to the 
Department's stated objective of maintaining a very small cadre 
oversight organizations within the Office of the Secretary of 
Defense (OSD), focused solely on policy level guidance to 
ensure reconnaissancesystem interoperability and architectural 
compliance. The Department has indicated that it plans to request 
reprogramming authority to shift DARO funding for DARP integration and 
support from PE 35209D8Z to program elements within the Air Force and 
other DoD agencies, as well as Defense-wide operations and maintenance.
    The committee supports this transfer of funding, and, 
therefore recommends $7.0 million in Operations & Maintenance, 
Defense-wide, $1.0 million in PE 35208F, $1.0 million in PE 
35208BQ, $1.0 million in 35208G, and $1.0 million in PE 35208L, 
a total decrease of $4.7 million.

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

    The budget request included $43.4 million for developing 
the Super Hornet Advanced Reconnaissance Pod (SHARP).
    The committee continues to fully support the development of 
a podded tactical reconnaissance capability for use by fighter 
aircraft and has supported the concept that a podded 
reconnaissance capability should not be focused strictly on the 
E/F-18 aircraft. The Navy has agreed with this broader concept 
and has decided to change the name SHARP to the Shared 
Reconnaissance Pod to reflect the change in approach.
    Due to this decision, the committee believes the funds 
should be more appropriately reflected in the Joint Military 
Intelligence Program, within the Navy's Manned Reconnaissance 
line. Therefore, the committee recommends $42.4 million in P.E. 
35207N for this purpose.

Advanced synthetic aperture radar system improvement program, +$8.0 
        million

    The budget request contained $5.0 million in PE 35207D8Z 
for the Advanced Synthetic Aperture Radar System (ASARS) 
Improvement Program (AIP) for the U-2 aircraft. As a result of 
the termination of the Defense Airborne Reconnaissance Office, 
the Deputy Secretary of Defense for Acquisition and Technology 
sent a letter to the Congress recommending specific 
redistribution of Defense Airborne Reconnaissance Program 
funding in fiscal year 1999. Included in this recommendation 
was an additional $2.5 million for AIP research and 
development. Further, the Air Force has requested a transfer of 
AIP procurement funding into the research and development 
account.
    The AIP program will dramatically increase the U-2's radar 
system with significantly improved synthetic aperture radar 
imagery, a highly capable moving target indicator tracking 
capability, and integral onboard processing functions. 
Unfortunately, the AIP has suffered cost growth and has a 
fiscal year 1999 shortfall of over $18.0 million. Some of this 
growth is due to contractor overruns and schedule slips caused 
by late deliveries of commercial processors. Some of this 
growth is due to a decision to postpone certain Global Hawk 
High Altitude Unmanned Aerial Vehicle radar developments that 
were cost sharing with AIP. This growth has forced the Air 
Force to make decisions to slip the AIP, thereby further 
increasing costs. In order to deliver the AIP when required, 
the Air Force has stated a need to reprogram funding from 
procurement to research and development in fiscal year 1999. 
However, such a step would have a significant procurement 
funding impact in fiscal year 2000.
    The committee recommends an authorization of $13.0 million, 
an increase of $8.0 million for AIP development.

Electro-optic framing technologies, +$8.0 million

    The budget request contained $5.4 million in PE 35207D8Z 
for electro-optic (EO) framing technology.
    The committee continues to support the state-of-the-art EO 
framing with on-chip forward motion compensation (FMC). This 
technology is proving itself in operationally deployed systems.
    The committee recommends $13.4 million, an increase of $8.0 
million in PE 35206N for the purposes of furthering the EO with 
on-chip FMC technologies. Specifically, these additional funds 
are to be used for continued development of the ultra-high 
resolution focal plane array and conformance with JPEG 2000 
compression standards. These developments should produce form/
fit operational insertions into currently deployed CA-260 
framing cameras. Further, these funds are to be used to develop 
infra-red EO framing technologies and image intensified EO 
framing sensors with FMC for operational insertion into 
existing Air National Guard tactical reconnaissance aircraft 
and other aircraft as appropriate.

Unmanned aerial vehicle systems integration laboratory, No budgetary 
        change

    The budget request contained $5.0 million in PE 35204D8Z 
for the U.S. Army's Unmanned Aerial Vehicle (UAV) Systems 
Integration Laboratory (SIL), and included $3.0 million for 
continued development of the Multiple UAV Simulation 
Environment (MUSE).
    The committee supports the SIL's joint UAV developmental 
work and it is concerned that the reorganization of Defense 
Airborne Reconnaissance Program will leave the SIL without a 
sponsor, thereby possibly losing a valuable joint UAV 
integration organization and jeopardizing continued evolution 
and improvement of the MUSE tool. While SIL is clearly a 
service organization, it provides joint support that may well 
be overseen directly by the new Deputy Assistant Secretary of 
Defense (DASD) for Command, Control, Communications, and 
Intelligence, Surveillance and Reconnaissance.
    Therefore, the committee directs the Assistant Secretary of 
Defense (Command, Control, Communications and Intelligence) to 
provide the congressional defense and intelligence committees a 
plan, which includes a funding profile, for the continued 
operation of the SIL, no later than March 31, 1999.

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

    The budget request contained $32.1 million for continued 
development of the unmanned aerial vehicle (UAV) tactical 
control system (TCS).
    The committee notes that the TCS will provide 
interoperability and commonality for mission planning, command 
and control, communications, and data dissemination for the 
current and future family of tactical and medium altitude 
endurance UAVS. The multi-function self aligned gate (MSAG) 
technology developed as part of the TCS development has been 
successfully demonstrated and is now ready for larger scale 
testing. The committee supports MSAG and recommends $36.1 
million, an increase of $4.0 million for fabrication and 
testing of prototype MSAG active array antennae for TCS UAVS.
    Finally, the committee is aware that after the field tests 
of the AAA in fiscal year 1998, there are no plans to continue 
to develop, produce or test this technology. The committee 
believes this technology has the potential for many 
applications, including use as highly reliable satellite 
communications antennas with no mechanical parts. Therefore, 
committee requests the Assistant Secretary of Defense (Command, 
Control, Communications, and Intelligence) to provide the 
defense and intelligence committees a plan for moving forward 
with, and possibly fielding, this technology. This plan should 
include a spend plan for the fiscal year 1999 funding, 
potential users--including National Foreign Intelligence 
Program users--and schedule. The committee requests the plan be 
provided no later than 31 January 1999.

Integrated imagery planning, No budgetary change

    The committee believes that the numerous, but separate, 
Department of Defense and Intelligence Community (IC) imagery 
programs should be closely coordinated and integrated to 
maximize their collective capabilities. Better planning of 
visible and multi-spectral imagery, synthetic aperture radar 
(SAR), moving target indicator (MTI) radar, and video 
collection could improve support to military operations and 
save resources.
    Moving target indicator (MTI) radar provides a real-time 
acquisition and can provide continuous tracking capability, but 
has limited abilities for target identification. Electro-optic 
(EO) and SAR imagery, in contrast, are excellent for target 
classification and identification, but are exploited by humans 
and do not provide a continuous tracking capability. It would 
appear that the two types of imagery are highly complementary, 
and that their individual strengths offset their individual 
deficiencies. For example, if proper MTI coverage of an area 
could be maintained, EO or SAR imagery, even with significant 
latencies, could be used to identify immediate targets without 
additional imaging. Logically, the need for repeatedly imaging 
those targets with high resolution sensors might be reduced, as 
would associated communications requirements. Unfortunately, 
these complementary types of imagery have been managed, and 
moreover, tasked, in isolation.
    DoD is, for example, acquiring a host of unrelated MTI 
capable systems. With few exceptions, these systems are not 
interoperable. If adequate numbers of systems could be fielded 
and their data streams integrated, however, overall performance 
could be far greater than the sum of their parts, improving the 
chances for continuous and precise tracking. Similarly, the DoD 
and IC are operating and acquiring a host of imagery systems. 
Although the products may be interoperable in many cases, there 
is reason for concern that we have not yet determined the right 
relationship and balance between these systems to best combine 
their total capabilities.
    Finally, every imagery requirements analysis has concluded 
that two foot resolution is necessary for imagery analysts 
conducting wide-area search. Many sensors do not meet this 
standard--particularly those being planned for the unmanned 
aerial vehicles. Meeting such requirements, and absorbing the 
costs associated, may not be necessary if the various forms of 
``imagery'' can be combined into a holistic information effort.
    The committee believes that there is a compelling need to 
carefully examine ways to integrate imagery and MTI systems to 
not only make requirements, cost and capability tradeoffs 
across programs, but, moreover, to take fullest advantage of 
the totality of all our information capabilities. This will 
require better mission planning and tasking, more robust 
connectivity between sensors, fusion developments, and analysis 
interactions. Further, it will require a removal of stovepiped 
management processes.
    The committee directs DoD and the IC to conduct a study on 
the issues discussed above, using the study of MTI technical 
issues and requirements mandated by Congress last year as a 
model. The committee expects the technical assessment portion 
of the study to be led jointly by ASD(C3I) in coordination and 
the Community Management Staff, with appropriate participation 
of NIMA, NRO, DARPA, the services, and the joint staff. The 
committee directs that this study be completed and the results 
conveyed to the congressional defense and intelligence 
committees no later than March 1, 1999.

Defense imagery program, Funding transfers

    The budget request included $29.4 million in research and 
development, defense-wide, line 150 for the Common Imagery 
Ground/Surface Station (CIGSS) and $1.9 million for development 
of the standards for the Distributed Common Ground Station 
(DCGS). The committee believes there is a need for the National 
Imagery and Mapping Agency (NIMA) to create from within 
existing resources a management structure analogous to the 
National Security Agency's Defense Cryptologic Program (DCP). 
The DCP is responsible for coordinating and providing funding 
for advanced research and development of signals intelligence 
capabilities that have applicability across all services. This 
structure requires close coordination with the services as they 
develop, field, and evolve tactical systems, with the service 
needs driving the leading edge developments. The committee 
believes that, just as the Director, NSA is responsible for 
coordinating research and development to meet the tactical 
needs of the U.S. Cryptologic System, so should the Director, 
NIMA for the U.S. Imagery System.
    Therefore, the committee recommends these funding requests 
be authorized in research and development, defense-wide, line 
138A. Further, the committee directs NIMA to create a 
management structure to provide a Defense Imagery Program 
within the Defense Imagery andMapping Agency Program of the 
Joint Military Intelligence Program. No additional billets are 
authorized for this management.

Integrated architecture plan, +$3.0 million

    The budget request contained $6.1 million for the Command, 
Control, Communications, Computers, Intelligence, Surveillance, 
and Reconnaissance (C4ISR) Integrated Architecture Plan (CIAP).
    CIAP has been strongly endorsed by the Assistant Secretary 
of Defense for Command, Control, Communications, and 
Intelligence as well as the commanders-in-chief of the nine 
unified commands. The CIAP developments have included the 
highly successful C4ISR Architecture Framework for the 
Department of Defense, the Command C4ISR Architectures for the 
regional Commanders in Chief, and the initiation of the C4ISR 
Architectures for the Warfighter (CAW) effort at selected 
unified commands. The committee believes this later effort 
should be extended to all nine unified commands.
    The committee believes these architectural developments 
will provide a cohesive and more cost effective strategy for 
developing and procuring the proper intelligence support 
systems for the users. The committee recommends $9.1 million 
for the continuation of these efforts and extension of the CAW 
to all unified commands.

Joint reserve intelligence program, +$3.0 million

    The budget request contained $9.4 million in operations and 
maintenance, defense-wide, for continued reserve component man 
days for the conduct of the Joint Reserve Intelligence Program 
(JRIP).
    The committee is favorably impressed by the intelligence 
production mission load the JRIP has been able to accommodate 
in support of the active forces. This has been particularly 
true of the JRIP support to the European Joint Analysis Center 
(JAC) from the Fort Sheridan, Illinois, Joint Reserve 
Intelligence Center. This world-wide support has included 
direct personnel support via temporary duty assignments as well 
as support from the continental United States via virtual 
connectivity whereby reservists can drill with their gaining 
units without having to leave their home area. Further, this 
support, in excess of 34,000 man days, has provided the active 
components with critical intelligence augmentation to conduct 
collection operations, process backlogs, and produce targeting 
materials, final reports and studies--all without having to use 
the presidential selected reserve call-up authority.
    The committee believes this program should be expanded and 
its benefits maximized to the extent possible. The committee 
recommends $12.6 million, an increase of $3 million for these 
purposes.

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

    The budget request included $4.2 million for operating an 
all-source intelligence analysis cell for the Joint Inter-
Agency Task Force (JIATF) West. This cell is focused on 
coordinating tactical and operational intelligence support to 
U.S. Embassy Country Teams performing counter-drug operations 
in the Southeast Asia and Southwest Asia areas.
    The committee notes that JIATF-West is attached to PACOM, 
but appears to have little command support. Further, the Drug 
Enforcement Agency, the Crime and Narcotics Center, and other 
JIATFs have indicated to the committee that this cell offers 
little value for the funds expended and has not produced any 
actionable tactical intelligence or strategic analysis. 
Therefore the committee recommends an authorization of $700,000 
for this intelligence function, and recommends an evaluation to 
terminate it altogether.

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

    The budget request contained $7.8 million for Defense 
Support Program Office (DSPO) training and exercise support.
    The Secretary of Defense has informed the committee that 
the DSPO is being abolished and its functions consolidated 
within the National Reconnaissance Office (NRO). The committee 
understands that the National Military and Operations Support 
Office within the NRO is also charged with, and funded for, 
training and exercise support. Therefore, the committee 
believes the DSPO training and exercise support funding is no 
longer required and recommends no authorization for this 
purpose.

              Tactical Intelligence and Related Activities

Tactical exploitation of national capabilities, -$4.6 million

    The budget request contained $44.7 million in PE 64766A for 
Army tactical exploitation of national capabilities (TENCAP).
    The committee notes that the amount requested represents 
nearly a $26.0 million increase from the level approved for 
fiscal year 1998. The committee is concerned that the Army may 
be using the TENCAP program as a means for bypassing the 
``normal'' acquisition process allowing it to procure and 
operate combat systems associated with space sensors. The 
committee is supportive of TENCAP efforts for short-term, high-
pay concepts and initiatives that improve the use of national 
space sensors and systems. The committee will not, however, 
support TENCAP funded development and production of entire 
weapons systems. Therefore, the committee directs that future 
TENCAP requests be limited to space exploitation initiatives 
and projects that are of short-duration and high payoff.
    The committee recommends $40.1 million for the Army's 
TENCAP program in fiscal year 1999, a reduction of 4.6 million 
in PE 64766A.

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

    The budget request contained $25.4 million for the GBCS-
Light system, of which $1.5 million is for the Common Module 
Electronics Intelligence System (CMES).
    The committee notes that $1.5 million for CMES procurement 
is requested twice. Consequently, the committee recommends a 
reduction of $1.5 million.
    Additionally, the committee notes that the GBCS-L system 
has had numerous technical difficulties and experienced a 
fielding delay as a result of a two-year slip in initial 
operational test and evaluation (IOT&E). This delay has 
resulted in the Department twice having used GBCS as a source 
of funds for reprogramming requests.
    Just as the committee was marking up the fiscal year 1999 
request, it learned that, due to continuing integration 
problems, the GBCS-L IOT&E will not be conducted again in 
fiscal year 1998. This third and latest slip is very disturbing 
and signals to the committee that there are more problems with 
this system than the Army is admitting. As a result of the 
program's past and current performance, it believes that all of 
the requested funding will not be executable in fiscal year 
1999 and it recommends a reduction of $9.7 million for GBCS-L 
hardware. Finally, the committee notes that the Department of 
Defense has requested nearly $500 million for this relatively 
small and low complexity program. This committee finds this 
cost excessive for the capability required, and therefore 
requests the Secretary of Defense to conduct an Inspector 
General audit of the GBCS program; its costs, its technical 
approach, and management.

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

    The budget request contained $28.1 million in PE 64321A for 
the ASAS intelligence support system.
    The committee recommends $30.1 million, an increase of $2.0 
million in PE 64321A, to continue the development of situation 
display fusion algorithms, to transfer these algorithms to the 
other service intelligence support systems, and to achieve ASAS 
Block II interoperability with the Defense Intelligence 
Agency's Modernized Integrated Data Base.

Distributed surveillance system, +$6.7 million

    The budget request contained $42.0 million in PE 64784N for 
advanced deployable system (ADS) engineering and manufacturing 
development.
    The committee recommends $48.7 million, including an 
increase of $6.7 million to continue the planned introduction 
of automation and data fusion capability for the ADS 
demonstration system.

Navy joint surveillance and target attack radar system (JSTARS), +$3.0 
        million

    The budget request included no funding for completing the 
developments for integrating a capability on U.S. Navy surface 
vessels to receive processed JSTARS MTI data over UHF satellite 
communications and Link 16.
    In the National Defense Authorization Act for Fiscal Year 
1998, Congress provided $5.0 million for the Navy to begin 
integrating the Link 16 data into the Joint Maritime Command 
and Control System (JMCIS) and the Global Command and Control 
System (GCCS). The committee has learned that the Link 16 
integration into GCCS will satisfy many DoD data dissemination 
requirements, including the JSTARS. Therefore, the committee 
recommends an additional $3 million for these purposes within 
the Navy's JMCIS line.
    Also, as noted elsewhere in this report, the committee is 
convinced that the Navy will require access to the full range 
of JSTARS' capabilities to support Navy targeting requirements. 
Such full access will require a wide-band data link capability 
between the aircraft and the surface vessels. The wide-band 
Common Data Link (CDL) is DoD's standard, high-rate data link 
that will be installed on nearly thirty Navy aircraft carriers, 
amphibious, and command ships early in the next decade. The 
committee believes that it would be illogical for the Navy to 
install another expensive, unique data link such as the low 
data rate Secure Common Data Link (SCDL), currently employed on 
the JSTARS, on its major combatants. Instead, the committee 
believes it is necessary to add as soon as possible a data 
broadcast capability based on the CDL standard to the JSTARS 
fleet. Also as noted elsewhere, the Navy clearly needs a CDL 
capability on the P-3 fleet to take full advantage of the range 
of radar, SIGINT, and imagery capabilities planned or 
programmed for the various elements of that fleet.
    If the Navy's requirement for CDL-compatible wide-band 
airborne data links turns out to be the recently demonstrated 
Tactical CDL (TCDL), the committee believes it would be wise 
for the Navy to consider modifying its currently planned CDL 
installations, to be compatible with both the CDL and TCDL, 
before or as they are installed. The committee will be 
reluctant to approve purchase of TCDL ground stations without 
first receiving a solid Navy commitment to modify all of its 
shipboard CDL systems to be compatible with both.
    Based on the above, the committee directs the Secretary of 
the Navy to report to the congressional defense and 
intelligence committees, by March 1, 1999, on the Navy's 
requirements and plans for CDL/TCDL-compatible data links.

Fleet air reconnaissance, -$5.2 million

    The budget request contained $5.2 million for ES-3A 
modification kits.
    The Navy has informed the committee that it intends to 
terminate the ES-3 program in fiscal year 2000. Based on this 
decision, the committee sees no need for modifying these 
aircraft prior to their removal from the fleet. The committee, 
therefore, recommends no funding for these modifications.

Marine Corps electronic warfare support system, Fence $16.4 million

    The budget request contained $16.4 million for acquiring 
two Marine Corps Electronic Warfare Support Systems (MEWSS).
    The committee directs that none of the authorized and 
appropriated funding be obligated or expended until completion 
of a successful initial operational test and evaluation 
(IOT&E). The committee understands the development and IOT&E of 
the MEWSS is directly tied to the Army' Ground-Based Common 
Sensor (GBCS) system. The committee believes, however, that 
IOT&E success or failure, and, therefore, subsequent 
procurement decisions, should be based on the individual system 
merits based on their operational concepts. Therefore, the 
committee does not see a specific need to make a successful 
IOT&E of MEWSS contingent on a successful IOT&E of GBCS.

Marine Corps tactical intelligence equipment, +$1.0 million

    The budget request contained no funds for purchasing and 
evaluating commercial imagery display tools, or modern printer 
technologies.
    The committee is aware of the highly successful Marine 
Corps use of the Remote Replication System (RRS). The RRS 
allows the Marine Expeditionary Force (MEF) to deploy with 
automated equipment that provides the capability to ``reach 
back'' to National Imagery and Mapping Agency data bases and 
``pull forward'' data in order to construct mapping and imagery 
products. The committee believes this concept has the potential 
to reduce drastically the paper products with which the MEF 
currently deploys. Despite the success of the RRS concept, 
however, the committee understands that there has been little 
attention paid to providing modern display and printing 
technologies. Therefore, the committee recommends $1.0 million 
in procurement, Marine Corps, for purchasing and evaluating 
commercial imagery manipulation tools, state-of-the-art display 
devices, and high quality large format printers for field use.

Air Force/NRO partnership, -$2.6 million

    The budget request contained $17.6 million in research and 
development, Air Force, for the joint Air Force, National 
Reconnaissance Office, and Defense Advanced Research Projects 
Agency advanced space technology demonstrator.
    The partnership funding for this demonstration is an equal 
share of one third each. The fiscal year 1999 Air Force request 
exceeds its share. Therefore, the committee recommends an 
authorization of $15 million, or a reduction of $2.6 million.

Joint tactical terminal, +$8.0 million

    The budget request contained $6.5 million in other 
procurement, Army, and $4.2 million in other procurement, Air 
Force, for the Joint Tactical Terminal intelligence broadcast 
transceivers.
    These radios are an integral part of the Integrated 
Broadcast Service that the committee fully supports. The 
committee is concerned that, because of contract protests that 
have resulted in delays in final contract award, the fielding 
of these radios has slipped, leaving operational users without 
the ability to receive tactical intelligence data broadcasts. 
In order to correct this problem, the committee recommends 
$11.5 million and $7.2 million, an increase of $5.0 million for 
the Army and $3.0 million for the Air Force, respectively, for 
accelerating the purchase and fielding of these radios.

``Senior Scout,'' No budgetary change

    The budget request contained $14.3 million in operations 
and maintenance, Air National Guard, partially for the 
continued operation of the Senior Scout tactical reconnaissance 
system. Senior Scout is a C-130-employed, roll-on/roll-off, 
reconnaissance capability operated by the Air National Guard. 
It provides an airborne reconnaissance collection capability 
that is complementary to other airborne collection systems 
operated by the active component.
    The committee perceives a lack of direction and support for 
Senior Scout, noting that on several occasions, the Air Force 
has nearly terminated the program, that the system has not been 
well supported in terms of upgrades or sensor improvements, and 
that it has certainly not maintained technological pace with 
the RC-135 Rivet Joint aircraft or other similar reconnaissance 
platforms. Consequently, the committee does not believe 
continuing the Senior Scout to be either cost or mission 
effective. The committee believes, however, that the Air 
National Guard linguists currently operating the Senior Scout 
are vital to the overall nationalreconnaissance effort. The 
committee perceives a critical need to retain these Guard 
reconnaissance personnel and training them on more modern equipment.
    In fiscal year 1997, Congress authorized and appropriated 
funding for two additional RC-135 Rivet Joint aircraft. The 
committee has learned that the Air Force is having difficulty 
fully manning these aircraft. The committee believes that since 
the Guard personnel are currently tasked to supplement active 
component RC-135 operations, providing at least one of these 
aircraft on a rotational basis to the Air National Guard would 
both resolve the manpower problem and take greater advantage of 
an available resource.
    Therefore, the committee directs the Secretary of the Air 
Force to provide the congressional defense and intelligence 
committees a plan for phasing out the Senior Scout 
reconnaissance system and replacing it with an RC-135 
alternative no later than October 1, 1999.

``Pacer Coin,'' -$2.4 million

    The budget request contained $2.4 million in aircraft 
spares and repair parts for the transfer of mission equipment 
from retiring Pacer Coin aircraft to the non-dedicated, follow-
on C-130 reconnaissance aircraft. The committee notes that a 
fiscal year 1998 reprogramming action stated that all funds for 
the C-130 follow-on program were included in that request.
    Furthermore, the committee does not agree that $2.4 million 
of procurement funding is required to transfer equipment from 
one aircraft to another. Therefore, the committee recommends no 
funding for this purpose.

Joint surveillance and target attack system, Fence $40.2 million

    The budget request included $123.8 million in research and 
development for the Joint Surveillance and Target Attack System 
(JSTARS), including $5.6 million for studies and miscellaneous 
efforts. The committee recommends a total of $118.2 million for 
these purposes.
    The committee is concerned by the extraordinary costs of 
the JSTARS program. The committee understands each aircraft 
must undergo a forty-one month, $110 million, refurbishment 
effort to restore the old 707-based airframes to flying 
condition before the aircraft begins its modification to JSTARS 
configuration. This is more than triple what the aircraft cost 
new, and is more expensive than purchasing a new 757 aircraft. 
Further, current projections show that the JSTARS latest 
improvement program will cost the U.S. taxpayer well in excess 
of a billion dollars to upgrade only a limited number of the 
thirteen JSTARS aircraft. While the committee may fully support 
necessary upgrades to this important system, there needs to be 
a significant effort to curb costs.
    Therefore, the committee requests the Secretary of the Air 
Force to provide a report of audit on the costs of the JSTARS 
aircraft: the basic airframe costs, the modification costs, and 
the costs of the upgrade programs. This audit should be 
provided to the defense and intelligence committees no later 
than 31 March 1999.
    Finally, the committee has been asked in the President's 
budget request to authorize the full request of the radar 
technology improvement program. The Department of Defense has 
not agreed to brief Members of the committee on all aspects of 
this upgrade, or even on how the requested funding will be 
spent. Therefore, the committee directs that no funding for the 
RTIP upgrade be obligated or expended until the committee is 
fully briefed on this program.

Special operations intelligence systems, +$5.0 million

    The budget request contained $1.8 million in PE 1160405BB 
for the special operations systems development.
    The committee notes that the special operations forces 
intelligence vehicle (SOF IV) is an evolutionary ongoing effort 
that requires additional funding to complete development. The 
committee recommends $6.8 million, an increase of $5.0 million 
for SOF IV in PE 1160405BB.

          Section-by-Section Analysis of the Bill as Reported

          INTELLIGENCE AUTHORIZATION ACT FOR FISCAL YEAR 1999

Title I: Intelligence activities

            Section 101--Authorization of appropriations
    Section 101 lists those elements of the United States 
Government for whose intelligence and intelligence-related 
activities the Act authorizes appropriations for fiscal year 
1999.
    The Drug Enforcement Administration (DEA) has been listed 
in section 101 of past Intelligence Authorization Acts. The 
DEA, however, does not receive appropriations authorized by 
this legislation. Thus, the committee does not include DEA in 
section 101.
    The fact that DEA is no longer included, however, should 
not be understood by either the DEA or any element of the 
intelligence community as a reason to reduce the level of 
cooperation that currently exists between the DEA and the 
various elements of the community. The committee expects and 
demands a continuation of the very beneficial working 
relationship that has developed between the community and the 
DEA. The committee recognizes the efficacy of the DEA's 
partnership with the intelligence community on the extremely 
serious national security issue of international drug 
trafficking. It is the committee's expectation, in spite of the 
removal of the DEA from section 101 of the Intelligence 
Authorization Act for Fiscal Year 1999, that this partnership 
will remain solid and continue to develop in the best interests 
of the people of the United States.
    The committee similarly insists upon a continuation of the 
level of close communication between the committee and the DEA, 
with respect to notification of developments, successes, 
failures, or compromises of the foreign counternarcotics 
activities of the United States. The committee will not 
countenance any attenuation of its ability to ensure that the 
intelligence community is working together with law 
enforcement, where necessary and appropriate, to advance our 
national security interests.
            Section 102--Classified schedule of authorizations
    Section 102 incorporates by reference the classified 
Schedule of Authorizations. That schedule sets forth the 
specific amounts authorized to be appropriated for specific 
intelligence and intelligence-related activities and personnel 
ceilings for fiscal year 1999 for those United States 
government elements listed in section 101. The details of the 
Schedule are explained in the classified annex to this report. 
The Schedule of Authorizations correlates to the President's 
budget request, which was submitted to Congress, and remains, 
in classified form.
            Section 103--Personnel ceiling adjustments
    Section 103 authorizes the Director of Central 
Intelligence, with the approval of the Director of the Office 
of Management and Budget (OMB), in fiscal year 1999, to exceed 
the personnel ceilings applicable to the components of the 
intelligence community under section 102 by an amount not to 
exceed two percent of the total of the ceilings otherwise 
applicable under section 102. The Director may exercise this 
authority only when necessary to the performance of important 
intelligence functions. Any exercise of this authority must be 
reported to the two intelligence committees of the Congress.
    The committee emphasizes that the authority conferred by 
section 103 is not intended to permit the wholesale raising of 
personnel strength in any intelligence component. Rather, the 
section provides the Director of Central Intelligence with 
flexibility to adjust personnel levels temporarily for 
contingencies, and for overages caused by an imbalance between 
hiring of new employees and attrition of current employees. The 
committee does not expect the Director of Central Intelligence 
to allow heads of intelligence components to plan to exceed 
levels set in the Schedule of Authorizations, except for the 
satisfaction of clearly identified hiring needs that are 
consistent with the authorization of personnel strengths in 
this legislation. In no case is this authority to be used to 
provide for positions otherwise denied by Congress.
            Section 104--Community management account
    Section 104 details the amount and composition of the 
Community Management Account (CMA) of the Director of Central 
Intelligence.
    Subsection (a) of section 104 authorizes appropriations in 
the amount of $139,123,000 for fiscal year 1999 for the 
staffing and administration of various components under the 
CMA. Subsection (a) also authorizes funds identified for the 
Advanced Research and Development Committee and the 
Environmental Intelligence and Applications Program to remain 
available for two years.
    Subsection (b) authorizes a total of 283 full-time 
personnel for elements within the CMA for fiscal year 1999 and 
provides that such personnel may be permanent employees of the 
CMA element or detailed from other elements of the United 
States Government.
    Subsection (c) explicitly authorizes the classified portion 
of the CMA.
    Subsection (d) requires that personnel be detailed on a 
reimbursable basis, with certain exceptions.
    Subsection (e) authorizes $27,000,000 of the amount 
authorized for the CMA under subsection (a) to be made 
available for the National Drug Intelligence Center (NDIC) in 
Johnstown, Pennsylvania. Subsection (e) requires the Director 
of Central Intelligence to transfer the $27,000,000 to the 
Department of Justice to be used for NDIC activities under the 
authority of the Attorney General, and subject to section 
103(d)(1) of the National Security Act.
    Subsection (f) earmarks funds that are allocated for the 
CMA under subsection (a) and authorizes those funds to be made 
immediately available to the Department of State for the 
express purpose of supporting intelligence community 
requirements related to the security of overseas facilities. 
This subsection authorizes a one-time-only immediate transfer 
of funds by the Director of Central Intelligence from the CMA's 
Center for Security Evaluation to the Department of State to 
ensure that architectural and engineering services related to 
several overseas locations in fiscal year 1999 can begin 
immediately. These funds shall only be available for the same 
purposes, and subject to the same terms and conditions, as the 
funds in the appropriation accounts to which these funds will 
be transferred.
    The committee understands that an agreement among the 
departments or agencies affected has been reached with respect 
to the specific amounts and locations involved.

Title II: Central Intelligence Agency retirement and disability system

            Section 201--Authorization of appropriations
    Section 201 authorizes appropriations in the amount of 
$201,500,000 for fiscal year 1999 for the Central Intelligence 
Agency Retirement and Disability Fund.

Title III: General provisions

            Section 301--Increase in employee compensation and benefits 
                    authorized by law
    Section 301 provides that appropriations authorized by this 
Act for salary, pay, retirement and other benefits for federal 
employees may be increased by such additional or supplemental 
amounts as may be necessary for increases in such compensation 
or benefits authorized by law.
            Section 302--Restriction on conduct of intelligence 
                    activities
    Section 302 provides that the authorization of 
appropriations within the Act does not constitute authority for 
the conduct of any intelligence activity that is precluded by 
the Constitution or other laws of the United States.
            Section 303--Extension of application of sanctions laws to 
                    intelligence activities
    Section 303 amends section 905 of the National Security Act 
of 1947, which authorizes the President to delay the imposition 
of an economic, cultural, diplomatic, or other sanction upon a 
foreign government based on his determination that proceeding 
with such sanction could compromise an ongoing criminal 
investigation or an intelligence source or method. Section 905 
was first enacted as part of the Intelligence Authorization Act 
for Fiscal Year 1996. This authority has been extended every 
year since for one year intervals.
    Section 303 extends this authority until January 6, 2000. 
The committee finds that there is a continuing need for this 
authority because the immediate imposition of sanctions, 
without some delay, could, in particular cases, seriously 
jeopardize a criminal investigation or sources and methods of 
intelligence collection.
    The committee reaffirms, without restating here, the 
position asserted in its report accompanying the Intelligence 
Authorization Act for Fiscal Year 1998 (Rpt. No. 105-135, part 
I), with respect to this section.
            Section 304--Sense of Congress regarding intelligence 
                    community contracting
    Section 304 expresses the sense of Congress that the DCI 
should continue to direct elements of the intelligence 
community to award contracts in a manner that would maximize 
the procurement of products produced in the United States, when 
such action is compatible with the national security interests 
of the United States, consistent with operational and security 
concerns, and fiscally sound.

Title IV: Central Intelligence Agency

            Section 401--Extension of the CIA Voluntary Separation of 
                    Pay Act provisions
    Section 401 amends section 2(f) of the Central Intelligence 
Agency Voluntary Separation Pay Act (P.L. 103-36)(50 U.S.C. 
Sec. 403-4 note) to extend the Agency's authority to offer 
``early-out'' incentives until September 30, 2001. Without this 
amendment, the Agency's authority to offer such incentives 
would expire on September 30, 1999.
    Although, CIA's ``early out'' incentive has been an 
effective workforce reduction tool, the Agency must continue to 
address skills mix issues, and ensure that personnel reductions 
are not undertaken simply for the sake of reduction. The net 
impact of the six CIA early-out exercises thus far, along with 
normal attrition and reduced hiring, has been a significant 
drop in the Agency's on-duty strength since the separation 
incentive program began in fiscal year 1993. The committee is 
concerned that such reductions could result in gaps of 
coverage, especially in critical areas.
    The committee acknowledges that the CIA has worked hard 
over the past decade to streamline and refocus its workforce to 
address critical, cutting-edge national security issues. The 
Agency should be commended for its efforts to reengineer its 
business processes, hire personnel with new and vital skills, 
expand the capabilities and experiences within the Agency 
workforce, and acquire new technologies to meet the demands of 
today's collection requirements.
    Voluntary Separation Incentive Pay authority should only be 
used for specific, targeted populations and is intended to help 
the CIA achieve its skill mix goals without resorting to 
involuntary separations in certain occupational categories.
    The committee believes that without this continued 
authority separation rates would decline. This would limit the 
Agency's ability to keep pace with rapidly expanding 
technologies and the dynamic geopolitical realities that we 
face. The ability to adapt to such dynamic changes is central 
to the Agency's mission.
            Section 402--Enhanced protective authority for CIA 
                    personnel and family members
    Section 402 of the Act amends section 5(a)(4) of the 
Central Intelligence Agency Act of 1949 (``CIA Act''). This 
provision will enable the Agency to use firearms to protect 
current and former Agency personnel and their immediate 
families, as well as defectors and their immediate families, 
who are in the United States. This authority is granted for 
those situations when the Director of Central Intelligence 
determines such protection is necessary for the performance of 
the authorized functions of the Central Intelligence Agency.
    Current Section 5(a)(4) of the CIA Act permits the CIA to 
use firearms within the United States to protect only certain 
categories of individuals limited to Agency personnel, 
defectors, and the families of defectors, and other persons in 
the United States under Agency auspices. This provision does 
not limit or amend any aspect of this authority.
    Protection may sometimes be appropriate for former Agency 
personnel because the distinction between former and current 
CIA personnel will be of little consequence to terrorists 
seeking to harm CIA. In addition, prudence dictates that if 
former or current CIA personnel are threatened with harm, the 
protection provided to them should, in appropriate 
circumstances, be extended to their immediate families as well. 
The committee intends that the authority provided by this 
amendment will be used only when the Director determines that 
there are specific and credible threats to the protectees while 
in the United States and that those threats arise from the 
protectee's affiliation with the CIA. The committee expects 
that the Director will advise the intelligence committees when 
this authority is exercised.
    Similarly, the committee believes the Agency must advise 
the Attorney General when such specific and credible threats 
against a protected individual occurs. In this way, the United 
States government's prosecutorial rights that could result from 
such criminal activity will be protected.
    The committee does not anticipate that the authority 
provided by section 402 will be used to provide protectees with 
armed security protection when threatened with harm that arises 
for reasons unrelated to an individual's current or former 
affiliation with CIA (e.g., domestic violence or general threat 
of criminal violence in the area of a CIA employee's residence 
in the United States).
    In the wake of the 1993 assassination of CIA employees, the 
CIA discussed the protection issue with local jurisdictions. 
These local law enforcement agencies indicated that they did 
not have the resources, training, or charter to provide such 
protection. More recently during and after the trial of Mir 
Aimal Kasi, the need for this enhanced authority was 
established. The immediate families of those killed or injured 
provided a target for threats, causing additional anguish for 
them.
    The committee notes that this additional grant of 
protective authority is not without precedent. The United 
States Marshals Service (USMS) provides protection to the 
families of certain personnel under certain circumstances. The 
USMS has the authority to provide protection to any USMS 
employee, officer, or witness or anyone involved in judicial 
process who is deemed by the USMS Director to be under threat. 
Such examples include federal judges, prosecutors, witnesses, 
jurors, and any of their family members against whom a threat 
has been directed.
    The committee understands that the CIA is a target or 
recipient of a large volume of unsolicited calls, letters, and 
visits by potentially hostile individuals. Many of these 
contacts are the work of disturbed individuals, some of whom 
make threats and then ``close the gap'', actually appearing at 
the CIA Headquarters compound (or other Agency facilities). 
Implicit in this kind of potential threat is the chance that 
hostile or aggressive behavior may be directed against the 
families of CIA personnel.
    The amendment made by section 402 would not extend or 
expand, in any way, the carefully limited law enforcement 
authority and jurisdiction provided to the Agency in section 15 
of the CIA Act. Simply put, it authorizes the Agency to protect 
Agency employees, current and former, and their families, in 
the United States, in the same manner as they are authorized to 
protect defectors in the United States.
            Section 403--Technical corrections
    Section 403 makes technical corrections to section 5(a)(1) 
and section 6 of the Central Intelligence Agency (CIA) Act of 
1949 and section 201(c) of the CIA Retirement Act. The cross-
reference in section 5(a)(1) of the CIA Act to subparagraphs 
(B) and (C) of section 102(a)(2) of the National Security Act 
is no longer current or accurate, and should cite instead to 
subsections (a)(2) and (a)(3) of section 102. Section 805(a) of 
the Intelligence Authorization Act for Fiscal Year 1997 (P.L. 
No. 104-293) changed what had been sections 102(a)(2) (B) and 
(C) of the National Security Act to sections 102(a)(2) and 
(a)(3) of that Act. Similarly, the cross-references in section 
5(a)(1) and section 6 of the CIA Act to ``subsection (c)(5) of 
section 103'' and to ``section 103(c)(5) of the National 
Security Act of 1947 (50 U.S.C. 403-3(c)(5))'', respectively, 
are no longer current or accurate. The cross-reference in 
section 201(c) of the CIA Retirement Act to that same provision 
of the National Security Act is also outdated. Section 
807(a)(2) of the Intelligence Authorization Act for Fiscal Year 
1997 changed what had been section 103(c)(5) of the National 
Security Act (50 U.S.C. 403-3(c)(5)) to section 103(c)(6) (50 
U.S.C. 403-3(c)(6)). Section 401 of the present legislation 
simply updates the cross-references in section 5(a)(1) and 
section 6 of the CIA Act and section 201(c) of the CIA 
Retirement Act to the pertinent provision of the National 
Security Act.

Title V: Department of Defense

            Section 501-- Extension of authority to engage in 
                    commercial activities as security for intelligence 
                    collection activities
    Section 501 amends section 431(a) of title 10 to continue 
current Department of Defense authority to engage in commercial 
activities as security for intelligence collection activities 
beyond December 31, 1999, which is the date on which the 
current statutory authorization expires. The Committee has 
extended this provision for an additional three years through 
and until December 31, 2002.

                           Committee Position

    On April 29, 1998, in open session, a quorum being present, 
the Permanent Select Committee on Intelligence, by a recorded 
vote of 12 ayes to 0 noes, approved the bill, H.R. 3694, as 
amended by an amendment in the nature of a substitute. By that 
vote, the committee ordered the bill, as amended, reported 
favorably to the House. On that vote, the Members present 
recorded their votes as follows:
    Mr. Goss (Chairman)--aye; Mr. Shuster--aye; Mr. McCollum--
aye; Mr. Castle--aye; Mr. Boehlert--aye; Mr. Bass--aye; Mr. 
Gibbons--aye; Mr. Dicks--aye; Mr. Skaggs--aye; Ms. Harman--aye; 
Mr. Skelton--aye; Mr. Bishop--aye.

Findings and Recommendations of the Committee on Government Reform and 
                               Oversight

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

                           Oversight Findings

    With respect to clause 2(l)(3)(A) of rule XI of the Rules 
of the House of Representatives, the committee held seven full-
committee hearings, as well as six full-committee briefings, on 
the classified budgetary issues raised by H.R. 3694. Testimony 
was taken from the Director of Central Intelligence, the 
Director of the National Security Agency, the Director of the 
Defense Intelligence Agency, the Deputy Director of Central 
Intelligence, the Deputy Directors for Operations and 
Intelligence, numerous program managers, and various other 
knowledgeable witnesses on the activities and plans of the 
intelligence community covered by the provisions and 
authorizations, both classified and unclassified, of the 
Intelligence Authorization Act for Fiscal Year 1999. The bill, 
as reported by the committee, reflects conclusions reached by 
the committee in light of that oversight activity.

                      Fiscal Year Cost Projections

    The committee has attempted, pursuant to clause 7(a) of 
rule XIII of the Rules of the House of Representatives, to 
ascertain the outlays that will occur in fiscal year 1999 and 
the five years following if the amounts authorized are 
appropriated. These estimates are contained in the classified 
annex and are in accordance with those of the executive branch.

                 Congressional Budget Office Estimates

    In compliance with clause 2(l)(3)(B) and (C) of rule XI of 
the Rules of the House of Representatives, and pursuant to 
sections 308 and 403 of the Congressional Budget Act of 1974, 
the committee submits the following estimate prepared by the 
Congressional Budget Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                       Washington, DC, May 5, 1998.
Hon. Porter J. Goss,
Chairman, Permanent Select Committee on Intelligence,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3694, the 
Intelligence Authorization Act for Fiscal Year 1999.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Dawn Sauter.
            Sincerely,
                                         June E. O'Neill, Director.
    Enclosure.

H.R. 3694--Intelligence Authorization Act for Fiscal Year 1999

    Summary: H.R. 3694 would authorize appropriations for 
fiscal year 1999 for intelligence activities of the United 
States government, the Community Management Account, and the 
Central Intelligence Agency Retirement and Disability System 
(CIARDS).
    This estimate addresses only the unclassified portion of 
the bill. On that limited basis, CBO estimates that enacting 
H.R. 3694 would result in additional spending of $139 million 
over the 1999-2003 period, assuming appropriation of the 
authorized amounts. CBO believes that section 401 of the bill, 
which would extend the authority of the CIA to offer incentive 
payments to employees who voluntarily retire or resign, would 
increase direct spending by $1 million or more in at least one 
year during the 2000-2003 period. However, CBO cannot give a 
precise estimate of the increase in spending because data to 
support a cost estimate are classified. Because the bill would 
raise direct spending, pay-as-you-go procedures would apply.
    The Unfunded Mandates Reform Act of 1995 (UMRA) excludes 
from application of the act legislative provisions that are 
necessary for the national security. CBO has determined that 
all of the provisions of this bill either fit within that 
exclusion or do not contain intergovernmental or private-sector 
mandates as defined by UMRA.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of the unclassified portions of H.R. 3694 is 
shown in the following table. CBO is unable to obtain the 
necessary information to estimate the costs for the entire bill 
because parts are classified at a level above clearances held 
by CBO employees. The costs of this legislation fall within 
budget function 050 (national defense).
    The bill would authorize appropriations of $139 million for 
the Community Management Account. In addition, the bill would 
authorize $202 million for CIARDS to cover retirement costs 
attributable to military service and various unfunded 
liabilities. The payment to CIARDS is considered mandatory, and 
the authorization under this bill would be the same as assumed 
in the CBO baseline.
    CBO believes that section 401 of the bill would increase 
direct spending by $1 million or more in at least one year 
during the 2000-2003 period. Section 401 would extend the 
authority of the CIA to offer incentive payments to employees 
who voluntarily retire or resign. Under current law this 
authority expires on September 30, 1999. Section 401 would 
extend this authority starting in fiscal year 2000 until 
September 30, 2001. This extension would induce some employees 
to retire earlier than under current law, thereby increasing 
federal outlays for retirement benefits. CBO cannot give a 
precise estimate of the increase in spending because data to 
support a cost estimate are classified.

                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                              1998     1999     2000     2001     2002     2003 
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION                                       
                                                                                                                
Spending under current law for the community management                                                         
 account:                                                                                                       
    Budget authority......................................       94        0        0        0        0        0
    Estimated outlays.....................................      104       36        7        2        0        0
Proposed changes:                                                                                               
    Authorization level...................................        0      139        0        0        0        0
    Estimated outlays.....................................        0       86       42        8        3        0
Spending under H.R. 3694 for the community management                                                           
 account:                                                                                                       
    Authorization level \1\...............................       94      139        0        0        0        0
    Estimated outlays.....................................      104      122       49       10        3        0
                                                                                                                
                                           CHANGES IN DIRECT SPENDING                                           
                                                                                                                
Estimated budget authority................................        0        0    (\2\)    (\2\)    (\2\)    (\2\)
Estimated outlays.........................................        0        0    (\2\)    (\2\)    (\2\)    (\2\)
----------------------------------------------------------------------------------------------------------------
\1\ The 1998 level is the amount appropriated for that year.                                                    
\2\ CBO believes that H.R. 3694 would increase direct spending by $1 million or more in at least one year over  
  the 2000-2003 period. However, CBO cannot give a precise estimate because data to support a cost estimate are 
  classified.                                                                                                   

  For purposes of this estimate, CBO assumes that H.R. 3694 will be enacted by October 1, 1998, and that the 
full amounts authorized will be appropriated for fiscal year 1999. 
Outlays are estimated according to historical spending patterns for 
intelligence programs.
    Pay-as-you-go considerations: Section 401 of the bill would 
affect direct spending, and therefore the bill would be subject 
to pay-as-you-go procedures. The estimated pay-as-you-go impact 
would be $1 million or more in at least one year over the 2000-
2003 period.
    Intergovernmental and private-sector impact: The Unfunded 
Mandates Reform Act of 1995 (UMRA) excludes from application of 
the act legislative provisions that are necessary for the 
national security. CBO has determined that all of the 
provisions of this bill either fit within that exclusion or do 
not contain intergovernmental or private-sector mandates as 
defined by UMRA.
    Estimate prepared by: Federal costs: Dawn Sauter; Impact on 
State, local and tribal governments: Teri Gullo; Impact on the 
private sector: Bill Thomas.
    Estimate approved by: Robert A. Sunshine, Deputy Assistant 
Director for Budget Analysis.

                        Committee Cost Estimates

    The committee agrees with the estimate of the Congressional 
Budget Office.

 Specific Constitutional Authority for Congressional Enactment of This 
                              Legislation

    The intelligence and intelligence-related activities of the 
United States government are carried out to support the 
national security interests of the United States, to support 
and assist the armed forces of the United States, and to 
support the President in the execution of the foreign policy of 
the United States. Article I, section 8, of the Constitution of 
the United States provides, in pertinent part, that ``Congress 
shall have power * * * to pay the debts and provide for the 
common defence and general welfare of the United States; * * * 
``; ``to raise and support Armies, * * * ``; ``to provide and 
maintain a Navy; * * * `` and ``to make all laws which shall be 
necessary and proper for carrying into execution * * * all 
other powers vested by this Constitution in the Government of 
the United States, or in any Department or Officer thereof.'' 
Therefore, pursuant to such authority, Congress is empowered to 
enact this legislation.

         Changes in Existing Law Made by the Bill, as Reported

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

               SECTION 905 NATIONAL SECURITY ACT OF 1947

                              application

  Sec. 905. This title shall cease to be effective on [January 
6, 1999] January 6, 2000.
                              ----------                              


 SECTION 2 OF THE CENTRAL INTELLIGENCE AGENCY VOLUNTARY SEPARATION PAY 
                                  ACT

SEC. 2. SEPARATION PAY.

  (a) * * *

           *       *       *       *       *       *       *

  (f) Termination.--No amount shall be payable under this 
section based on any separation occurring after [September 30, 
1999] September 30, 2001.

           *       *       *       *       *       *       *

                              ----------                              


CENTRAL INTELLIGENCE AGENCY ACT OF 1949

           *       *       *       *       *       *       *


                          general authorities

  Sec. 5. (a) In the performance of its functions, the Central 
Intelligence Agency is authorized to--
          (1) Transfer to and receive from other Government 
        agencies such sums as may be approved by the Office of 
        Management and Budget, for the performance of any of 
        the functions or activities authorized under 
        [subparagraphs (B) and (C) of section 102(a)(2)] 
        paragraphs (2) and (3) of section 102(a), subsections 
        [(c)(5)] (c)(6) and (d) of section 103, subsections (a) 
        and (g) of section 104, and section 303 of the National 
        Security Act of 1947 (50 U.S.C. 403(a)(2), (3), 403-
        3(c)(6), (d), 403-4(a), (g), and 405), and any other 
        Government agency is authorized to transfer to or 
        receive from the Agency such sums without regard to any 
        provisions of law limiting or prohibiting transfers 
        between appropriations. Sums transferred to the Agency 
        in accordance with this paragraph may be expended for 
        the purposes and under the authority of this Actwithout 
regard to limitations of appropriations from which transferred;

           *       *       *       *       *       *       *

          (4) Authorize personnel designated by the Director to 
        carry firearms to the extent necessary for the 
        performance of the Agency's authorized functions, 
        except that, within the United States, such authority 
        shall be limited to the purposes of protection of 
        classified materials and information, the training of 
        Agency personnel and other authorized persons in the 
        use of firearms, the protection of Agency installations 
        and property, [and the protection of Agency personnel 
        and of defectors, their families] and the protection of 
        current and former Agency personnel and their immediate 
        families, and defectors and their immediate families, 
        and other persons in the United States under Agency 
        auspices;

           *       *       *       *       *       *       *

  Sec. 6. In the interests of the security of the foreign 
intelligence activities of the United States and in order 
further to implement section 103[(c)(5)] (c)(6) of the National 
Security Act of 1947 (50 U.S.C. 403-3[(c)(5)] (c)(6)) that the 
Director of Central Intelligence shall be responsible for 
protecting intelligence sources and methods from unauthorized 
disclosure, the Agency shall be exempted from the provisions of 
sections 1 and 2, chapter 795 of the Act of August 28, 1935 (49 
Stat. 956, 957; 5 U.S.C. 654), and the provisions of any other 
laws which require the publication or disclosure of the 
organization, functions, names, official titles, salaries, or 
numbers of personnel employed by the Agency: Provided, That in 
furtherance of this section, the Director of the Office of 
Management and Budget shall make no reports to the Congress in 
connection with the Agency under section 607, title VI, chapter 
212 of the Act of June 30, 1945, as amended (5 U.S.C. 947(b)).

           *       *       *       *       *       *       *

                              ----------                              


     SECTION 201 OF THE CENTRAL INTELLIGENCE AGENCY RETIREMENT ACT

SEC. 201. THE CIARDS SYSTEM.

  (a) * * *

           *       *       *       *       *       *       *

  (c) Finality of Decisions of DCI.--In the interests of the 
security of the foreign intelligence activities of the United 
States and in order further to implement section 103[(c)(5)] 
(c)(6) of the National Security Act of 1947 (50 U.S.C. 403-
3[(c)(5)] (c)(6)) that the Director of Central Intelligence 
shall be responsible for protecting intelligence sources and 
methods from unauthorized disclosure, and notwithstanding the 
provisions of chapter 7 of title 5, United States Code, or any 
other provision of law (except section 305(b) of this Act), any 
determination by the Director authorized by this Act shall be 
final and conclusive and shall not be subject to review by any 
court.
                              ----------                              


              SECTION 413 OF TITLE 10, UNITED STATES CODE

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

  (a) Authority.--The Secretary of Defense, subject to the 
provisions of this subchapter, may authorize the conduct of 
those commercial activities necessary to provide security for 
authorized intelligence collection activities abroad undertaken 
by the Department of Defense. No commercial activity may be 
initiated pursuant to this subchapter after [December 31, 1998] 
December 31, 2001.

           *       *       *       *       *       *       *