[House Report 107-592]
[From the U.S. Government Publishing Office]



107th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     107-592

======================================================================



 
          INTELLIGENCE AUTHORIZATION ACT FOR FISCAL YEAR 2003

                                _______
                                

 July 18, 2002.--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. 4628]

      [Including cost estimate of the Congressional Budget Office]

    The Permanent Select Committee on Intelligence, to whom was 
referred the bill (H.R. 4628) to authorize appropriations for 
fiscal year 2003 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
Purpose..........................................................    10
Overall perspective on the intelligence budget and committee 
  intent.........................................................    11
Scope of committee review........................................    11
Committee findings and recommendations...........................    12
Section-by-Section Analysis of the Bill as Reported..............    22
    Title I--Intelligence Activities.............................    22
        Section 101--Authorization of Appropriations.............    22
        Section 102--Classified Schedule of Authorizations.......    23
        Section 103--Personnel Ceiling Adjustments...............    23
        Section 104--Community Management Account................    23
        Section 105--Authorization of emergency supplemental 
          appropriations for fiscal year 2002....................    23
    Title II--Central Intelligence Agency Retirement and 
      Disability System..........................................    25
        Section 201--Authorization of Appropriations.............    25
    Title III--General Provisions................................    25
        Section 301--Increase in Employee Compensation and 
          Benefits Authorized by Law.............................    25
        Section 302--Restriction on Conduct of Intelligence 
          Activities.............................................    25
        Section 303--Sense of Congress on intelligence Community 
          Contracting............................................    25
        Section 304--Semiannual reports on financial intelligence 
          on terrorist assets (FITA).............................    25
        Section 305--Modification of excepted agency voluntary 
          leave transfer authority...............................    26
        Section 306--Additional one-year suspension of 
          reorganization of Diplomatic Telecommunications Service 
          Program Office.........................................    26
        Section 307--Prohibition on compliance with requests for 
          information submitted by foreign governments...........    27
        Section 308--Cooperative relationship between the 
          National Security Education Program and the Foreign 
          Language Center of the Defense Language Institute......    27
        Section 309--Establishment of National Flagship Language 
          Initiative within the National Security Education 
          Program................................................    28
        Section 310--Deadline for submittal of various overdue 
          reports................................................    30
    Title IV--Central Intelligence Agency........................    31
        Section 401--Two-year extension of CIA Voluntary 
          Separation Program.....................................    31
        Section 402--Prohibition on implementation of 
          Intelligence Community compensation reform plans.......    31
    Title V--Department of Defense...............................    32
        Section 501--Use of funds for counter-drug and counter-
          terrorism activities for Colombia......................    32
        Section 502--Protection of operational files of the 
          National Reconnaissance Office.........................    32
        Section 503--Eligibility of employees in intelligence 
          senior level positions for Presidential Rank Awards....    33
Committee position...............................................    33
Oversight findings and recommendations...........................    33
Fiscal year cost projections.....................................    34
Congressional Budget Office estimates............................    34
Committee cost estimates.........................................    38
Specific Constitutional authority for Congressional enactment of 
  this legislation...............................................    38
Changes to existing law..........................................    38


  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Intelligence 
Authorization Act for Fiscal Year 2003''.
  (b) Table of Contents.--The table of contents of 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.
Sec. 105. Authorization of emergency supplemental appropriations for 
fiscal year 2002.

 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. Sense of Congress on intelligence community contracting.
Sec. 304. Semiannual report on financial intelligence on terrorist 
assets (FITA).
Sec. 305. Modification of excepted agency voluntary leave transfer 
authority. 
Sec. 306. Additional one-year suspension of reorganization of 
Diplomatic Telecommunications Service Program Office.
Sec. 307. Prohibition on compliance with requests for information 
submitted by foreign governments.
Sec. 308. Cooperative relationship between the National Security 
Education Program and the Foreign Language Center of the Defense 
Language Institute.
Sec. 309. Establishment of National Flagship Language Initiative within 
the National Security Education Program.
Sec. 310. Deadline for submittal of various overdue reports.

                 TITLE IV--CENTRAL INTELLIGENCE AGENCY

Sec. 401. Two-year extension of Central Intelligence Agency Voluntary 
Separation Pay Act.
Sec. 402. Prohibition on implementation of compensation reform plan.

         TITLE V--DEPARTMENT OF DEFENSE INTELLIGENCE ACTIVITIES

Sec. 501. Use of funds for counter-drug and counterterrorism activities 
for Colombia.
Sec. 502. Protection of operational files of the National 
Reconnaissance Office.
Sec. 503. Eligibility of employees in intelligence senior level 
positions for Presidential Rank Awards.

                    TITLE I--INTELLIGENCE ACTIVITIES

SEC. 101. AUTHORIZATION OF APPROPRIATIONS.

  Funds are hereby authorized to be appropriated for fiscal year 2003 
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.
          (12) The Coast Guard.

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, 2003, 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. 4628 of the One 
Hundred Seventh 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 2003 under section 102 when 
the Director of Central Intelligence determines that such action is 
necessary to the performance of important intelligence functions, 
except that the number of personnel employed in excess of the number 
authorized under such section may not, for any element of the 
intelligence community, exceed 2 percent of the number of civilian 
personnel authorized under such section for such element.
  (b) Notice to Intelligence Committees.--The Director of Central 
Intelligence shall notify promptly the Permanent Select Committee on 
Intelligence of the House of Representatives and the Select Committee 
on Intelligence of the Senate whenever the Director 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 2003 the sum of $176,179,000. 
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, 
2004.
  (b) Authorized Personnel Levels.--The elements within the Community 
Management Account of the Director of Central Intelligence are 
authorized 350 full-time personnel as of September 30, 2003. Personnel 
serving in such elements may be permanent employees of the Community 
Management Account or personnel detailed from other elements of the 
United States Government.
  (c) Classified Authorizations.--
          (1) Authorization of appropriations.--In addition to amounts 
        authorized to be appropriated for the Community Management 
        Account by subsection (a), there are also authorized to be 
        appropriated for the Community Management Account for fiscal 
        year 2003 such additional amounts as are specified in the 
        classified Schedule of Authorizations referred to in section 
        102(a). Such additional amounts shall remain available until 
        September 30, 2004.
          (2) Authorization of personnel.--In addition to the personnel 
        authorized by subsection (b) for elements of the Community 
        Management Account as of September 30, 2003, there are hereby 
        authorized such additional personnel for such elements as of 
        that date as are specified in the classified Schedule of 
        Authorizations.
  (d) Reimbursement.--Except as provided in section 113 of the National 
Security Act of 1947 (50 U.S.C. 404h), during fiscal year 2003 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 authorized to be appropriated 
        in subsection (a), $34,100,000 shall be available for the 
        National Drug Intelligence Center. Within such amount, funds 
        provided for research, development, testing, and evaluation 
        purposes shall remain available until September 30, 2003, and 
        funds provided for procurement purposes shall remain available 
        until September 30, 2004.
          (2) Transfer of funds.--The Director of Central Intelligence 
        shall transfer to the Attorney General funds available for the 
        National Drug Intelligence Center under paragraph (1). The 
        Attorney General shall utilize funds so transferred for the 
        activities of the National Drug Intelligence Center.
          (3) Limitation.--Amounts available for the National Drug 
        Intelligence Center may not be used in contravention of the 
        provisions of section 103(d)(1) of the National Security Act of 
        1947 (50 U.S.C. 403-3(d)(1)).
          (4) Authority.--Notwithstanding any other provision of law, 
        the Attorney General shall retain full authority over the 
        operations of the National Drug Intelligence Center.

SEC. 105. AUTHORIZATION OF EMERGENCY SUPPLEMENTAL APPROPRIATIONS FOR 
                    FISCAL YEAR 2002.

  (a) Authorization.--Amounts authorized to be appropriated for fiscal 
year 2002 under section 101 of the Intelligence Authorization Act for 
Fiscal Year 2002 (Public Law 107-108) for the conduct of the 
intelligence activities of elements of the United States Government 
listed in such section are hereby increased, with respect to any such 
authorized amount, by the amount by which appropriations pursuant to 
such authorization were increased by the following:
          (1) The Emergency Supplemental Act, 2002 (contained in 
        division B of Public Law 107-117), including section 304 of 
        such Act (115 Stat. 2300).
          (2) An emergency supplemental appropriation in a supplemental 
        appropriations Act for fiscal year 2002 that is enacted after 
        May 1, 2002, amounts as are designated by Congress as an 
        emergency requirement pursuant to section 251(b)(2)(A) of the 
        Balanced Budget and Emergency Deficit Control Act of 1985 (2 
        U.S.C. 901(b)(2)(A)).
  (b) Ratification.--For purposes of section 504 of the National 
Security Act of 1947 (50 U.S.C. 414), any obligation or expenditure of 
those amounts deemed to have been specifically authorized by the Act 
referred to in subsection (a)(1) and by the supplemental appropriations 
Act referred to in subsection (a)(2) is hereby ratified and confirmed.

 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 2003 the sum of 
$351,300,000.

                     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. 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.

SEC. 304. SEMIANNUAL REPORT ON FINANCIAL INTELLIGENCE ON TERRORIST 
                    ASSETS (FITA).

  (a) Semiannual Report.--
          (1) In general.--Title I of the National Security Act of 1947 
        (50 U.S.C. 401 et seq.) is amended by adding at the end the 
        following new section:
   ``semiannual report on financial intelligence on terrorist assets
  ``Sec. 118. (a) Semiannual Report.--On a semiannual basis, the 
Secretary of the Treasury (acting through the head of the Office of 
Intelligence Support) shall submit a report to the appropriate 
congressional committees (as defined in subsection (c)) that fully 
informs the committees concerning operations against terrorist 
financial networks. Each such report shall include with respect to the 
preceding six-month period--
          ``(1) the total number of asset seizures, designations, and 
        other actions against individuals or entities found to have 
        engaged in financial support of terrorism;
          ``(2) the total number of applications for asset seizure and 
        designations of individuals or entities suspected of having 
        engaged in financial support of terrorist activities, that were 
        granted, modified, or denied;
          ``(3) the total number of physical searches of offices, 
        residences, or financial records of individuals or entities 
        suspected of having engaged in financial support for terrorist 
        activity; and
          ``(4) whether the financial intelligence information seized 
        in these cases has been shared on a full and timely basis with 
        the all departments, agencies, and other entities of the United 
        States Government involved in intelligence activities 
        participating in the Foreign Terrorist Asset Tracking Unit 
        (managed and coordinated by the Counterterrorism Center of the 
        Central Intelligence Agency).
  ``(b) Immediate Notification for Emergency Designation.--In the case 
of a designation of an individual or entity, or the assets of an 
individual or entity, as having been found to have engaged in terrorist 
activities, the Secretary of the Treasury shall report such designation 
within 24 hours of such a designation to the appropriate congressional 
committees.
  ``(c) Definition.--In this section, the term `appropriate 
congressional committees' means the following:
          ``(1) The Permanent Select Committee on Intelligence, the 
        Committee on Appropriations, and the Committee on Financial 
        Services of the House of Representatives.
          ``(2) The Select Committee on Intelligence, the Committee on 
        Appropriations, and the Committee on Banking, Housing, and 
        Urban Affairs of the Senate.''.
          (2) Clerical amendment.--The table of contents contained in 
        the first section of such Act is amended by inserting after the 
        item relating to section 117 the following new item:

``Sec. 118. Semiannual report on financial intelligence on terrorist 
assets.''.

  (b) Conforming Amendment.--Section 501(f) of the National Security 
Act of 1947 (50 U.S.C. 413(f)) is amended by inserting before the 
period the following: ``, and includes financial intelligence 
activities''.

SEC. 305. MODIFICATION OF EXCEPTED AGENCY VOLUNTARY LEAVE TRANSFER 
                    AUTHORITY.

  (a) In General.--Section 6339 of title 5, United States Code, is 
amended--
          (1) by striking subsection (b);
          (2) by redesignating subsection (c) as subsection (b); and
          (3) by inserting after subsection (b) (as so redesignated by 
        paragraph (2)) the following:
  ``(c)(1) Notwithstanding any provision of subsection (b), the head of 
an excepted agency may, at his sole discretion, by regulation establish 
a program under which an individual employed in or under such excepted 
agency may participate in a leave transfer program established under 
the provisions of this subchapter outside of this section, including 
provisions permitting the transfer of annual leave accrued or 
accumulated by such employee to, or permitting such employee to receive 
transferred leave from, an employee of any other agency (including 
another excepted agency having a program under this subsection).
  ``(2) To the extent practicable and consistent with the protection of 
intelligence sources and methods, any program established under 
paragraph (1) shall be consistent with the provisions of this 
subchapter outside of this section and with any regulations issued by 
the Office of Personnel Management implementing this subchapter.''.
  (b) Conforming Amendments.--Section 6339 of such title is amended--
          (1) in paragraph (2) of subsection (b) (as so redesignated by 
        subsection (a)(2)), by striking ``under this section'' and 
        inserting ``under this subsection''; and
          (2) in subsection (d), by striking ``of Personnel 
        Management''.

SEC. 306. ADDITIONAL ONE-YEAR SUSPENSION OF REORGANIZATION OF 
                    DIPLOMATIC TELECOMMUNICATIONS SERVICE PROGRAM 
                    OFFICE.

  Section 311 of the Intelligence Authorization Act for Fiscal Year 
2002 (Public Law 107-108; 22 U.S.C. 7301 note; 115 Stat. 1401) is 
amended--
          (1) in the heading, by striking ``ONE-YEAR'' and inserting 
        ``TWO-YEAR''; and
          (2) in the text, by striking ``October 1, 2002'' and 
        inserting ``October 1, 2003''.

SEC. 307. PROHIBITION ON COMPLIANCE WITH REQUESTS FOR INFORMATION 
                    SUBMITTED BY FOREIGN GOVERNMENTS.

  Section 552(a)(3) of title 5, United States Code, is amended--
          (1) in subparagraph (A) by inserting ``and except as provided 
        in subparagraph (E),'' after ``of this subsection,''; and
          (2) by adding at the end the following:
  ``(E) An agency, or part of an agency, that is an element of the 
intelligence community (as that term is defined in section 3(4) of the 
National Security Act of 1947 (50 U.S.C. 401a(4))) shall not make any 
record available under this paragraph to--
          ``(i) any government entity, other than a State, territory, 
        commonwealth, or district of the United States, or any 
        subdivision thereof; or
          ``(ii) a representative of a government entity described in 
        clause (i).''.

SEC. 308. COOPERATIVE RELATIONSHIP BETWEEN THE NATIONAL SECURITY 
                    EDUCATION PROGRAM AND THE FOREIGN LANGUAGE CENTER 
                    OF THE DEFENSE LANGUAGE INSTITUTE.

  Section 802 of the David L. Boren National Security Education Act of 
1991 (50 U.S.C. 1902) is amended by adding at the end the following new 
subsection:
  ``(h) Use of Awards To Attend the Foreign Language Center of the 
Defense Language Institute.--(1) The Secretary shall provide for the 
admission of award recipients to the Foreign Language Center of the 
Defense Language Institute (hereinafter in this subsection referred to 
as the `Center'). An award recipient may apply a portion of the 
applicable scholarship or fellowship award for instruction at the 
Center on a space-available basis as a Department of Defense sponsored 
program to defray the additive instructional costs.
  ``(2) Except as the Secretary determines necessary, an award 
recipient who receives instruction at the Center shall be subject to 
the same regulations with respect to attendance, discipline, discharge, 
and dismissal as apply to other persons attending the Center.
  ``(3) In this subsection, the term `award recipient' means an 
undergraduate student who has been awarded a scholarship under 
subsection (a)(1)(A) or a graduate student who has been a fellowship 
under subsection (a)(1)(B) who--
          ``(A) is in good standing;
          ``(B) has completed all academic study in a foreign country, 
        as provided for under the scholarship or fellowship; and
          ``(C) would benefit from instruction provided at the 
        Center.''.

SEC. 309. ESTABLISHMENT OF NATIONAL FLAGSHIP LANGUAGE INITIATIVE WITHIN 
                    THE NATIONAL SECURITY EDUCATION PROGRAM.

  (a) National Flagship Language Initiative.--
          (1) Expansion of grant program authority.--Subsection (a)(1) 
        of section 802 of the David L. Boren National Security 
        Education Act of 1991 (50 U.S.C. 1902) is amended--
                  (A) by striking ``and'' at the end of subparagraph 
                (B)(ii);
                  (B) by striking the period at the end of subparagraph 
                (C) and inserting ``; and''; and
                  (C) by adding at the end the following new 
                subparagraph:
                  ``(D) awarding grants to institutions of higher 
                education to carry out a National Flagship Language 
                Initiative (described in subsection (i)).''.
          (2) Provisions of national flagship language initiative.--
        Such section, as amended by section 308, is further amended by 
        adding at the end the following new subsection:
  ``(i) National Flagship Language Initiative.--(1) Under the National 
Flagship Language Initiative, institutions of higher learning shall 
establish, operate, or improve activities designed to train students in 
programs in a range of disciplines to achieve advanced levels of 
proficiency in those foreign languages that the Secretary identifies as 
being the most critical in the interests of the national security of 
the United States.
  ``(2) An undergraduate student who has been awarded a scholarship 
under subsection (a)(1)(A) or a graduate student who has been awarded a 
fellowship under subsection (a)(1)(B) may participate in the activities 
carried out under the National Flagship Language Initiative.
  ``(3) An institution of higher education that receives a grant 
pursuant to subsection (a)(1)(D) shall give special consideration to 
applicants who are employees of the Federal Government.
  ``(4) For purposes of this subsection, the Foreign Language Center of 
the Defense Language Institute and any other educational institution 
that provides training in foreign languages operated by the Department 
of Defense or an agency in the intelligence community is deemed to be 
an institution of higher education, and may carry out the types of 
activities permitted under the National Flagship Language 
Initiative.''.
          (3) Waiver of funding allocation rules.--Subsection (a)(2) of 
        such section is amended by adding at the end the following 
        flush sentences:
        ``The funding allocation under this paragraph shall not apply 
        to grants under paragraph (1)(D) for the National Flagship 
        Language Initiative described in subsection (i). For the 
        authorization of appropriations for the National Flagship 
        Language Initiative, see section 811.''.
          (4) Board requirement.--Section 803(d)(4) of such Act (50 
        U.S.C. 1904(d)(4)) is amended--
                  (A) by striking ``and'' at the end of subparagraph 
                (C);
                  (B) by striking the period at the end of subparagraph 
                (D) and inserting ``; and''; and
                  (C) by adding at the end the following new 
                subparagraph:
                  ``(E) which foreign languages are critical to the 
                national security interests of the United States for 
                purposes of section 802(a)(1)(D) (relating to grants 
                for the National Flagship Language Initiative).''.
  (b) Funding.--The David L. Boren National Security Education Act of 
1991 (50 U.S.C. 1901 et seq.) is amended by adding at the end the 
following new section:

``SEC. 811. ADDITIONAL ANNUAL AUTHORIZATION OF APPROPRIATIONS.

  ``(a) In General.--In addition to amounts that may be made available 
to the Secretary under the National Security Education Trust Fund 
(under section 804 of this Act) for a fiscal year, there is authorized 
to be appropriated to the Secretary for each fiscal year, beginning 
with fiscal year 2003, $10,000,000, to carry out the grant program for 
the National Flagship Language Initiative under section 802(a)(1)(D).
  ``(b) Availability of Appropriated Funds.--Amounts appropriated 
pursuant to the authorization under subsection (a) shall remain 
available until expended.''.

SEC. 310. DEADLINE FOR SUBMITTAL OF VARIOUS OVERDUE REPORTS.

  (a) Deadline.--The reports described in subsection (c) shall be 
submitted to Congress not later than 180 days after the date of the 
enactment of this Act.
  (b) Noncompliance.--(1) If all the reports described in subsection 
(c) are not submitted to Congress by the date specified in subsection 
(a), amounts available to be obligated or expended after that date to 
carry out the functions or duties of the following offices shall be 
reduced by \1/3\:
          (A) The Office of the Director of Central Intelligence.
          (B) The Office of Community Management Staff.
  (2) The reduction applicable under paragraph (1) shall not apply if 
the Director of Central Intelligence certifies to Congress by the date 
referred to in subsection (a) that all reports referred to in 
subsection (c) have been submitted to Congress.
  (c) Reports Described.--The reports referred to in subsection (a) are 
reports mandated by law for which the Director of Central Intelligence 
has sole or primary responsibility to prepare, or coordinate, and 
submit to Congress which, as of the date of the enactment of this Act, 
have not been submitted to Congress by the date mandated by law.

                 TITLE IV--CENTRAL INTELLIGENCE AGENCY

SEC. 401. TWO-YEAR EXTENSION OF CENTRAL INTELLIGENCE AGENCY VOLUNTARY 
                    SEPARATION PAY ACT.

  Section 2 of the Central Intelligence Agency Voluntary Separation Pay 
Act (50 U.S.C. 403-4 note) is amended--
          (1) in subsection (f), by striking ``September 30, 2003'' and 
        inserting ``September 30, 2005''; and
          (2) in subsection (i), by striking ``or 2003'' and inserting 
        ``2003, 2004, or 2005''.

SEC. 402. PROHIBITION ON IMPLEMENTATION OF COMPENSATION REFORM PLAN.

  No plan by the Director of Central Intelligence that would revise the 
manner in which employees of the Central Intelligence Agency, or 
employees of other elements of the United States Government that 
conduct intelligence and intelligence-related activities, are 
compensated may be implemented until the plan has been specifically 
authorized by statute.

         TITLE V--DEPARTMENT OF DEFENSE INTELLIGENCE ACTIVITIES

SEC. 501. USE OF FUNDS FOR COUNTER-DRUG AND COUNTERTERRORISM ACTIVITIES 
                    FOR COLOMBIA.

  Notwithstanding any other provision of law, funds designated for 
intelligence or intelligence-related purposes for assistance to the 
Government of Colombia for counter-drug activities for fiscal years 
2002 and 2003, and any unobligated funds available to any element of 
the intelligence community for such activities for a prior fiscal year, 
shall be available to support a unified campaign against narcotics 
trafficking and against activities by organizations designated as 
terrorist organizations (such as the Revolutionary Armed Forces of 
Colombia (FARC), the National Liberation Army (ELN), and the United 
Self-Defense Forces of Colombia (AUC)), and to take actions to protect 
human health and welfare in emergency circumstances, including 
undertaking rescue operations.

SEC. 502. PROTECTION OF OPERATIONAL FILES OF THE NATIONAL 
                    RECONNAISSANCE OFFICE.

  (a) In General.--Title I of the National Security Act of 1947 (50 
U.S.C. 401 et seq.) is amended by inserting after section 105C (50 
U.S.C. 403-5c) the following new section:
``protection of operational files of the national reconnaissance office
  ``Sec. 105D. (a) Exemption of Certain Operational Files From Search, 
Review, Publication, or Disclosure.--(1) The Director of the National 
Reconnaissance Office, with the coordination of the Director of Central 
Intelligence, may exempt operational files of the National 
Reconnaissance Office from the provisions of section 552 of title 5, 
United States Code, which require publication, disclosure, search, or 
review in connection therewith.
  ``(2)(A) Subject to subparagraph (B), for the purposes of this 
section, the term `operational files' means files of the National 
Reconnaissance Office (hereafter in this section referred to as `NRO') 
that document the means by which foreign intelligence or 
counterintelligence is collected through scientific and technical 
systems.
  ``(B) Files which are the sole repository of disseminated 
intelligence are not operational files.
  ``(3) Notwithstanding paragraph (1), exempted operational files shall 
continue to be subject to search and review for information 
concerning--
          ``(A) United States citizens or aliens lawfully admitted for 
        permanent residence who have requested information on 
        themselves pursuant to the provisions of section 552 or 552a of 
        title 5, United States Code;
          ``(B) any special activity the existence of which is not 
        exempt from disclosure under the provisions of section 552 of 
        title 5, United States Code; or
          ``(C) the specific subject matter of an investigation by any 
        of the following for any impropriety, or violation of law, 
        Executive order, or Presidential directive, in the conduct of 
        an intelligence activity:
                  ``(i) The Permanent Select Committee on Intelligence 
                of the House of Representatives.
                  ``(ii) The Select Committee on Intelligence of the 
                Senate.
                  ``(iii) The Intelligence Oversight Board.
                  ``(iv) The Department of Justice.
                  ``(v) The Office of General Counsel of NRO.
                  ``(vi) The Office of the Director of NRO.
  ``(4)(A) Files that are not exempted under paragraph (1) which 
contain information derived or disseminated from exempted operational 
files shall be subject to search and review.
  ``(B) The inclusion of information from exempted operational files in 
files that are not exempted under paragraph (1) shall not affect the 
exemption under paragraph (1) of the originating operational files from 
search, review, publication, or disclosure.
  ``(C) The declassification of some of the information contained in 
exempted operational files shall not affect the status of the 
operational file as being exempt from search, review, publication, or 
disclosure.
  ``(D) Records from exempted operational files which have been 
disseminated to and referenced in files that are not exempted under 
paragraph (1) and which have been returned to exempted operational 
files for sole retention shall be subject to search and review.
  ``(5) The provisions of paragraph (1) may not be superseded except by 
a provision of law which is enacted after the date of the enactment of 
this section, and which specifically cites and repeals or modifies its 
provisions.
  ``(6)(A) Except as provided in subparagraph (B), whenever any person 
who has requested agency records under section 552 of title 5, United 
States Code, alleges that NRO has withheld records improperly because 
of failure to comply with any provision of this section, judicial 
review shall be available under the terms set forth in section 
552(a)(4)(B) of title 5, United States Code.
  ``(B) Judicial review shall not be available in the manner provided 
for under subparagraph (A) as follows:
          ``(i) In any case in which information specifically 
        authorized under criteria established by an Executive order to 
        be kept secret in the interests of national defense or foreign 
        relations is filed with, or produced for, the court by NRO, 
        such information shall be examined ex parte, in camera by the 
        court.
          ``(ii) The court shall, to the fullest extent practicable, 
        determine the issues of fact based on sworn written submissions 
        of the parties.
          ``(iii) When a complainant alleges that requested records are 
        improperly withheld because of improper placement solely in 
        exempted operational files, the complainant shall support such 
        allegation with a sworn written submission based upon personal 
        knowledge or otherwise admissible evidence.
          ``(iv)(I) When a complainant alleges that requested records 
        were improperly withheld because of improper exemption of 
        operational files, NRO shall meet its burden under section 
        552(a)(4)(B) of title 5, United States Code, by demonstrating 
        to the court by sworn written submission that exempted 
        operational files likely to contain responsible records 
        currently perform the functions set forth in paragraph (2).
          ``(II) The court may not order NRO to review the content of 
        any exempted operational file or files in order to make the 
        demonstration required under subclause (I), unless the 
        complainant disputes NRO's showing with a sworn written 
        submission based on personal knowledge or otherwise admissible 
        evidence.
          ``(v) In proceedings under clauses (iii) and (iv), the 
        parties may not obtain discovery pursuant to rules 26 through 
        36 of the Federal Rules of Civil Procedure, except that 
        requests for admissions may be made pursuant to rules 26 and 
        36.
          ``(vi) If the court finds under this paragraph that NRO has 
        improperly withheld requested records because of failure to 
        comply with any provision of this subsection, the court shall 
        order NRO to search and review the appropriate exempted 
        operational file or files for the requested records and make 
        such records, or portions thereof, available in accordance with 
        the provisions of section 552 of title 5, United States Code, 
        and such order shall be the exclusive remedy for failure to 
        comply with this subsection.
          ``(vii) If at any time following the filing of a complaint 
        pursuant to this paragraph NRO agrees to search the appropriate 
        exempted operational file or files for the requested records, 
        the court shall dismiss the claim based upon such complaint.
          ``(viii) Any information filed with, or produced for the 
        court pursuant to clauses (i) and (iv) shall be coordinated 
        with the Director of Central Intelligence prior to submission 
        to the court.
  ``(b) Decennial Review of Exempted Operational Files.--(1) Not less 
than once every 10 years, the Director of the National Reconnaissance 
Office and the Director of Central Intelligence shall review the 
exemptions in force under subsection (a)(1) to determine whether such 
exemptions may be removed from the category of exempted files or any 
portion thereof. The Director of Central Intelligence must approve any 
determination to remove such exemptions.
  ``(2) The review required by paragraph (1) shall include 
consideration of the historical value or other public interest in the 
subject matter of the particular category of files or portions thereof 
and the potential for declassifying a significant part of the 
information contained therein.
  ``(3) A complainant that alleges that NRO has improperly withheld 
records because of failure to comply with this subsection may seek 
judicial review in the district court of the United States of the 
district in which any of the parties reside, or in the District of 
Columbia. In such a proceeding, the court's review shall be limited to 
determining the following:
          ``(A) Whether NRO has conducted the review required by 
        paragraph (1) before the expiration of the 10-year period 
        beginning on the date of the enactment of this section or 
        before the expiration of the 10-year period beginning on the 
        date of the most recent review.
          ``(B) Whether NRO, in fact, considered the criteria set forth 
        in paragraph (2) in conducting the required review.''.
  (b) Clerical Amendment.--The table of contents contained in the first 
section of such Act is amended by inserting after the item relating to 
section 105C the following new item:

``Sec. 105D. Protection of operational files of the National 
Reconnaissance Office.''.

SEC. 503. ELIGIBILITY OF EMPLOYEES IN INTELLIGENCE SENIOR LEVEL 
                    POSITIONS FOR PRESIDENTIAL RANK AWARDS.

  Section 1607 of title 10, United States Code, is amended by adding at 
the end the following new subsection:
  ``(c) Award of Rank to Employees in Intelligence Senior Level 
Positions.--The President, based on the recommendations of the 
Secretary of Defense, may award a rank referred to in section 4507a of 
title 5 to employees in Intelligence Senior Level positions designated 
under subsection (a). The award of such rank shall be made in a manner 
consistent with the provisions of that section.''.

                                Purpose

    The bill would:
          (1) Authorize appropriations for fiscal year 2003 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, 
        2003 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 2003 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 intelligence and intelligence-related 
        activities funded within the FY 2002 Emergency 
        Supplemental Act and the FY 2002 Defense Department 
        Appropriations supplemental bill now under 
        Congressional consideration;
          (4) Authorize $351.3 million for the Central 
        Intelligence Agency Retirement and Disability Fund 
        (CIARDS) in order to fully fund the accruing cost of 
        retirement benefits for individuals in the Civil 
        Service Retirement System, CIARDS, and other federal 
        retirement systems;
          (5) Establish an ongoing notification procedure with 
        respect to Financial Intelligence on Terrorist Assets 
        (FITA), so as to assure timely Congressional oversight 
        of national-security-related financial enforcement 
        actions by the executive branch;
          (6) Amend U.S.C. 552(a)(3)(A), with respect to 
        elements of the Intelligence Community, by limiting the 
        application of this paragraph of the Freedom of 
        Information Act such that agencies would be prohibited 
        from complying with the requests of foreign governments 
        to make records available;
          (7) Authorize $10 million for the National Security 
        Education Program to establish a National Flagship 
        Language Initiative whereby institutions of higher 
        learning would be awarded grants to establish, operate 
        or improve foreign language training programs that are 
        identified by the Secretary of Defense as most critical 
        to U.S. national security interests;
          (8) Prohibit the implementation of any compensation 
        reform plan within the Intelligence Community until 
        such plans have been specifically authorized by 
        statute; and
          (9) Authorize the use of funds designated for 
        intelligence and intelligence-related purposes for 
        assistance to the Government of Colombia for counter-
        drug activities for fiscal year 2002 and 2003 to also 
        be used to fund counterterrorism activities in 
        Colombia.

  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 associated language therein. The 
classified Schedule is incorporated directly into this 
legislation by virtue of section 102 of the bill. The 
classified Annex is available for review by all Members of the 
House of Representatives, subject to the requirements of clause 
13 of rule XXII 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 Armed 
Services Committee 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). As with TIARA programs, the Armed Services Committee in 
the House of Representatives has joint oversight and 
authorizing jurisdiction of the programs comprising the JMIP.

                 Committee Findings and Recommendations

    In the following several pages, the Committee highlights 
areas of concern that it believes must be addressed with a high 
priority by the Director of Central Intelligence (DCI), as the 
leader of the Intelligence Community, and by administration if 
intelligence sufficient to protect our national security is to 
be provided. The Committee places particular emphasis on issues 
that impact the Intelligence Community as a whole or that 
involve several various programs.
    The Committee notes that this is the first budget to be 
compiled after the horrific events of September 11th. The 
Committee wishes to acknowledge and thank all of the men and 
women working in the Intelligence Community. Members have been 
uniformly impressed during their travels, at home and abroad, 
by the work being done by these individuals to further U.S. 
goals, protect U.S. interests, enable policymakers, and reduce 
the risk of future terrorist attacks. As is often noted, the 
successes of the Intelligence Community normally go unnoticed, 
for obvious and correct reasons, while ``failures'' seem to be 
immediately brought into the public eye. Given its unique 
position, the Committee wants to make sure that those 
associated with the Intelligence Community know that the 
successes that are happening every day at varying levels are 
recognized and appreciated.
    That said, the Committee is also uniquely positioned to 
understand the ``failures.'' In any enterprise that involves 
operations in a hostile environment, the risk of failure is 
always present and must be accepted. In some cases, a failure 
may be the result of a lack of risk taking or a lack of 
adequate planning. In both cases, the question the Committee 
must assess is whether the failures were avoidable. In the 
context of the September 11th terrorist attacks, the Committee, 
through the Joint Inquiry it is conducting, seeks to determine 
whether there were avoidable failures and, if so, how they may 
be prevented in the future.
    The effects on our nation's intelligence resources by the 
terrorist attacks are many and varied. On the one hand, the 
terrorist attacks and the responses to them in the Global War 
on Terrorism (GWOT) have justified the Committee's stated 
belief that the need for intelligence during times of relative 
``peace'' is as, if not more, important than in times of war, 
and that strategic and tactical intelligence must have similar 
emphasis. On the other hand, the attacks have also highlighted 
the fact that our intelligence resources have been stretched 
too thin, that the Community has analytical weaknesses, and 
that the management decisions about those resources did not 
take into account sufficiently the complexity and importance of 
the growing threat from terrorism associated with Islamic 
fundamentalism. Moreover, the lessons learned post-September 
11th have, once again, emphasized the need for the Intelligence 
Community to work as a whole, not as individual ``stove-piped'' 
agencies.
    These observations are made as the basis for justification 
for actions taken within this bill. These actions are taken not 
only based on the events of September 11th, but also from the 
extensive work that the Committee has done previously. The 
Committee intends to focus on the future, but to do so the 
Committee believes that the DCI and the Administration must 
understand that the issues highlighted here must be addressed 
quickly and thoroughly.

                  INVESTMENT--BUT IN AN OLD STRUCTURE

    The Committee has repeatedly endorsed the need to invest 
significantly in intelligence, lest the nation be confronted 
with unexpected events. Such concerns, were reinforced on 
several occasions prior to September 11th, including the 
bombing of the U.S. embassy and Marinebarracks in Beirut, the 
destruction of Pan Am 103, the ``surprise'' testing of nuclear weapons 
by India and Pakistan that went undetected by U.S. intelligence. In the 
past, the Committee has at least attempted to sustain funding for 
intelligence, if not enhance funding where and when possible in an 
attempt to preclude such future surprise. This year, the administration 
has proposed substantial increases for intelligence. This is most 
appropriate given the situation. Moreover, the indications are that the 
administration understands that single-year investments are not as 
effective as sustained significant funding over at least the next five-
to-ten years. The Committee is greatly encouraged by this apparent 
commitment.
    Unfortunately, however, these investments are being made 
into an organizational framework that gives little indication 
of being prepared to produce intelligence capabilities that can 
address the national security demands of the future. Except for 
significant efforts on the GWOT, most of the other investments 
emphasize collection systems that are of questionable 
flexibility compared to the needs, that underemphasize 
analysis, language capabilities and other shortfalls, and that 
continue a stove-pipe mentality of decision-making and 
planning. Put simply, integrated intelligence operations and 
community-wide information sharing are the exception rather 
than the norm. Even the significant and inventive efforts on 
the GWOT are being accomplished in somewhat of a vacuum, with 
enormous amounts of resources being shifted to terrorism that 
create gaps in coverage and understanding in other areas of 
national security interest.
    The Committee does not criticize the administration for the 
size of the proposed investment. The Committee must emphasize, 
however, that investment alone, without reorganization and/or 
reform of some of the basic components and practices of the 
Intelligence Community, will not provide effective national 
intelligence capabilities. Therefore, although the Committee 
endorses the President's request for a significant investment 
in intelligence, it does so with reservation and notes that the 
administration must, especially during this time of war, 
evaluate and make necessary changes, including organizational, 
to the Intelligence Community, lest we find ourselves surprised 
in additional areas.
    Moreover, as the Committee has consistently noted, some of 
the needed changes to the Intelligence Community are likely to 
be structural, in order for the DCI to better plan and manage 
Community resources to ensure a balance of capabilities and 
requirements. Although at the beginning of the 107th Congress, 
the Committee intended to address significant structural 
issues, the events of September 11th resulted in a decision to 
postpone consideration of many potential changes. Reviews of 
the terrorist attacks must come first, and are underway. 
Notably, the interim report to the Speaker of the House from 
the Committee's Subcommittee on Terrorism and Homeland 
Security, is in preparation, and the review from the bicameral, 
bi-partisan Joint Inquiry into September 11th is being 
conducted by the House and Senate Intelligence Committees and a 
report will follow later. It is the Committee's belief that 
these reports will provide additional substantive basis and 
rationale for changes that may be warranted. Moreover the 
President's own review resulting from NSPD-5 will also aid in 
assessing the nation's intelligence effectiveness and what 
barriers impinge on that effectiveness. The Committee implores 
the President, in particular, to receive the findings from the 
NSPD-5 review and act upon them with expediency.

                       BUDGETING BY SUPPLEMENTAL

    Having stated the need for investment, and the support for 
the amounts in this year's request, the Committee must also 
highlight a growing concern related to how the investment is 
being requested.
    Perhaps the most disturbing budgetary trend in the United 
States Intelligence Community is its increasing reliance on 
supplemental appropriations. In fairness, Congress began the 
current round of supplemental largess with a $1.5 billion 
intelligence supplemental funding bill in fiscal year 1999 in 
order to try cover intelligence needs not being met through the 
regular budget requests. The practice was continued in the wake 
of the millennium terrorist threats, and sustained to address 
the initial phases in the war on terrorism. However, in any 
sustained ``crisis'' action, there comes a point where short-
term stopgap practices must be phased out and long-term 
strategic plans put into place. This year's fiscal year 2002 
budget supplemental is $1.694 billion.
    The ``advantage'' of the supplemental appropriations 
process to the Intelligence Community is that pressing 
budgetary demands can be met in a shorter time (and with fewer 
bureaucratic hurdles) than the regular yearly process. However, 
by continuing to rely on supplemental appropriations year after 
year, the Intelligence Community risks fostering a budget 
process that is ripe for abuse and long-term funding gaps.
    One potential complicating factor is the creation of the 
Defense Emergency Response Fund (or DERF). The DERF was 
originally created to pay for emergency items that arose due to 
the war on terrorism. However, it has been increasingly obvious 
that the DERF has turned into just another vehicle to fund 
items that the Intelligence Community did not get through the 
regular budget and planning process. In fact, the Committee 
notes that, in the fiscal year 2003 request for the JMIP and 
TIARA programs, some funding lines were duplicative of entries 
in the fiscal year 2002 supplemental, and the DERF request for 
fiscal year 2001 and 2003. The Committee does not believe the 
DERF is an appropriate vehicle for Intelligence Community 
funding, except perhaps for truly unforeseen emergency items.
    A subtler, yet no less problematic set of issues arises 
when programs are forced to rely on supplemental funding for 
core mission support.
    The Committee acknowledges that in the war on terrorism 
plans will continue to be in a constant state of flux and 
dollar amounts in spend plans are really just guesses that can 
( and probably will) change day-to-day. But the apparent lack 
of a long-term, strategic planning effort is troubling. This 
presents a number of problems:
          It is bad budget practice and bad government. By 
        failing to build the ``tail'' for these programs into 
        the Future Year Defense Program (to the extent 
        possible), the executive branch is perpetuating the 
        need for large, mid-stream supplemental infusions of 
        cash. The need for flexibility in the execution of funds 
        can and should be addressed rationally, and with an eye 
        towards better long-term planning.
          Congressional oversight is minimized--creating the 
        potential for serious problems down the road. Given the 
        history of intelligence in the United States, an 
        erosion of robust, effective oversight could lead to 
        erosion in the integrity and credibility of the 
        Intelligence Community.
          Finally, the committee believes that the supplemental 
        gravy train won't last--and without long term planning 
        and investment, the United States may be left with too 
        little to show for all of its spending on intelligence.

               BACK TO BASICS--GLOBAL COVERAGE AND HUMINT

    Of all of the lessons that should be learned in the wake of 
September 11th, the importance of having reliable and timely 
human intelligence is among the most important. The information 
most important to the nation's national security is identifying 
and understanding the plans and intentions of those who would 
harm our interests. Some of this information may be obtainable 
only through HUMINT. In today's environment, however, HUMINT 
must not only be able to provide information on governments, 
states, and entities, but also be able to acquire information 
on small, independent groups of individuals or single persons, 
as we have seen with the terrorist target.
    The breadth of HUMINT resource needs and capabilities is 
far-reaching and complex. HUMINT must provide ``boots on the 
ground'' assessments and evaluations of foreign environments 
and targets to support not only ongoing, but future national 
and military operations--operations that now range from full-
scale combat to peacekeeping. HUMINT must be positioned to 
collect against terrorist threats and the more traditional 
information on government, political and the regional stability 
of countries that influence our policies and security. Equally 
important are the types of HUMINT accesses and skills that are 
required, particularly language capabilities and regional 
expertise. Coupled with the abilities to recruit assets and, 
when necessary to intensively interrogate detained persons.
    The Committee emphasizes these points for some very basic 
reasons. In reviewing the budget request and various witness 
testimonies, the Committee is not confident that the rebuilding 
effort that the Committee has been calling for an now sees 
beginning is headed in the right direction. The Committee is 
concerned, for example, that there is an over-reliance on 
assistance from allies to collect information. Clearly, the 
post-September 11th environment has proven the necessity and 
value of having close and continuing allies supporting the 
Global War on Terrorism. However, the U.S. Intelligence 
Community must have a robust unilateral collection capability 
to ensure it has the necessary efforts to best preclude any 
future attacks on America.
    Finally, the Committee to be concerned about the current 
HUMINT career structure both within the CIA and within the 
Department of Defense's HUNINT service. At a time when regional 
expertise, including language capabilities, have again proven 
critical, the current civilian and military personnel and 
career structures do not emphasize or incentivize these 
factors. Currently, individuals get promoted based on their 
broad, and often general knowledge in wide-ranging areas, while 
those who would appear to stay focused on one area or even one 
country are not, in the Committee's view, being given the 
credit or rewards deserved. This includes the age-old issue of 
having senior promotion opportunities weighted toward those 
with experience in management positions. The Committee 
acknowledges that this issue is not unique to the HUMINT area--
in fact it is also most acute in the area of analysis--but, 
given that HUMINT requires direct operational experience in the 
countries or regions containing intelligence targets and 
equities, it seems to the Committee that the ability to reward 
and incentivize those working in this field is critical.

                      GLOBAL COVERAGE AND ANALYSIS

    As important as having a robust and global HUMINT service, 
the need to have analytical capabilities that are dynamic, 
wide-ranging and, collectively, cover the globe, is critical to 
national security. Too often, investments in analytical 
capabilities are secondary to collection assets and systems, 
when, at the end of the day the policy maker takes an 
analytical assessment as a key part of decisionmaking. 
Additionally, collected intelligence in the technical fields of 
SIGINT, IMINT, and MASINT, are, by and large, useless (except 
in certain and selective tactical situations) unless the data 
collected is processed and analyzed in a timely fashion, then 
placed into context in consideration of other all-source 
information. Although these issues are not new to the 
Committee, as it has written about such needs for several years 
now, it is important to raise them again in light of September 
11th and the current national security environment.
    Prior to the terrorist attacks in September, the Committee 
was concerned that there were significant gaps in the 
Community's analytical capabilities, especially in areas that 
were not perceived as having immediate national security 
concerns. Although our analytic depth in some areas was strong, 
in other areas it was virtually non-existent.
    After September 11th, Herculean efforts have been made to 
enhance our analytical wherewithal on the various aspects of 
the terrorist target. For example, a number of analysts were 
shifted to focus on this threat. Additionally, there are plans 
to shift additional resources to the FBI, in order to assist in 
building up the Bureau's capabilities to understand information 
being collected domestically on the terrorist target. There has 
also been an exponential growth of staff required to support 
production of the President's Daily Brief and the Senior 
Executive Intelligence Brief. The effects of these shifts are 
somewhat alarming. Some analytic cadres were moved in their 
entirety to Counterterrorism Center. Similar, though not as 
dramatic, analytic impacts have been experienced as a result of 
the movement of analysts to support the establishment of the 
DCI's Office of Weapons Intelligence, Nonproliferation, and 
Arms Control (WINPAC). This is not to say that areas of 
counterterrorism and counterproliferation are not critically 
important; they clearly are. The Committee must point out, 
however, that significant gaps in the Community's analytical 
capabilities are widening, and present opportunity for further 
surprise in national security areas.
    Along with all-source analysis capabilities, technical 
analysis capabilities are also wanting. Still today, after 
repeated warnings and encouragement to invest now in 
appropriate tasking, processing, exploiting and dissemination 
capabilities for future imagery collection capabilities, the 
amount of investment and planning appeals, to the Committee, to 
be minimal in relation to the attention paid to the ability to 
collect large volumes of data. In the SIGINT area, the events 
of September 11th highlight the critical nature of SIGINT 
analysis to understand the terrorist target, and moreover the 
need to be able to quickly exploit intercepted communications.
    The Committee questions whether the senior management of 
the Community is fully understanding of the critical need to 
rebuild analytical resources. At a time when new investments in 
intelligence collection are significant, the apparent lack of 
priority or interest in strategic, global analysis to ensure 
that the nation is not caught off-guard, while it is focused on 
conducting the GWOT is both puzzling and disturbing.
    As with HUMINT, career progression for all-source analysts 
must be reviewed and changed. The Committee is concerned that 
the current pathways to promotion favor generalists, and force 
career tracks into management, rather than providing incentives 
for country, regional and language expertise, with a clear 
senior promotion track within the analytic workforce.

             THE MISSING INTELLIGENCE LINK--LANGUAGE SKILLS

    One of the most disappointing elements of this budget 
request is the inattention paid to investment in language 
capabilities. Of all the shortfalls identified thus far in the 
GWOT, the lack of skilled linguists has been universal. This, 
again, is not a new issue, and is one that the Committee has 
significantly highlighted for many years. Yet, even in this 
budget request, only minimal efforts within individual agencies 
are presented. Language capabilities and skills are Community-
wide concerns and must be addressed accordingly. Trying to 
address language deficiencies within the current structures and 
with the current priority system is simply unworkable. 
Therefore, the Committee has taken steps to begin to 
significantly address these issues. In some of the programs, 
the Committee has added money into existing language accounts, 
and in at least one case has added positions. A a hallmark of 
this effort, the Committee intends that an Intelligence 
Community Language University be created. It is the intent of 
the Committee that this University would be committed to 
providing basic and advanced language training and regional 
studies to any analyst, operations officer, or collector within 
the Intelligence Community. Such training would include all 
languages necessary for global coverage capabilities, not just 
those of the highest priority of the moment. Attendees could 
include both civilian and military personnel. The intent is not 
to replace current language schools within the Intelligence 
Community or Department of Defense, but to augment those 
capabilities, perhaps at the current locations of those 
schools.

                  GUANTANAMO BAY INTERROGATION EFFORT

    The Committee is very concerned that the intelligence 
collection effort at Guantanamo Bay (GITMO) is exhibiting, in a 
microcosm, a number of problems that have plagued the 
Intelligence Community writ large over a number of years. 
Specifically, the problems highlighted include shortages of 
analytic resources, linguists, interrogators and human 
intelligence officers. Interagency cooperation has also, at 
times, been an issue. Finally, and perhaps most troublesome, is 
the low priority and low regard that the intelligence mission 
is afforded.
    The Committee has closely followed the Department of 
Defense (DoD) and Intelligence Community's (IC) planning, 
establishment and conduct of the intelligence interrogation 
efforts at the GITMO detention facilities. The Committee's 
concerns are focused specifically on the need to collect 
actionable intelligence for national security. The IC and DoD 
must ensure that any and all actionable intelligence that may 
aid in averting potential terrorist attacks is gained. If 
problems in doing so exist, they must be corrected quickly. 
Once before the start of the detainee interrogations and twice 
since the interrogations have been underway the Committee sent 
delegations to visit the GTMO operations. The Committee 
observed that the interrogation efforts have been hampered by a 
lack of appropriate training, a dearth of language-skilled 
personnel, and a lack of depth and breadth of analytic 
expertise. Further, the Committee notes that the organizational 
construct of the GITMO detention facilities/operations may also 
be impeding collection efforts. A full discussion of these 
issues is included in the classified annex to this report.

                    NSA'S ``BUY VERSUS MAKE'' POLICY

    Some time ago, the Director of NSA directed that NSA 
emphasize buying SIGINT capabilities versus developing them 
internally. This directive specified that, within 60 days, a 
detailed policy would be issued outlining related procedures. 
Nearly two years later the ``buy versus make'' policy was 
issued, stating that ``NSA will give first consideration to 
buying products, services's and capabilities,'' and that NSA 
will maintain ``strategic stronghold'' expertise necessary to 
understand target use of technologies.'' This ``strategic 
stronghold'' includes 32 separate activities that encompass 
virtually all SIGINT mission functions, including broad 
categories like basic and applied research and advanced 
technology development. The current policy allows NSA to 
develop capabilities in-house whenever ``strategic stronghold'' 
categories have no commercial industry skills base or whenever 
``the NSA/CSS Strategic Stronghold must be maintained.'' The 
Committee believes that, unfortunately, the Agency has 
repeatedly used a liberal interpretation to find that no skills 
reside in industry, when, in fact, expertise does reside in 
industry. This allows for a continued emphasis on in-house 
developments. the Committee firmly believes there are niche 
areas that indeed need to be maintained as strategic 
strongholds. However, most other categories include 
technologies and functions that are routinely developed or done 
in industry and often for other intelligence agencies.
    The DIRNSA has repeatedly assured the Committee that NSA 
would be emphasizing buying capabilities versus making them in-
house. However, the implementation of the current ``buy versus 
make'' policy appears to justify far too many in-house 
acquisition activities. The perception is that the current 
policy was written by NSA management to actually perpetuate in-
house development. In fact, there is little evidence that would 
suggest otherwise. For example, the hiring statistics presented 
by the DIRNSA at the first year 2003 budget hearing showed that 
NSA continues to hire more computer scientists and engineers 
than any other skill category. TheCommittee continues to 
believe that the institution of an aggressive ``buy versus make'' 
policy would result in the availability of billets in critical mission 
areas.
    The Committee therefore requests that the Intelligence 
Community's System Acquisition Executive (SAE) and the 
Assistant Secretary of Defense (Command, Control, 
Communications and Intelligence) review NSA's Buy verses Make 
Policy and provide a report to the intelligence and defense 
authorization committees by 30 December 2002. This review 
should include a comparison of NSA's policy with similar 
policies at other intelligence and defense agencies, and should 
provide recommendations for change.

                       DOD'S SIGINT ARCHITECTURE

    The Committee maintains that it is the responsibility of 
the Assistant Secretary of Defense for Command Control 
Communication and Intelligence (ASD(C31)) to provide guidance, 
management and technical oversight, and to establish policy and 
practices for the Department of Defense (DoD) and its 
components on all aspects of information exchange networks, 
surveillance, warning and reconnaissance architectures, and 
data information systems standardization programs, particularly 
with respect to their readiness to support military operations.
    The Committee notes that the National Security Agency is 
charged with the operational control and the authority for the 
development of prescriptive uniform techniques and standards by 
which Signals Intelligence (SIGINT) information is collected, 
processed, and reported.
    The Committee is concerned that the ASD(C3I) and the NSA 
have been deficient in their duties to the DoD, and its 
components, in the execution of their roles to create a 
cohesive SIGINT architecture. There appears to be insufficient 
support by both principals for establishing collective 
practices and for promoting coordinated efforts and cross-
service oversight of joint intelligence surveillance and 
reconnaissance SIGINT activities.
    This concern was noted in the report accompanying the 
National Defense Authorization Act for Fiscal Year 2002. This 
report identified specific instances, including the impact of 
the termination of the Joint SIGINT Avionics Family's (JSAF) 
Low-band Sub System (LBSS) on relying on this program to 
fulfill the Services' low frequency SIGINT needs. The Act has 
also identified significant problems in systems that are 
incompatible and not interoperable within the DoD's current 
architectures, and directed the Secretary of the Air Force 
(SECAF), in his capacity an acquisition executive, to prepare a 
report on non-space SIGINT system architecture planning by May 
31, 2002. The Congress still awaits this report.
    The Committee instructs ASD(C3I) and the NSA to consider 
the findings of the SECAF's report, along with any other 
credible service inputs observed, as an expert assessment of 
current process and available technologies, and their abilities 
to fulfill the urgent need for non-proprietary, software 
definable, open and commercially based standards in which to 
establish an overall DoD SIGINT architecture.
    The Committee acknowledges that the Services have 
acquisition authority under Title X, U.S.C. subject to the 
guidance and direction of ASD(C3I), and under the expertise of 
the NSA of the SIGINT functional manager. ASD(C3I) has an 
oversight function; and the Committee believes the service 
systems are to be built by the services based on specific 
mission/platform needs, but in strict compliance with standards 
and technical architectures designed and promulgated by NSA.
    Therefore, the Committee directs the ASD(C3I) and the NSA 
establish a SIGINT architecture that is evolutionary in nature. 
This architectural strategy shall be well conceived, efficient 
and economical and based on practical, generally accepted 
standards used throughout industry and the military. The 
architecture shall be flexible enough to accommodate changes as 
technology improves and as mission-specific requirements 
evolve.
    The Committee directs that this initiative be delivered to 
the congressional defense and intelligence committees by 31 May 
2003. The Committee expects interim briefings so the status of 
this high interest project can be monitored.

                              GLOBAL HAWK

    The Committee is very concerned about the management and 
cost growth of the Global Hawk endurance UAV program. This 
program was originally justified to the Congress as a $10 
million per copy collection platform that could be put in 
harm's way and potentially lost to hostile fire without 
endangering pilots. Over the last several years, however, the 
program has undergone a metamorphosis. Instead of an 
``attritable'' platform with austere avionics, this has become 
an expensive system. The Air Force has proposed integrating 
costly sensor suites that are robust and highly reliable, and 
has proposed that the aircraft operate according to the 
airspace navigation and management standards applicable to 
manned aircraft. These changes have made the platform, quite 
simply, too expensive to risk losing, and it must therefore be 
considered, like the U-2, a standoff collection system that 
needs to be protected. Once this threshold was crossed, the 
requirements and acquisition process began to feed on itself: 
an expensive standoff collector requires higher fidelity, 
longer-range and wide-area sensors. As a result, new missions 
are proposed, which in turn require higher-capacity 
communications for data relay. The more costly platform should 
be protected and therefore equipped with a defensive 
electronics suite, and so on--all of which drive up the cost of 
the system even further. Today, a $10 million per copy Global 
Hawk platform has become at least a $30-40 million aircraft, 
and the cost will increase substantially further as additional 
and improved sensors, and corresponding power/payload upgrades, 
are added. In fact, the Air Force projects that the average 
total unit cost (including all program costs) will exceed $75 
million per copy.
    During the initial Global Hawk development, the program was 
conducted as an Advanced Concept Technology Demonstration. At 
that time, the platform clearly had limited capabilities (power 
levels, payload, sensor performance, communications relay 
capacity, long mission planning times, reliability, and so 
forth). Despite this limited capability, there were repeated, 
irresponsible assertions that the Global Hawk would ``soon'' 
replace the U-2. In fact, elements within the Defense 
Department, without careful analysis, proposed direct funding 
trades betweenthe development Global Hawk and the operational 
U-2 that provides critical support to warfighters. In some sense, the 
Committee sees some of this same inadequate planning, but from the 
opposite perspective: there is now an effort to flood the Global Hawk 
program with money, there are ad hoc plans for rapid, major upgrades 
before requirements have been established, and no sign of serious 
examination of where and how Global Hawk fits into an overall 
collection architecture. As noted elsewhere in this report, to cite but 
one example, DoD has taken no serious steps to be able to relay and 
process the huge amounts of data from Global Hawk, or to process, 
exploit, and disseminate all the data that a fleet of 51 Global Hawks 
with highly capable sensors will generate.
    The Committee has complained for years that the Defense 
Department has suffered from an acute shortage of airborne 
collection systems. The Committee understands the Department's 
eagerness to address the shortage by investing heavily in the 
Global Hawk program and transforming it into a highly capable 
collection system. But the Committee is concerned that the 
Department is engaged in this process on an ad hoc basis, 
without a clear idea of what is to be produced and at what 
cost. The Committee is not persuaded that the Department, in 
its rush to identify transformational possibilities, has made 
the case for a complete makeover of the Global Hawk system in 
the space of a few years. Moreover, the Committee notes that 
the historical genesis of the Global Hawk program was 
intertwined in an agreement by the Congress to a DoD request to 
terminate the SR-71 reconnaissance aircraft. The Congress 
agreed to the SR-71 termination based on the DoD's promise of a 
replacement aircraft that would provide, as did the SR-71, a 
long-range aircraft that could penetrate hostile airspace with 
impunity. This was the `survivable, penetrating aircraft' 
concept. The Global Hawk program was to provide the long-range 
portion of that replacement. However, the DoD terminated the 
Dark Star UAV that would have provided the survivable, 
penetrating reconnaissance role. Therefore, even with a 
successful Global Hawk air vehicle, the survivable, penetrating 
reconnaissance mission remains unfilled.
    Finally, the Committee is concerned that some cost growth 
in the program is not attributable solely to increases in 
capability and production volume. The Committee notes, with 
approval, efforts by the Assistant Secretary of the Air Force 
for Acquisition to methodically investigate ways to reduce the 
costs of the Global Hawk air vehicle. The Committee notes that 
these efforts can only be successful if the constantly evolving 
mission issues addressed above are dealt with effectively. If 
the Under Secretary's efforts result in a re-baselining of the 
Global Hawk program, the Committee suggests that the process 
must be thorough and include a comprehensive, but achievable 
set of requirements, that can result in well-structured 
production of a militarily useful aircraft. The Committee must 
note that if the cost of the air vehicle continues to escalate, 
making mission accomplishment tenuous, the Secretary of Defense 
will have to be accountable to making the necessary decisions 
as to continuing the program or replacing it with other 
existing alternatives.

              Section-by-Section Analysis and Explanation


                    TITLE I--INTELLIGENCE ACTIVITIES

Section 101--Authorization of appropriations

    Section 101 lists the departments, agencies, and other 
elements of the United States Government for whose intelligence 
and intelligence-related activities the Act authorizes 
appropriations for fiscal year 2003.

Section 102--Classified schedule of authorizations

    Section 102 makes clear that the details of the amounts 
authorized to be appropriated for intelligence and 
intelligence-related activities and applicable personnel 
ceilings covered under this title for fiscal year 2003 are 
contained in a 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.

Section 103--Personnel ceiling adjustments

    Section 103 authorizes the Director of Central Intelligence 
(DCI), with the approval of the Director of the Office of 
Management and Budget (OMB), in fiscal year 2003 to authorize 
employment of civilian personnel in excess of the personnel 
ceilings applicable to the components of the Intelligence 
Community under section 102 by an amount not to exceed two 
percent of the total of the ceilings applicable under section 
102. The DCI may exercise this authority only if necessary to 
the performance of important intelligence functions. Any 
exercise of this authority must be reported to the intelligence 
committees of the Congress.

Section 104--Community Management Account

    Section 104 authorizes appropriations for the Community 
Management Account (CMA) of the DCI and sets the personnel end-
strength for the Community Management staff for fiscal year 
2003.
    Subsection (a) authorizes appropriations in the amount of 
$176,179,000 for fiscal year 2003 for the activities of the CMA 
of the DCI. Subsection (a) also authorizes funds identified for 
the Advanced Research and Development Committee to remain 
available for two years.
    Subsection (b) authorizes 350 full-time personnel for 
elements within the CMA for fiscal year 2003 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) authorizes additional appropriations and 
personnel for the CMA as specified in the classified Schedule 
of Authorizations.
    Subsection (d) requires that, except as provided in Section 
113 of the National Security Act of 1947, personnel from 
another element of the United States Government be detailed to 
an element of the CMA on a reimbursable basis, or for temporary 
situations of less than one year on a non-reimbursable basis.
    Subsection (e) authorizes $34,100,000 of the amount 
authorized in subsection (a) to be made available for the 
National Drug Intelligence Center (NDIC). Subsection (e) 
requires the DCI to transfer these funds to the 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.

Section 105--Authorization of emergency supplemental appropriations for 
        fiscal year 2002

    Section 105 authorizes intelligence and intelligence-
related activities funded within the FY2002 Emergency 
Supplemental Act and the FY2002 Defense Department 
Appropriations bill that is now under congressional 
consideration.
    Perhaps the most disturbing budgetary trend in the United 
States intelligence community is its increasing reliance on 
supplemental appropriations. In fairness, Congress began the 
current round of supplemental largess with a sizeable 
intelligence supplemental in fiscal year 1998. The practice has 
been continued in the succeeding years, primarily to address 
additional intelligence spending to address terrorist threats. 
However, in any sustained crisis action, there comes a point 
where short-term practices must be phased out and long-term 
strategic plans put into place.
    The ``advantage'' of the supplemental appropriations 
process to the intelligence community is that the process can 
address pressing budgetary demands in a shorter time (and with 
fewer Administration and Congressional bureaucratic hurdles) 
than the regular process. However, by continuing to rely on 
supplemental appropriations year after year, the intelligence 
community risks fostering a budget process that is ripe for 
abuse and long-term funding gaps.
    Abuse of the process comes mainly in the form of redundant 
budget requests. The committee has noted many places in the 
fiscal year 2003 budget requests where specific items have been 
``funded'' two or even three times, especially in the 
Department of Defense activities under the Joint Military 
Intelligence and the tactical Intelligence and Related 
Activities programs. These two programs had funding lines that 
appeared as duplicative entries in the FY02 supplemental, the 
President's request for FY03 and the Defense Emergency Response 
Fund FY01, FY02, and FY03. While the Committee recognizes the 
Administration was under significant time pressure to compile 
these budget requests, there should have been special effort to 
methodically review them before they were submitted to 
Congress.
    One potential complicating factor for the Administration 
and the Department of Defense is the creation of the Defense 
Emergency Response Fund (or DERF). The DERF was originally 
created to pay for emergency items that arise during the war on 
terrorism. However, it has been increasingly obvious that the 
DERF has turned into just another vehicle to fund items that 
the intelligence community did not get through the regular 
budget and planning process. The Committee does not believe the 
DERF is an appropriate source for intelligence community 
funding.
    A subtler, yet no less problematic set of issues arises 
when programs are forced to rely on supplemental funding for 
core mission support. This is increasingly the case for those 
intelligence community operations supporting the war on 
terrorism. The Committee acknowledges the war's dynamic 
environment, and the day-to-day adjustments to intelligence 
operations that this war requires. But the intelligence 
community's apparent lack of a long-term, strategic planning 
effort is troubling.
    The committee directs that the Secretary of Defense and the 
Director of Central Intelligence fully fund all anticipated 
intelligence activities in their fiscal year 2004 budget 
requests.

 TITLE II--CENTRAL INTELLIGENCE AGENCY RETIREMENT AND DISABILITY SYSTEM

Section 201--Authorization of appropriations

    Section 201 authorizes appropriations in the amount of 
$351,300,000 for fiscal year 2003 for the Central Intelligence 
Agency Retirement and Disability Fund. The Administration has 
proposed legislation requiring agencies, beginning in FY 2003, 
to fully fund the accruing cost of retirement benefits for 
individuals in the Civil Service Retirement System, CIARDS, and 
other federal retirement systems. The legislation also would 
require agencies to pay the full accruing cost of post-
retirement health benefits for current civilian employees and 
the post retirement health costs of all retirees (and their 
dependents/survivors) of the Uniformed Service. $129 million of 
the $139.3 million increase from the FY 2002 authorization 
level represents the additional funds CIA will require to meet 
these requirements within the CIARDS program.

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

Section 303--Sense of the Congress regarding Intelligence Community 
        contracting

    Section 303 is a Sense of the Congress provision to 
encourage the Intelligence Community to maximize the 
procurement of US-made products.

Section 304--Semiannual reports on financial intelligence on terrorist 
        assets (FITA)

    Section 304 of the bill, establishing an ongoing 
notification procedure with respect to Financial Intelligence 
on Terrorist Assets (FITA), is intended to assure timely 
Congressional oversight of national security-related financial 
enforcement actions by the executive branch, andis meant to 
mirror the reporting practices followed under the Foreign Intelligence 
Surveillance Act (FISA).
    On a semiannual basis, the Secretary of Treasury shall 
provide the intelligence committees, together with the 
Committee on Financial Services of the House of Representatives 
and the Senate Banking Committee and the Senate and House 
Appropriations Committees, a report setting forth with respect 
to the preceding six-month period: (1) the total number of 
asset seizures, designations, and other actions against 
individuals or entities found to have engaged in financial 
support for terrorism; (2) the total number of applications for 
asset seizure and designation of individuals or entities 
suspected of having engaged in financial support of terrorist 
activities, that were granted, modified, or denied; (3) the 
total number of physical searches of offices, residences, or 
financial records of individuals or entities suspected of 
financial support for terrorist activity; and, (4) whether the 
financial intelligence information seized in these cases has 
been shared on a full and timely basis with all departments, 
agencies, and other entities of the United States Government 
involved in intelligence activities in the Foreign Terrorist 
Asset Tracking Unit (FTAT).
    Although the Committee anticipates that the semiannual FITA 
reports will better inform its understanding of the actions of 
the Foreign Terrorist Asset Tracking Unit and of the FTAT's 
participating agencies in the US intelligence and law 
enforcement communities, the Committee is also requiring 
enhanced notification procedures concerning urgent financial 
intelligence actions of the executive branch, including covert 
actions and intelligence activities other than covert actions, 
which are derived from financial intelligence on terrorist 
assets and fundraising activities.

Section 305--Modification of excepted agency voluntary leave transfer 
        authority

    Section 305 amends section 6339 of title 5, United States 
Code, to permit the head of an ``excepted agency'' to establish 
a voluntary leave transfer program for employees of such 
agency. This program would permit employees of the excepted 
agency to transfer accrued or accumulated annual leave to, or 
receive transferred leave from, employees of different 
agencies. Currently, employees of certain ``excepted 
agencies''--i.e., the Central Intelligence Agency (CIA), 
Defense Intelligence Agency (DIA), National Security Agency 
(NSA), FBI, National Imagery and Mapping Agency (NIMA), and, 
when designated by the President, any other agency whose 
primary mission is the conduct of foreign intelligence or 
counterintelligence--are not permitted to participate in 
interagency leave sharing programs. This restriction often 
places unnecessary restrictions on employees who may wish to 
transfer leave to a qualified employee at another agency, or 
vice versa. This provision permits the head of an excepted 
agency to establish an interagency leave-sharing program. Any 
such program must be consistent, to the extent practicable and 
with due regard for the protection of intelligence sources and 
methods, with applicable laws and regulation governing similar 
programs. Regardless of the discretionary decision to establish 
an interagency leave-sharing program, an excepted agency must 
still maintain an intra-agency program for an employee to 
transfer leave to or receive leave from an employee in the same 
agency.

Section 306--Additional one-year suspension of reorganization of 
        Diplomatic Telecommunications Service Program Office

    Section 306 extends the effective date of the suspension 
authorized in Section 311 of the Intelligence Authorization Act 
for Fiscal Year 2002 (Pub. L. No. 107-108 (Dec. 28, 2001)). 
Section 311 of the Intelligence Authorization Act for Fiscal 
Year 2002 suspended the provision of the Intelligence 
Authorization Act for Fiscal Year 2001 (22 U.S.C. 7301 et seq.) 
that required reorganization of the Diplomatic 
Telecommunications Service Program Office (DTS-PO). This 
provision extends the suspension until October 1, 2003.

Section 307--Prohibition on compliance with requests for information 
        submitted by foreign governments

    Section 307 amends 5 U.S.C. 552(a)(3)(A), with respect to 
elements of the Intelligence Community, by limiting the 
application of this paragraph of the Freedom of Information Act 
(FOIA) such that agencies would be prohibited from complying 
with the requests of foreign governments or their 
representatives to make records available. Section 307 
prohibits making records available ``under this paragraph'' 
(i.e. under 5 U.S.C. 552(a)(3), rather than ``under this 
section'' (i.e. 5 U.S.C. 552). It is the Committee's intent to 
not restrict making records available under 552(a)(1) or (2), 
since first, those matters are in the nature of general public 
records that are widely available, and second, it might be 
difficult or impractical to restrict their availability to the 
public.
    As currently structured, FOIA provides to any person a 
broad right of access to declassified Intelligence Community 
records, whatever the purpose of his or her request. As a 
result, foreign persons and governments (including those that 
may support or participate in terrorist activities) have 
generated requests that require a significant commitment of 
Intelligence Community resources to process. CIA estimates that 
requests from foreign governments and foreign nationals 
comprise approximately 10 percent of the FOIA requests received 
annually based on the last three years. From FY 1999 through FY 
2001, these foreign government FOIA requests increased at the 
rate of one percent per annum. Elements of the Intelligence 
Community are required by law to process these requests without 
regard to the nationality of the individual making the request. 
Because elements of the Intelligency Community routinely handle 
classified national security information, the resources 
required to perform the painstaking, line-by-line reviews 
necessary to ensure the proper protection of such classified 
information are substantial. This section will prevent the 
diversion of the Intelligence Community's limited 
declassification resources for this purpose.

Section 308--Cooperative relationship between the National Security 
        Education Program and the Foreign Language Center of the 
        Defense Language Institute

    Section 308 encourages an enhanced cooperative relationship 
between the National Security Education Program and the Defense 
Language Institute Foreign Language Center.
    Secion 308 authorizes the Foreign Language Center of the 
Defense Language Institute to provide instruction on a space-
available basis to recipients of scholarships and fellowships 
of the National Security Education Program (NSEP) as a 
Department of Defense sponsored program. Award recipients may 
apply a portion of their applicable scholarship or fellowship 
award at the Center to defray the additive instructional costs 
of their attendance. Award recipients must be in good standing; 
have completed all academic study in a foreign country, as 
provided for undertheir NSEP scholarship or fellowship; and be 
able to benefit from the instruction provided at the Center.
    Section 308 is intended to improve national foreign 
language capabilities and enhance cooperative efforts among 
federal programs. The Foreign Language Center of DLI provides 
intensive language instruction in a large number of foreign 
languages, primarily to members of the United States armed 
forces. The NSEP is focused on promoting the study of foreign 
cultures and foreign languages critical to the national 
security interests of the United States. The authority provided 
in this section should provide flexibility of benefit to each 
program, and enhance the development of national security 
professionals and foreign area experts with high levels of 
foreign language proficiency.
    The Committee anticipates that only a very small number of 
NSEP recipients would attend the FLCDLI over the course of a 
year. NSEP recipients are only to be admitted to a position in 
a language course at the FLC when there is no Department of 
Defense civilian or military personnel available to take that 
position in that course at the Center. NSEP recipients are to 
receive no preference for space in FLC instructional programs 
over Department of Defense civilian and military personnel.

Section 309--Establishment of National Flagship Language Initiative 
        within the National Security Education Program

    Section 309 authorizes $10 million for the National 
Security Education Program, established pursuant to the David 
L. Boren National Security Education Act of 1991, to establish 
a National Flagship Language Initiative whereby institutions of 
higher learning would be awarded grants to establish, operate 
or improve activities designed to train students in programs in 
a range of disciplines to achieve advanced levels of 
proficiency in those foreign languages that the Secretary 
identifies as being the most critical in the interests of the 
national security of the United States.
    The Committee is strongly interested in improving the 
quality and availability of advanced language education and 
training to support U.S. national security requirements. The 
Committee urges that the National Security Education Program 
apply rigorous standards and metrics to ensure that the NSEP's 
participating academic institutions are regularly evaluated by 
language training experts in the Defense Department and the 
Intelligence Community to ensure that the training provided by 
these institutions meets the U.S. Government's language 
standards. Students who have been awarded scholarships or 
fellowships under the NSEP would be eligible to participate in 
the activities carried out under the National Flagship Language 
Initiative. The Committee intends that Flagship Initiative 
grants be awarded competitively according to rigorous 
standards. The Defense Language Institute and other 
institutions of higher education that are operated by the 
Department of Defense and by agencies of the Intelligence 
Community are specifically authorized to participate in the 
Flagship program. The Committee intends that these institutions 
be treated equally in the grant competition process.
    Under current law, in selecting recipients of awards of 
scholarships, fellowships or grants, the Secretary or 
contracting organizations that administer aspects of the 
program are to take into consideration the extent to which 
program participants reflect the cultural, racial and ethnic 
diversity of the population of the United States, as well as an 
equitable geographic distribution. This requirement is 
especially important as the National Security Education Program 
evolves to face the new national security challenges of the 
21st century.
    The intelligence community shares in a government-wide 
problem of insufficient language and area expertise among 
officials working on national security and foreign policy 
issues. Government is not alone: American multinational 
corporations and non-governmental organizations also do not 
have the people with the language abilities and cultural 
exposure that are needed.
    The problem stems from at least three larger societal 
challenges: general international isolation of the majority of 
the American population, limited study abroad beyond Western 
Europe, and limited foreign language study.
    First, according to 2000 Census data, 82% of the US 
population of 255 million people speaks only English. There are 
very few US households where languages critical for supporting 
US national security are spoken. For example, only 0.23%, or 
596,000 of the US population, speaks Arabic at home, 0.13% for 
Hindi, 0.11% for Urdu, 0.09% for Serbo-Croatian, 0.27% for 
Russian, 0.18% for Japanese, and 0.78% for Chinese.
    Second, less than 1% (about 144,000 in calendar year 2000) 
of all US students in higher education study abroad. Study 
abroad program data also show that US students historically 
have not studied in areas that are emerging as critical to 
national security. In 2000, 60% of US study abroad students 
studied in Western Europe. Less than 2.9% studied in the Middle 
East (a mere 4,100 students, with 3,900 of these studying in 
Israel). 2.7% studied in Africa (3,900 students), and 6% in 
Asia (8,800, with 5,600 of these in China and Japan).
    Third, modern foreign language class registrations in US 
higher education are down from a high in 1965 of 16.5 foreign 
language class registrations per 100 overall class 
registrations to 7.9 registrations per 100 in 1998. Spanish 
accounts for 55% of foreign language registrations, while 
Arabic accounts for 0.5% (5,500 registrations), Chinese for 
2.4% (28,000), and Russian for 2% (24,000).
    Some promising trends nevertheless are apparent. The number 
of US students studying abroad doubled from 1994 to 2000, and a 
higher percentage are studying in non-European countries than 
in the past. Foreign language enrollments in universities grew 
by 5% in the late 1990s, and critical languages are seeing 
increases in enrollments. For example, Arabic language 
enrollments increased by 24% and Chinese by 8% in the late 
1990s. Preliminary statistics from the National Security 
Education Program (NSEP) indicate that post-September 11th 
undergraduate applications to the program are up more than 50% 
and graduate applications up by 33%. Moreover, among NSEP 
applicants, Arabic and Chinese show the largest rise in 
proposed languages for study among undergraduates, and almost 
one of four graduate applicants proposes to study in the Middle 
East.
    The US government needs to do all it can both to encourage 
foreign language and area expertise and to utilize this 
expertise in the service of national security and foreign 
policy. The NSEP uniquely facilitates these goals. The bill 
also supports developing additional foreign language and area 
expertise across the intelligence community. It adds funds 
within the intelligence community to improve language training, 
provide additional linguists, enhance incentive pay for 
language training, and support language-related advanced 
research and development. The bill also adds funds for 
curriculum development and infrastructure at the Defense 
Language Institute.

Section 310--Deadline for submittal of various overdue reports

    The Committee is increasingly concerned about the DCI's 
ability to properly facilitate congressional oversight 
activities. This community-wide reporting and coordination 
problem has been repeatedly identified to the Intelligence 
Community's leadership, yet little has been done to correct the 
IC's poor performance in fulfilling its responsibility to fully 
and currently inform the Congressional oversight committees.
    During the past year, various components of the 
Intelligence Community have not provided Congress with 
coordinated responses for numerous Congressionally Directed 
Actions (CDAs). Although the Committee understands the 
Intelligence Community's argument that wartime requirements 
have hampered its ability to respond to CDAs, such responses 
have not been limited to the period following the 11 September 
terrorist attacks. The Office of the DCI, the Community 
Management Staff (CMS), the CIA's Office of General Counsel 
(OGC), and the CIA's Office of Congressional Affairs (OCA) have 
been unable to fulfill the Intelligence Community's legally 
mandated CDA reporting requirements during the past year.
    The Committee recognizes there has been an increase in 
reporting requirements since 1990, and is willing to engage 
with the IC's leadership on the number and scope of CDAs once 
the Intelligence Committees have received the CDA reports that 
are required by law and overdue. Among the issues that should 
be discussed are: (1) consolidation of CDAs addressing related 
subject matter (for example, numerous CDAs cover China, 
proliferation, and terrorism); (2) repeal of outdated CDAs; (3) 
more realistic CDA deadlines; (4) replacing semiannual 
reporting deadlines with annual due dates; (5) annual 
sunsetting of CDAs in the intelligence authorization bill to 
ensure continuing Member interest in the subject matter; (6) 
greater programmatic and financial details in the annual 
Congressional Budget Justification Books (CBJB); and (7) 
submission of the Intelligence Community's annual legislative 
proposal in conjunction with the CBJBs in February of each 
year.
    To address these Intelligence Community-wide reporting and 
coordination deficiencies, the Committee recommends a fence of 
33% of available funds against each of the following offices 
six months after enactment of this legislation: (1) Office of 
the DCI; and (2) the Office of the Community Management Staff. 
The reports referred to in this section are reports mandated by 
law for which the DCI has sole or primary responsibility to 
prepare or coordinate and submit to Congress, which, as of the 
date of enactment, have not been submitted to Congress by the 
date mandated by law. The fences will be lifted when the DCI 
certifies in writing to the committees that all overdue reports 
specified in Section 310 are completed. The SSCI has also 
addressed this issue in substantial detail in its bill and has 
also made recommendations to force compliance with the CDA 
reporting requirements.

                 TITLE IV--CENTRAL INTELLIGENCE AGENCY

Section 401--Two-year extension of Central Intelligence Agency 
        Voluntary Separation Pay Act

    Section 401 extends the CIA Voluntary Separations Pay Act 
(VSPA) for two years, to September 30, 2005.
    CIA has used CIA VSPA authority over the past several years 
to restructure and ``re-skill'' its workforce to support the 
Strategic Direction that the DCI has outlined. The use of 
incentives, and early-outs, has contributed greatly to CIA 
efforts to re-tool the workforce for the challenges of the 21st 
century and is a critical tool in providing the DCI the 
flexibility to adapt the workforce as priorities change. The 
changes in the workforce required to support the DCI's 
direction have an impact on a number of areas within the CIA. 
Authority to offer separation incentives to targeted groups of 
employees, therefore, remains important to the success of CIA 
restructuring. Data from the CIA's exit survey indicate that 
the separation incentive pay has accelerated the departure of 
employees in targeted groups.
    Of continuing importance is the ability to redirect middle 
and senior level management positions in the Directorate of 
Intelligence and the Directorate of Science and Technology. 
Reductions in managerial ranks will make available positions 
for senior substantive experts in the analysis and technology 
fields. Separation incentive authority will substantially 
assist in achieving this transition without serious adverse 
impact on the managerial workforce.

Section 402--Prohibition on implementation of Intelligence Community 
        compensation reform plans

    CIA's proposed compensation reform proposal appears to be 
causing more anxiety in CIA's workforce than any other recent 
Agency administrative issue. Although the reform plans' authors 
have performed a useful service in identifying deficiencies of 
the GS system and proposing some much-needed solutions, there 
has been insufficient discussion and input on the compensation 
reform plan outside senior management circles. Rank and file 
employees are by no means convinced that a ``market-based'' 
compensation system is a perfect fit in an organization whose 
be-all and end-all is service to the American people, not 
profits for ``the firm'' or its individual employees.
    Reform is nevertheless overdue. The current pay system 
inadequately rewards its most skilled and productive members, 
inadequately motivates its least productive members, and 
encourages individuals with sorely needed special skills to 
take management positions, in order to advance in the ranks and 
increase their income. Skilled professionals are hard to find 
and make in any profession--especially in the arcane 
disciplines of the intelligence profession. Retention of 
skills, and skilled employees, can be improved by compensation 
reform. The Committee commends the compensation plan's authors 
for recognizing the skill retention problem and proposing a 
remedy. Like CIA, NSA's leadership has developed a 
somewhatsimilar compensation reform proposal and is moving toward full 
implementation of this approach.
    To give the CIA and NSA compensation reform projects more 
transparency and to ensure that there is full and informed 
participation by their respective workforces, the Committee 
prohibits the implementation of any compensation reform plan 
within the Intelligence Community until such plans have been 
specifically authorized by statute.

         TITLE V--DEPARTMENT OF DEFENSE INTELLIGENCE ACTIVITIES

Section 501--Use of funds for counter-drug and counter-terrorism 
        activities for Colombia

    Section 501 authorizes the use of funds designated for 
intelligence and intelligence-related purposes for assistance 
to the Government of Colombia for counter-drug activities for 
fiscal years 2002 and 2003 (and any unobligated funds 
designated for such purposes from prior years) to be utilized 
to support a unified campaign against narcotics trafficking and 
against activities by organizations designated as terrorist 
organizations (such as the Revolutionary Armed Forces of 
Colombia (FARC, the National Liberation Army (ELN), and the 
United Self Defense Forces of Colombia (AUC)), and to take 
actions to protect human health and welfare in emergency 
circumstances, including undertaking rescue actions.
    During the past year, Members of the Committee who have 
visited Colombia have become increasingly troubled that the 
effectiveness of U.S. policy in Colombia has been undermined by 
restrictions on what activities in the field are allowed under 
current law and policy. The Committee is concerned that the 
Intelligence Community lacks the necessary legal authority to 
prosecute the Global War On Terrorism against the FARC, the 
AUC, and the ELN in Colombia effectively and expeditiously. 
Just as the FARC, the AUC, and the ELN have improved their 
capabilities to conduct terrorist operations in Colombia and 
elsewhere in the Andean Region, the Intelligence Community 
needs to have additional tools and strategies to deal with this 
growing threat to our hemisphere's security. The Administration 
should give serious consideration to developing new policy 
guidance to reflect current conditions in Colombia, and should 
provide appropriate support to U.S. intelligence efforts in 
Colombia.
    Section 501 is intended to be consistent with similar 
language included in the FY 2002 Defense Department 
supplemental appropriations bill under consideration by the 
Congress to enhance the legal authorities of the Departments of 
State and Defense with respect to their activities in Colombia. 
This language is intended to similarly enhance the legal 
authorities needed by the Intelligence Community to 
appropriately support U.S. policy objectives in Colombia.

Section 502--Protection of operational files of the National 
        Reconnaissance Office

    Section 502 allows the Secretary of Defense, in 
coordination with the DCI, to exempt certain operational files 
of the National Reconnaissance Office (NRO) from search and 
review under the FOIA. The bill would allow exemptions for 
files concerning the activities of the NRO that document the 
means by which foreign intelligence or counterintelligence is 
collected through scientific and technical systems. This 
exemption would also require a decennial review under rules and 
procedures similar to those governing operational files of the 
CIA.

Section 503--Eligibility of employees in intelligence senior level 
        positions for Presidential Rank Awards

    Section 503 would make Intelligence Senior Level employees 
eligible for Presidential Rank Awards, as are senior career 
employees under section 4507a of title 5, United States Code.
    Section 4507 of title 5, United States Code, authorizes the 
President to award the rank of either Meritorious Executive or 
Distinguished Executive career appointee. Similarly, section 
1606 of title 10, United States Code, which provides for the 
establishment of a Defense Intelligence Senior Executive 
Service, authorizes the President to award these ranks to 
members of the Defense Intelligence Senior Executive Service. 
Such awards are an important means of recognizing sustained 
extraordinary accomplishment, and they represent a valuable 
management tool for motivating and recognizing truly 
exceptional performers among senior career employees.
    Public Law 107-67 makes senior career employees, including 
Senior Level employees, eligible for these rank awards. Given 
that Congress has extended eligibility to senior career 
employees, the same should be extended to Intelligence senior-
level employees and managers. This section makes Intelligence 
Senior Level employees and managers eligible for the 
Presidential Rank Awards, similar to that which was recently 
done for senior career employees.

              Committee Position and Recorded Votes Taken

    On May 15, 2002, in open session, a quorum being present, 
the Permanent Select Committee on Intelligence, by a recorded 
vote of 16 ayes to 0 noes, approved the bill, H.R. 4628, as 
amended. By that vote, the committee ordered the bill reported 
favorably to the House. On that vote, the Members present 
recorded their votes as follows: Mr. Goss (Chairman)--aye; Mr. 
Bereuter--aye; Mr. Castle--aye; Mr. Boehlert--aye; Mr. 
Gibbons--aye; Mr. LaHood--aye; Mr. Hoekstra--aye; Mr. Burr--
aye; Mr. Chambliss--aye; Ms. Pelosi--aye; Mr. Bishop--aye; Ms. 
Harman--aye; Mr. Condit--aye; Mr. Roemer--aye; Mr. Reyes--aye; 
Mr. Boswell--aye.

   Findings and Recommendations of the Committee on Government Reform

    With respect to clause 3(c)(4) of rule XIII of the House of 
Representatives, the committee is not subject to this 
requirement; therefore, the committee has not received a report 
from the Committee on Government Reform pertaining to the 
subject of this bill.

                           Oversight Findings

    With respect to clause 3(c)(1) of rule XIII of the Rules of 
the House of Representatives, the committee held various 
hearings and numerous briefings on the classified budgetary 
issues raised by H.R. 4628. Testimony was taken from senior 
officials of the Central Intelligence Agency, the National 
Security Agency, the Defense Intelligence Agency, the Federal 
Bureau of Investigation, the National Reconnaissance Office, 
the National Imagery and Mapping Agency, the Department of 
Defense, the Department of State, the Department of Treasury, 
the Department of Justice, and the Department of Transportation 
regarding 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 2003. The bill, as reported by the 
committee, reflects conclusions reached by the committee in 
light of this oversight activity.

                      Fiscal Year Cost Projections

    The committee has attempted, pursuant to clause 3(d)(2) of 
rule XIII of the Rules of the House of Representatives, to 
ascertain the outlays that will occur in fiscal year 2003 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

                          House of Representatives,
                Permanent Select Committee on Intelligence,
                                      Washington, DC, May 16, 2002.
Mr. Dan L. Crippen,
Director, Congressional Budget Office,
Washington, DC.
    Dear Mr. Crippen: In compliance with the Rules of the House 
of Representatives, I am writing to request a cost estimate of 
H.R. 4628, the ``Intelligence Authorization Act for Fiscal Year 
2003,'' pursuant to sections 308 and 403 of the Congressional 
Budget Act of 1974. I have attached a copy of the bill as 
approved by the House Permanent Select Committee on 
Intelligence on April 15, 2002.
    As I hope to bring this legislation to the House floor in 
the very near term, I would very much appreciate an expedited 
response to this request by the CBO's staff. Should you have 
any questions related to this request, please contact 
Christopher Barton, the Committee's Chief Counsel. Thank you in 
advance for your assistance with this request.
            Sincerely,
                                            Porter J. Goss,
                                                          Chairman.
    Attachment.
                                ------                                

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 20, 2002.
Hon. Porter J. Goss,
Chairman, Permanent Select Committee on Intelligence,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: As you requested, the Congressional 
Budget Office has prepared the enclosed cost estimate for H.R. 
4628, the Intelligence Authorization Act for Fiscal Year 2003.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Matthew 
Schmit.
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

H.R. 4628--Intelligence Authorization Act for Fiscal Year 2003

    Summary: H.R. 4628 would authorize appropriations for 
fiscal year 2003 for intelligence activities of the United 
States government, the Intelligence 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 
implementing certain provisions of the bill would cost $221 
million over the 2003-2007 period, assuming appropriation of 
the necessary funds. CBO cannot estimate the direct spending 
effects of H.R. 4628 because the data necessary for an estimate 
are classified.
    H.R. 4628 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 4628 is shown in the following table. 
CBO cannot 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. For purposes of 
this estimate, CBO assumes that the bill will be enacted by 
October 1, 2002, and that the necessary amounts will be 
appropriated for fiscal year 2003. Estimated outlays are based 
on historical spending patterns. The costs of this legislation 
fall within budget function 050 (national defense).

                            ESTIMATED SPENDING SUBJECT TO APPROPRIATION FOR H.R. 4628
----------------------------------------------------------------------------------------------------------------
                                                                  By fiscal year, in millions of dollars--
                                                           -----------------------------------------------------
                                                              2002     2003     2004     2005     2006     2007
----------------------------------------------------------------------------------------------------------------
                                    INTELLIGENCE COMMUNITY MANAGEMENT ACCOUNT

Spending Under Current Law for the Intelligence:
Community Management Account:
    Budget Authority \1\..................................      161        0        0        0        0        0
    Estimated Outlays.....................................      166       63       14        2        0        0
Proposed Changes:
    Authorization Level...................................        0      176        0        0        0        0
    Estimated Outlays.....................................        0      110       53        9        3        0
Spending Under H.R. 4628 for the Intelligence:
Community Management Account:
    Authorization Level \1\...............................      161      176        0        0        0        0
    Estimated Outlays.....................................      166      173       67       11        3        0

                                     NATIONAL SECURITY EDUCATION TRUST FUND

Spending Under Current Law for the National:
Security Education Trust Fund:
    Budget Authority \2\..................................        8        8        8        8        9        9
    Estimated Outlays.....................................        8        8        8        8        9        9
Proposed Changes:
    Authorization Level...................................        0       10       10       10       10       10
    Estimated Outlays.....................................        0        6       10       10       10       10
Spending Under H.R. 4628 for the National:
Security Education Trust Fund:
    Estimated Authorization Level \2\.....................        8       18       18       18       19       19
    Estimated Outlays.....................................        8       14       18       18       19       19

                           SUMMARY OF CHANGES IN SPENDING SUBJECT TO APPROPRIATION \3\

    Authorization Level \1\...............................        0      186       10       10       10       10
    Estimated Outlays.....................................        0      116       63       19       13       10
----------------------------------------------------------------------------------------------------------------
\1\ The 2002 level is the amount appropriated for that year.
\2\ The 2002 level is the amount appropriated for that year. The current law amounts for the 2003-2007 period
  assume appropriations remain at the 2002 level with adjustments for inflation.
\3\ In addition to effects on spending subject to appropriation, H.R. 4628 would affect direct spending.
  However, CBO cannot estimate the total direct spending effects because the necessary data are classified.

    Spending subject to appropriation: H.R. 4628 would 
authorize appropriations of $176 million for the Intelligence 
Community Management Account, which funds the coordination of 
programs, budget oversight, and management of the intelligence 
agencies. The bill also would earmark $34 million for the 
National Drug Intelligence Center from the funds authorized for 
the Intelligence Community Management Account. Finally, H.R. 
4628 would authorize an additional $10 million a year beginning 
in 2003 for the National Security Education Trust Fund. These 
funds would be used to carry out the National Flagship Language 
Initiative, which would be established under section 309 of the 
bill to improve higher education in foreign languages that the 
Secretary of Defense identifies as most critical to the 
interests of the national security of the United States.
    Direct spending and revenues: The bill would authorize $351 
million for CIARDS to cover retirement costs attributable to 
military service and various unfunded liabilities. The payment 
to CIARDS is considered mandatory. The CBO budget baseline 
currently includes only $223 million for these payments. The 
additional $128 million authorized in this bill would be used 
to implement an Administration proposal that federal agencies 
pay the full cost of benefits for their employees as such 
benefits accrue. That change would depend on the enactment of 
other legislation. The additional $128 million would be an 
intergovernmental transfer and would have no effect on the 
budget.
    Section 401 would extend the authority of the CIA to offer 
incentive payments to employees who voluntarily retire or 
resign. The authority, which will expire on September 30, 2003, 
would be extended through fiscal year 2005. Section 401 also 
would require the CIA to make a deposit to the Civil Service 
Retirement and Disability Fund equal to 15 percent of final pay 
for each employee who accepts an incentive payment. Although 
the timing of agency payments and the additional benefit 
payments would not match on a yearly basis, CBO believes that 
these deposits would be sufficient to cover the cost of any 
long-term increase in benefits that would result from induced 
retirements. CBO cannot provide a precise estimate of the 
direct spending effects because the data necessary for an 
estimate are classified.
    Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act set up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. CBO 
cannot estimate the precise direct spending effects of section 
401 because the necessary data are classified.
    Intergovernmental and private-sector impact: H.R. 4628 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments.
    Previous CBO estimates: On May 16, 2002, CBO transmitted a 
cost estimate for the unclassified portion of S. 2506, the 
Intelligence Authorization Act for Fiscal Year 2003, as 
reported by the Senate Select Committee on Intelligence on May 
13, 2002. The differences in the estimated costs reflect 
differences in the bills. In particular, H.R. 4628 would 
authorize $176 million for the Intelligence Community 
Management Account, while S. 2506 would authorize $158 million 
for that account. H.R. 4628 would also authorize $10 million a 
year for the National Flagship Language Initiative. In 
addition, H.R. 4628 would authorize $351 million for CIARDS, 
while S. 2506 would authorize only $223 million for the 
account. The additional $128 million authorized for CIARDS by 
H.R. 4628 would be used to implement an administration proposal 
that federal agencies pay the full cost of benefits for their 
employees as such benefits accrue.
    Estimate prepared by: Federal costs: Matthew Schmit; impact 
on state, local, and tribal governments: Elyse Goldman; impact 
on the private sector: Zachary Seldon.
    Estimate approved by: Robert A. Sunshine, Assistant 
Director for Budget Analysis.
                                ------                                

                       Committee on Armed Services,
                                  House of Representatives,
                                     Washington, DC, July 18, 2002.
Hon. Porter J. Goss,
Chairman, Permanent Select Committee on Intelligence,
House of Representatives.
    Dear Mr. Chairman: I understand the Permanent Select 
Committee on Intelligence has recently ordered reported H.R. 
4628, the Intelligence Authorization Act for Fiscal Year 2003. 
The bill addresses subject matter that falls within the 
legislative jurisdiction of the Committee on Armed Services 
pursuant to House Rule X.
    In recognition of your committee's desire to bring this 
legislation expeditiously before the House of Representatives, 
the Committee on Armed Services will forego a request for 
sequential referral of the bill. This action in no way alters 
the Committee on Armed Services' jurisdiction over the 
provisions in question, and the committee will seek the 
appointment of conferees during any conference on the bill.
    Thank you for your continued assistance in working through 
the many issues of shared jurisdiction and interest, and I look 
forward to supporting H.R. 4628 on the House floor.
            Sincerely,
                                                 Bob Stump,
                                                          Chairman.

                        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 Forces, and to 
support and assist the armed forces of the United States, and 
to support the President in execution of the foreign policy of 
the United States. Article 1, 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 defense 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 extinction * * * 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(e) 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):

                     NATIONAL SECURITY ACT OF 1947

           *       *       *       *       *       *       *



                              SHORT TITLE

  That this Act may be cited as the ``National Security Act of 
1947''.

                            TABLE OF CONTENTS

Sec. 2. Declaration of policy.
     * * * * * * *

               Title I--Coordination for National Security

Sec. 101. National Security Council.
     * * * * * * *
Sec. 105D. Protection of operational files of the National 
          Reconnaissance Office.
     * * * * * * *
Sec. 118. Semiannual report on financial intelligence on terrorist 
          assets.
     * * * * * * *

              TITLE I--COORDINATION FOR NATIONAL SECURITY

           *       *       *       *       *       *       *


 PROTECTION OF OPERATIONAL FILES OF THE NATIONAL RECONNAISSANCE OFFICE

  Sec. 105D. (a) Exemption of Certain Operational Files From 
Search, Review, Publication, or Disclosure.--(1) The Director 
of the National Reconnaissance Office, with the coordination of 
the Director of Central Intelligence, may exempt operational 
files of the National Reconnaissance Office from the provisions 
of section 552 of title 5, United States Code, which require 
publication, disclosure, search, or review in connection 
therewith.
  (2)(A) Subject to subparagraph (B), for the purposes of this 
section, the term ``operational files'' means files of the 
National Reconnaissance Office (hereafter in this section 
referred to as ``NRO'') that document the means by which 
foreign intelligence or counterintelligence is collected 
through scientific and technical systems.
  (B) Files which are the sole repository of disseminated 
intelligence are not operational files.
  (3) Notwithstanding paragraph (1), exempted operational files 
shall continue to be subject to search and review for 
information concerning--
          (A) United States citizens or aliens lawfully 
        admitted for permanent residence who have requested 
        information on themselves pursuant to the provisions of 
        section 552 or 552a of title 5, United States Code;
          (B) any special activity the existence of which is 
        not exempt from disclosure under the provisions of 
        section 552 of title 5, United States Code; or
          (C) the specific subject matter of an investigation 
        by any of the following for any impropriety, or 
        violation of law, Executive order, or Presidential 
        directive, in the conduct of an intelligence activity:
                  (i) The Permanent Select Committee on 
                Intelligence of the House of Representatives.
                  (ii) The Select Committee on Intelligence of 
                the Senate.
                  (iii) The Intelligence Oversight Board.
                  (iv) The Department of Justice.
                  (v) The Office of General Counsel of NRO.
                  (vi) The Office of the Director of NRO.
  (4)(A) Files that are not exempted under paragraph (1) which 
contain information derived or disseminated from exempted 
operational files shall be subject to search and review.
  (B) The inclusion of information from exempted operational 
files in files that are not exempted under paragraph (1) shall 
not affect the exemption under paragraph (1) of the originating 
operational files from search, review, publication, or 
disclosure.
  (C) The declassification of some of the information contained 
in exempted operational files shall not affect the status of 
the operational file as being exempt from search, review, 
publication, or disclosure.
  (D) Records from exempted operational files which have been 
disseminated to and referenced in files that are not exempted 
under paragraph (1) and which have been returned to exempted 
operational files for sole retention shall be subject to search 
and review.
  (5) The provisions of paragraph (1) may not be superseded 
except by a provision of law which is enacted after the date of 
the enactment of this section, and which specifically cites and 
repeals or modifies its provisions.
  (6)(A) Except as provided in subparagraph (B), whenever any 
person who has requested agency records under section 552 of 
title 5, United States Code, alleges that NRO has withheld 
records improperly because of failure to comply with any 
provision of this section, judicial review shall be available 
under the terms set forth in section 552(a)(4)(B) of title 5, 
United States Code.
  (B) Judicial review shall not be available in the manner 
provided for under subparagraph (A) as follows:
          (i) In any case in which information specifically 
        authorized under criteria established by an Executive 
        order to be kept secret in the interests of national 
        defense or foreign relations is filed with, or produced 
        for, the court by NRO, such information shall be 
        examined ex parte, in camera by the court.
          (ii) The court shall, to the fullest extent 
        practicable, determine the issues of fact based on 
        sworn written submissions of the parties.
          (iii) When a complainant alleges that requested 
        records are improperly withheld because of improper 
        placement solely in exempted operational files, the 
        complainant shall support such allegation with a sworn 
        written submission based upon personal knowledge or 
        otherwise admissible evidence.
          (iv)(I) When a complainant alleges that requested 
        records were improperly withheld because of improper 
        exemption of operational files, NRO shall meet its 
        burden under section 552(a)(4)(B) of title 5, United 
        States Code, by demonstrating to the court by sworn 
        written submission that exempted operational files 
        likely to contain responsible records currently perform 
        the functions set forth in paragraph (2).
          (II) The court may not order NRO to review the 
        content of any exempted operational file or files in 
        order to make the demonstration required under 
        subclause (I), unless the complainant disputes NRO's 
        showing with a sworn written submission based on 
        personal knowledge or otherwise admissible evidence.
          (v) In proceedings under clauses (iii) and (iv), the 
        parties may not obtain discovery pursuant to rules 26 
        through 36 of the Federal Rules of Civil Procedure, 
        except that requests for admissions may be made 
        pursuant to rules 26 and 36.
          (vi) If the court finds under this paragraph that NRO 
        has improperly withheld requested records because of 
        failure to comply with any provision of this 
        subsection, the court shall order NRO to search and 
        review the appropriate exempted operational file or 
        files for the requested records and make such records, 
        or portions thereof, available in accordance with the 
        provisions of section 552 of title 5, United States 
        Code, and such order shall be the exclusive remedy for 
        failure to comply with this subsection.
          (vii) If at any time following the filing of a 
        complaint pursuant to this paragraph NRO agrees to 
        search the appropriate exempted operational file or 
        files for the requested records, the court shall 
        dismiss the claim based upon such complaint.
          (viii) Any information filed with, or produced for 
        the court pursuant to clauses (i) and (iv) shall be 
        coordinated with the Director of Central Intelligence 
        prior to submission to the court.
  (b) Decennial Review of Exempted Operational Files.--(1) Not 
less than once every 10 years, the Director of the National 
Reconnaissance Office and the Director of Central Intelligence 
shall review the exemptions in force under subsection (a)(1) to 
determine whether such exemptions may be removed from the 
category of exempted files or any portion thereof. The Director 
of Central Intelligence must approve any determination to 
remove such exemptions.
  (2) The review required by paragraph (1) shall include 
consideration of the historical value or other public interest 
in the subject matter of the particular category of files or 
portions thereof and the potential for declassifying a 
significant part of the information contained therein.
  (3) A complainant that alleges that NRO has improperly 
withheld records because of failure to comply with this 
subsection may seek judicial review in the district court of 
the United States of the district in which any of the parties 
reside, or in the District of Columbia. In such a proceeding, 
the court's review shall be limited to determining the 
following:
          (A) Whether NRO has conducted the review required by 
        paragraph (1) before the expiration of the 10-year 
        period beginning on the date of the enactment of this 
        section or before the expiration of the 10-year period 
        beginning on the date of the most recent review.
          (B) Whether NRO, in fact, considered the criteria set 
        forth in paragraph (2) in conducting the required 
        review.

           *       *       *       *       *       *       *


    SEMIANNUAL REPORT ON FINANCIAL INTELLIGENCE ON TERRORIST ASSETS

  Sec. 118. (a) Semiannual Report.--On a semiannual basis, the 
Secretary of the Treasury (acting through the head of the 
Office of Intelligence Support) shall submit a report to the 
appropriate congressional committees (as defined in subsection 
(c)) that fully informs the committees concerning operations 
against terrorist financial networks. Each such report shall 
include with respect to the preceding six-month period--
          (1) the total number of asset seizures, designations, 
        and other actions against individuals or entities found 
        to have engaged in financial support of terrorism;
          (2) the total number of applications for asset 
        seizure and designations of individuals or entities 
        suspected of having engaged in financial support of 
        terrorist activities, that were granted, modified, or 
        denied;
          (3) the total number of physical searches of offices, 
        residences, or financial records of individuals or 
        entities suspected of having engaged in financial 
        support for terrorist activity; and
          (4) whether the financial intelligence information 
        seized in these cases has been shared on a full and 
        timely basis with the all departments, agencies, and 
        other entities of the United States Government involved 
        in intelligence activities participating in the Foreign 
        Terrorist Asset Tracking Unit (managed and coordinated 
        by the Counterterrorism Center of the Central 
        Intelligence Agency).
  (b) Immediate Notification for Emergency Designation.--In the 
case of a designation of an individual or entity, or the assets 
of an individual or entity, as having been found to have 
engaged in terrorist activities, the Secretary of the Treasury 
shall report such designation within 24 hours of such a 
designation to the appropriate congressional committees.
  (c) Definition.--In this section, the term ``appropriate 
congressional committees'' means the following:
          (1) The Permanent Select Committee on Intelligence, 
        the Committee on Appropriations, and the Committee on 
        Financial Services of the House of Representatives.
          (2) The Select Committee on Intelligence, the 
        Committee on Appropriations, and the Committee on 
        Banking, Housing, and Urban Affairs of the Senate.

           *       *       *       *       *       *       *


          TITLE V--ACCOUNTABILITY FOR INTELLIGENCE ACTIVITIES

               GENERAL CONGRESSIONAL OVERSIGHT PROVISIONS

  Sec. 501. (a) * * *

           *       *       *       *       *       *       *

  (f) As used in this section, the term ``intelligence 
activities'' includes covert actions as defined in section 
503(e), and includes financial intelligence activities.

           *       *       *       *       *       *       *

                              ----------                              


                      TITLE 5, UNITED STATES CODE

           *       *       *       *       *       *       *


                     PART I--THE AGENCIES GENERALLY

           *       *       *       *       *       *       *


                   CHAPTER 5--ADMINISTRATIVE PROCEDURE

           *       *       *       *       *       *       *


                SUBCHAPTER II--ADMINISTRATIVE PROCEDURE

           *       *       *       *       *       *       *


Sec. 552. Public information; agency rules, opinions, orders, records, 
                    and proceedings

  (a) Each agency shall make available to the public 
information as follows:
  (1) * * *

           *       *       *       *       *       *       *

  (3)(A) Except with respect to the records made available 
under paragraphs (1) and (2) of this subsection, and except as 
provided in subparagraph (E), each agency, upon any request for 
records which (i) reasonably describes such records and (ii) is 
made in accordance with published rules stating the time, 
place, fees (if any), and procedures to be followed, shall make 
the records promptly available to any person.

           *       *       *       *       *       *       *

  (E) An agency, or part of an agency, that is an element of 
the intelligence community (as that term is defined in section 
3(4) of the National Security Act of 1947 (50 U.S.C. 401a(4))) 
shall not make any record available under this paragraph to--
          (i) any government entity, other than a State, 
        territory, commonwealth, or district of the United 
        States, or any subdivision thereof; or
          (ii) a representative of a government entity 
        described in clause (i).

           *       *       *       *       *       *       *


                          PART III--EMPLOYEES

           *       *       *       *       *       *       *


                    Subpart E--Attendance and Leave

           *       *       *       *       *       *       *


                           CHAPTER 63--LEAVE

           *       *       *       *       *       *       *


              SUBCHAPTER III--VOLUNTARY TRANSFERS OF LEAVE

           *       *       *       *       *       *       *


Sec. 6339. Additional leave transfer programs

  (a) * * *

           *       *       *       *       *       *       *

  [(b) Notwithstanding any other provision of this subchapter, 
neither an excepted agency nor any individual employed in or 
under an excepted agency may be included in a leave transfer 
program established under any of the preceding provisions of 
this subchapter.]
  [(c)] (b)(1) * * *
  (2) To the extent practicable, and consistent with the 
protection of intelligence sources and methods (if applicable), 
each program [under this section] under this subsection shall 
be established--
          (A) * * *

           *       *       *       *       *       *       *

  (c)(1) Notwithstanding any provision of subsection (b), the 
head of an excepted agency may, at his sole discretion, by 
regulation establish a program under which an individual 
employed in or under such excepted agency may participate in a 
leave transfer program established under the provisions of this 
subchapter outside of this section, including provisions 
permitting the transfer of annual leave accrued or accumulated 
by such employee to, or permitting such employee to receive 
transferred leave from, an employee of any other agency 
(including another excepted agency having a program under this 
subsection).
  (2) To the extent practicable and consistent with the 
protection of intelligence sources and methods, any program 
established under paragraph (1) shall be consistent with the 
provisions of this subchapter outside of this section and with 
any regulations issued by the Office of Personnel Management 
implementing this subchapter.
  (d) The Office [of Personnel Management] shall provide the 
head of an excepted agency with such advice and assistance as 
the head of such agency may request in order to carry out the 
purposes of this section.

           *       *       *       *       *       *       *

                              ----------                              


 SECTION 311 OF THE INTELLIGENCE AUTHORIZATION ACT FOR FISCAL YEAR 2002

SEC. 311. [ONE-YEAR] TWO-YEAR SUSPENSION OF REORGANIZATION OF 
                    DIPLOMATIC TELECOMMUNICATIONS SERVICE PROGRAM 
                    OFFICE.

  Notwithstanding any provision of subtitle B of title III of 
the Intelligence Authorization Act for Fiscal Year 2001 (Public 
Law 106-567; 114 Stat. 2843; 22 U.S.C. 7301 et seq.), relating 
to the reorganization of the Diplomatic Telecommunications 
Service Program Office, no provision of that subtitle shall be 
effective during the period beginning on the date of the 
enactment of this Act and ending on October 1, [2002] 2003.

           *       *       *       *       *       *       *

                              ----------                              


        DAVID L. BOREN NATIONAL SECURITY EDUCATION ACT OF 1991

           *       *       *       *       *       *       *


SEC. 802. SCHOLARSHIP, FELLOWSHIP, AND GRANT PROGRAM.

  (a) Program Required.--
          (1) In general.--The Secretary of Defense shall carry 
        out a program for--
                  (A) * * *
                  (B) awarding fellowships to graduate students 
                who--
                          (i) * * *
                          (ii) pursuant to subsection 
                        (b)(2)(B), enter into an agreement to 
                        work in a national security position or 
                        work in the field of education in the 
                        area of study for which the fellowship 
                        was awarded; [and]
                  (C) awarding grants to institutions of higher 
                education to enable such institutions to 
                establish, operate, or improve programs in 
                foreign languages, area studies, 
                counterproliferation studies, and other 
                international fields that are critical areas of 
                those disciplines (as determined under section 
                803(d)(4)(C))[.]; and
                  (D) awarding grants to institutions of higher 
                education to carry out a National Flagship 
                Language Initiative (described in subsection 
                (i)).
          (2) Funding allocations.--Of the amount available for 
        obligation out of the National Security Education Trust 
        Fund for any fiscal year for the purposes stated in 
        paragraph (1), the Secretary shall have a goal of 
        allocating--
                  (A) * * *

           *       *       *       *       *       *       *

        The funding allocation under this paragraph shall not 
        apply to grants under paragraph (1)(D) for the National 
        Flagship Language Initiative described in subsection 
        (i). For the authorization of appropriations for the 
        National Flagship Language Initiative, see section 811.

           *       *       *       *       *       *       *

  (h) Use of Awards To Attend the Foreign Language Center of 
the Defense Language Institute.--(1) The Secretary shall 
provide for the admission of award recipients to the Foreign 
Language Center of the Defense Language Institute (hereinafter 
in this subsection referred to as the ``Center''). An award 
recipient may apply a portion of the applicable scholarship or 
fellowship award for instruction at the Center on a space-
available basis as a Department of Defense sponsored program to 
defray the additive instructional costs.
  (2) Except as the Secretary determines necessary, an award 
recipient who receives instruction at the Center shall be 
subject to the same regulations with respect to attendance, 
discipline, discharge, and dismissal as apply to other persons 
attending the Center.
  (3) In this subsection, the term ``award recipient'' means an 
undergraduate student who has been awarded a scholarship under 
subsection (a)(1)(A) or a graduate student who has been a 
fellowship under subsection (a)(1)(B) who--
          (A) is in good standing;
          (B) has completed all academic study in a foreign 
        country, as provided for under the scholarship or 
        fellowship; and
          (C) would benefit from instruction provided at the 
        Center.
  (i) National Flagship Language Initiative.--(1) Under the 
National Flagship Language Initiative, institutions of higher 
learning shall establish, operate, or improve activities 
designed to train students in programs in a range of 
disciplines to achieve advanced levels of proficiency in those 
foreign languages that the Secretary identifies as being the 
most critical in the interests of the national security of the 
United States.
  (2) An undergraduate student who has been awarded a 
scholarship under subsection (a)(1)(A) or a graduate student 
who has been awarded a fellowship under subsection (a)(1)(B) 
may participate in the activities carried out under the 
National Flagship Language Initiative.
  (3) An institution of higher education that receives a grant 
pursuant to subsection (a)(1)(D) shall give special 
consideration to applicants who are employees of the Federal 
Government.
  (4) For purposes of this subsection, the Foreign Language 
Center of the Defense Language Institute and any other 
educational institution that provides training in foreign 
languages operated by the Department of Defense or an agency in 
the intelligence community is deemed to be an institution of 
higher education, and may carry out the types of activities 
permitted under the National Flagship Language Initiative.

SEC. 803. NATIONAL SECURITY EDUCATION BOARD.

  (a) * * *

           *       *       *       *       *       *       *

  (d) Functions.--The Board shall perform the following 
functions:
          (1) * * *

           *       *       *       *       *       *       *

          (4) After taking into account the annual analyses of 
        trends in language, international, area, and 
        counterproliferation studies under section 806(b)(1), 
        make recommendations to the Secretary regarding--
                  (A) * * *

           *       *       *       *       *       *       *

                  (C) which areas within the disciplines 
                described in section 802(a)(1)(C) are areas in 
                which United States students, educators, and 
                Government employees are deficient in learning 
                and in which insubstantial numbers of United 
                States institutions of higher education provide 
                training and are, therefore, critical areas 
                within those disciplines for the purposes of 
                that section; [and]
                  (D) how students desiring scholarships or 
                fellowships can be encouraged to work for an 
                agency or office of the Federal Government 
                involved in national security affairs or 
                national security policy upon completion of 
                their education[.]; and
                  (E) which foreign languages are critical to 
                the national security interests of the United 
                States for purposes of section 802(a)(1)(D) 
                (relating to grants for the National Flagship 
                Language Initiative).

           *       *       *       *       *       *       *


SEC. 811. ADDITIONAL ANNUAL AUTHORIZATION OF APPROPRIATIONS.

  (a) In General.--In addition to amounts that may be made 
available to the Secretary under the National Security 
Education Trust Fund (under section 804 of this Act) for a 
fiscal year, there is authorized to be appropriated to the 
Secretary for each fiscal year, beginning with fiscal year 
2003, $10,000,000, to carry out the grant program for the 
National Flagship Language Initiative under section 
802(a)(1)(D).
  (b) Availability of Appropriated Funds.--Amounts appropriated 
pursuant to the authorization under subsection (a) shall remain 
available until expended.
                              ----------                              


 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, 
[2003] 2005.

           *       *       *       *       *       *       *

  (i) Remittance of Funds.--The Director shall remit to the 
Office of Personnel Management for deposit in the Treasury of 
the United States to the credit of the Civil Service Retirement 
and Disability Fund (in addition to any other payments which 
the Director is required to make under subchapter III of 
chapter 83 and subchapter II of chapter 84 of title 5, United 
States Code), an amount equal to 15 percent of the final basic 
pay of each employee who, in fiscal year 1998, 1999, 2000, 
2001, 2002, [or 2003] 2003, 2004, or 2005, retires voluntarily 
under section 8336, 8412, or 8414 of such title or resigns and 
to whom a voluntary separation incentive payment has been or is 
to be paid under this section. The remittance required by this 
subsection shall be in lieu of any remittance required by 
section 4(a) of the Federal Workforce Restructuring Act of 1994 
(5 U.S.C. 8331 note).

           *       *       *       *       *       *       *

                              ----------                              


              SECTION 1607 OF TITLE 10, UNITED STATES CODE

Sec. 1607. Intelligence Senior Level positions

  (a) * * *

           *       *       *       *       *       *       *

  (c) Award of Rank to Employees in Intelligence Senior Level 
Positions.--The President, based on the recommendations of the 
Secretary of Defense, may award a rank referred to in section 
4507a of title 5 to employees in Intelligence Senior Level 
positions designated under subsection (a). The award of such 
rank shall be made in a manner consistent with the provisions 
of that section.

                                  
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