[Senate Report 107-149]
[From the U.S. Government Publishing Office]


107th Congress      }                                  {        Report
                                 SENATE
 2d Session         }                                  {       107-149

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



 
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

                                _______
                                

     May 13 (legislative day, May 9), 2002.--Ordered to be printed

                                _______
                                

 Mr. Graham, from the Select Committee on Intelligence, submitted the 
                               following

                              R E P O R T

                         [To accompany S. 2506]

    The Select Committee on Intelligence (SSCI or Committee), 
having considered an original bill (S. 2506), 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, reports favorably thereon and recommends that 
the bill pass.

                                CONTENTS

                                                                   Page
Purpose of the Bill..............................................     2
Classified Supplement to the Committee Report....................     3
Scope of Committee Review........................................     4
Committee Action on the Fiscal Year 2003 Intelligence Budget.....     4
Congress and the Intelligence Community
    Clarification of Intelligence Community Reporting 
      Requirements...............................................     6
    Specificity of National Foreign Intelligence Budget Amounts 
      for Counterterrorism, Counterproliferation, 
      Counternarcotics and Counterintelligence...................     8
    Modification of Authority to Make Funds for Intelligence 
      Activities Available for other Intelligence Activities.....     8
    Presidential Determinations to Limit Access to Reporting of 
      Covert Actions.............................................     9
    Effective Provision of Intelligence to, and Use by, Congress.    10
    Clarification of Authority of Intelligence Community to 
      Furnish Information on Intelligence Activities to Congress.    10
Intelligence Community Personnel
    Standards and Qualifications for the Performance of 
      Intelligence Activities....................................    11
    Military Support to the National Foreign Intelligence Program    12
    David L. Boren National Security Education Program...........    13
    Scholarships and Work-Study for Pursuit of Graduate Degrees 
      in Science and Technology..................................    16
Intelligence Collection, Analysis and Dissemination
    Establishment of the National Commission for the Review of 
      the Research and Development Programs of the U.S. 
      Intelligence Community.....................................    17
    National Virtual Translation Center..........................    18
    Foreign Terrorist Asset Tracking Center......................    18
    Terrorist Identification Classification System...............    19
    Counterdrug..................................................    20
    National Imagery and Mapping Agency Support to Homeland 
      Security...................................................    21
    Annual Report on Foreign Companies Involved in the 
      Proliferation of Weapons of Mass Destruction that Raise 
      Funds in the United States Capital Markets.................    21
Counterintelligence
    FBI Implementation of Webster Commission Report 
      Recommendations............................................    22
    FBI Counterintelligence and Counterterrorism Training and 
      Analysis...................................................    22
    The National Counterintelligence Executive...................    23
    Counterintelligence at the Department of Energy and the 
      National Nuclear Security Administration...................    24
Intelligence Community Financial Management, Planning, and 
  Performance
    Intelligence Community Compliance with Federal Financial 
      Accounting Standards.......................................    25
    Strategic and Performance Planning for the Intelligence 
      Community..................................................    28
Section-by-Section Analysis and Discussion.......................    28
Committee Action.................................................    35
Estimate of Costs................................................    35
Evaluation of Regulatory Impact..................................    35
Changes in Existing Law..........................................    35

                          PURPOSE OF THE BILL

    This bill will:
          (1) Authorize appropriations for fiscal year 2003 for 
        (a) U.S. intelligence activities and programs; (b) the 
        Community Management Account of the Director of Central 
        Intelligence; and (c) the Central Intelligence Agency 
        Retirement and Disability System;
          (2) Authorize the personnel ceilings as of September 
        30, 2003, for intelligence activities of the U.S. 
        Government and for the Community Management Account of 
        the Director of Central Intelligence;
          (3) Authorize the Director of Central Intelligence, 
        with Office of Management and Budget approval, to 
        exceed the personnel ceilings by up to two percent;
          (4) Amend the National Security Act to define the 
        intelligence committees of Congress;
          (5) Require that the National Foreign Intelligence 
        Program budget submission specify the amounts 
        attributable to counterterrorism, counterproliferation, 
        counternarcotics and counterintelligence;
          (6) Modify the legal authority to reprogram funds 
        from one intelligence activity to another;
          (7) Clarify that there are no statutory impediments 
        to the provision of information by the Director of 
        Central Intelligence to the congressional intelligence 
        committees;
          (8) Require the Director of Central Intelligence to 
        establish a standard method for transliteration;
          (9) Require the Director of Central Intelligence to 
        establish standards and qualifications for persons 
        performing intelligence functions;
          (10) Modify the David L. Boren National Security 
        Education Program;
          (11) Establish scholarships and work-study 
        opportunities for persons studying in the fields of 
        science and technology;
          (12) Establish the National Virtual Translation 
        Center;
          (13) Establish within the Central Intelligence Agency 
        the Foreign Terrorist Asset Tracking Center;
          (14) Require the Director of Central Intelligence to 
        develop and provide to the Intelligence Community and 
        appropriate federal, state and local officials a list 
        of known or suspected international terrorists and 
        international terrorist organizations;
          (15) Require an annual report on foreign companies 
        involved in the proliferation of weapons of mass 
        destruction that raise funds in the United States 
        capital markets;
          (16) Extend for two years the Central Intelligence 
        Agency Voluntary Separation Pay Act;
          (17) Suspend for an additional year the 
        reorganization of the Diplomatic Telecommunications 
        Service Program Office;
          (18) Identify recurring reports due to the 
        congressional intelligence committees, establish 
        uniform due dates for reports, provide for extensions 
        of due dates under certain circumstances, and repeal 
        certain requirements for reports;
          (19) Establish the Office of the National 
        Counterintelligence Executive in the Executive Office 
        of the President;
          (20) Establish the National Commission for Review of 
        Research and Development Programs of the United States 
        Intelligence Community.

             CLASSIFIED SUPPLEMENT TO THE COMMITTEE REPORT

    The classified nature of United States intelligence 
activities prevents the Committee from disclosing the details 
of its budgetary recommendations in this Report. The Committee 
has prepared a classified supplement to this Report which 
contains (a) the Classified Annex to this Report and (b) the 
classified Schedule of Authorizations which is incorporated by 
reference in the Act and has the same legal status as public 
law. The Classified Annex to this report explains the full 
scope and intent of the Committee's action as set forth in the 
classified Schedule of Authorizations. The Classified Annex has 
the same status as any Senate Reportand the Committee fully 
expects the Intelligence Community to comply with the limitations, 
guidelines, directions, and recommendations contained therein.
    The classified supplement to the Committee Report is 
available for review by any Member of the Senate, subject to 
the provisions of Senate Resolution 400 of the 94th Congress.
    The classified supplement is made available to the 
Committees on Armed Services and Appropriations of the Senate 
and the House of Representatives, the Permanent Select 
Committee on Intelligence of the House of Representatives and 
to the President. The President shall provide for appropriate 
distribution within the Executive branch.

                       SCOPE OF COMMITTEE REVIEW

    The Senate Select Committee on Intelligence (SSCI or 
Committee) conducted a detailed review of the fiscal year 2003 
budget requests for the National Foreign Intelligence Program 
(NFIP) of the Director of Central Intelligence; for the Joint 
Military Intelligence Program (JMIP) of the Deputy Secretary of 
Defense; and for the Tactical Intelligence and Related 
Activities (TIARA) of the military services. The Committee's 
review entailed a series of briefings and hearings with senior 
government officials, numerous staff briefings, review of 
budget justification materials, and numerous written responses 
provided by the Intelligence Community to specific questions 
posed by the Committee. The Committee also monitored compliance 
with reporting requirements contained in statute. Those 
reports, if received by the Committee by their due dates, were 
scrutinized by the Committee and provided important information 
and analysis upon which appropriate action could be taken, if 
deemed necessary.
    In accordance with a Memorandum of Agreement with the 
Senate Armed Services Committee (SASC), the SSCI is including 
its recommendations on both JMIP and TIARA in the Classified 
Annex. The SSCI has agreed that JMIP and TIARA issues will 
continue to be authorized in the defense authorization bill. 
The SASC has also agreed to involve the SSCI staff in staff-
level defense authorization conference meetings and to provide 
the Chairman and Vice Chairman of the SSCI the opportunity to 
consult with the SASC Chairman and Ranking Member before a JMIP 
or TIARA issue is finally closed out in conference in a manner 
with which they disagree. The Committee looks forward to 
continuing its productive relationship with the SASC on all 
issues of mutual concern.
    In addition to its annual review of the Administration's 
budget request, the Committee performs oversight of various 
intelligence activities and programs. The Committee's Audit 
Staff conducts in-depth audits and reviews of specific programs 
and activities identified by the Committee as needing close 
scrutiny. The Audit Staff also supports the Committee's 
continuing oversight of a number of administrative and 
operational issues. The Audit Staff's inquiries frequently lead 
to Committee action with respect to the authorities, applicable 
laws, and budget of the activity or program concerned. During 
the last year, this group completed the Committee's 
investigative work on the Intelligence Community's actions in 
the case of Navy Commander Michael Scott Speicher, the October 
2000 attack on the USS Cole and the Intelligence Community's 
foreign materiel acquisition and exploitation programs. The 
Audit Staff also continued the Committee's review of the 
espionage activities of former Federal Bureau of Investigation 
employee Robert Hanssen and the investigation leading to 
Hanssen's arrest. The Staff's additional projects included 
monitoring the products and activities of the Intelligence 
Community's statutory and administrative Inspectors General and 
overseeing efforts by Intelligence Community agencies to 
improve their financial management systems.

      COMMITTEE ACTION ON THE FISCAL YEAR 2003 INTELLIGENCE BUDGET

    The Committee conducted a thorough review of the 
Administration's budget request for the National Foreign 
Intelligence Program for fiscal year 2003. Consistent with its 
oversight responsibilities, the Committee carried out an 
extensive examination of the individual programs comprising the 
U.S. Intelligence Community. Building on the approach it took 
last year, the Committee's review of the Administration's 
fiscal year 2003 request reaffirmed its belief that the 
National Foreign Intelligence Program should be reviewed by 
specific priority areas as well as by individual agencies and 
functions.
    For fiscal year 2003 through fiscal year 2007, the 
Administration has proposed significant resource increases for 
our overall national intelligence effort. Such increases build 
upon substantial supplemental appropriations approved for the 
Intelligence Community for fiscal years 2001 and 2002 in the 
wake of the horrific terrorist attacks of September 11, 2001. 
The increased amounts already approved or requested for the 
National Foreign Intelligence Program are consistent with the 
need to strengthen the Intelligence Community in executing its 
roles in the ongoingwar against terrorism and the protection of 
the American homeland. Additionally, requested resources will aid the 
Intelligence Community's ongoing effort to pursue those intelligence 
subjects of greatest concern to our nation.
    The Committee compliments the Administration for requesting 
higher levels of resources for the Intelligence Community for 
fiscal year 2003 and beyond. As the Committee has noted in past 
years, the challenges confronting the Intelligence Community 
have, for too long, received inadequate attention and 
insufficient resources. This situation has changed in the wake 
of the attacks of September 11, 2001. The Intelligence 
Community is poised to benefit from an infusion of additional 
people and funding that can provide momentum for a renewal of 
intelligence efforts against those individuals, groups, and 
states that seek to do us harm. As the Intelligence Community 
is our first line of defense, the Administration's fiscal year 
2003 request for the National Foreign Intelligence Program is a 
necessary first step in correcting the deficiencies of the 
past.
    In this budget, the Committee seeks to highlight five 
priority areas that must continue to receive particular 
attention in the near term if intelligence is to fulfill its 
role in our national security strategy. Four of the five 
priority areas were first addressed by the Committee in last 
year's Intelligence Authorization Act. They are: (1) 
revitalizing the National Security Agency; (2) correcting 
deficiencies in human intelligence; (3) addressing the 
imbalance between intelligence collection and analysis; and (4) 
rebuilding a robust research and development program. This 
year, the Committee adds a fifth priority: modernizing the 
capabilities of Measurements and Signatures Intelligence to 
fulfill key intelligence requirements. In comparing the 
Administration's fiscal year 2003 request to funding levels 
which the Committee recommended last year, the Committee is 
encouraged by the progress of the Intelligence Community in 
addressing the resource needs in the first four priority areas. 
The Administration's request surpasses the Committee's 
recommendation in every area. The Committee looks forward to 
progress in Measurements and Signals Intelligence in the coming 
year.
    Higher levels of proposed resources for fiscal year 2003 
for the National Foreign Intelligence Program, however, will 
not rectify several important resource challenges which 
continue to confront the Intelligence Community. Two of these 
important challenges are the product of the new paradigm facing 
Intelligence Community agencies and programs. In the past, the 
level of resources requested for the Intelligence Community was 
not commensurate with the myriad strategic and tactical 
missions of critical importance to national policy-makers and 
military forces in the post-Cold War world. This led to 
difficult and self-defeating trade-offs among mission areas by 
intelligence leaders. Today, however, those same intelligence 
leaders must ensure that the Intelligence Community can absorb 
and execute efficiently the substantial increase in resources 
that have flowed to, or are requested for, key intelligence 
programs in the wake of September 11, 2001. Two such programs 
include the continued efforts to recapitalize our human 
intelligence capabilities and to improve the pace and quality 
of the modernization of the National Security Agency. It will 
take persistent and strong management to ensure that taxpayer 
dollars are spent in a manner that minimizes waste and 
maximizes performance.
    At the same time, Intelligence Community leaders must 
address the shortfalls in the National Foreign Intelligence 
Program budget that did not, or could not, receive adequate 
attention during the Administration's budget process. Such 
shortfalls include:
           Concerns about our ability to collect 
        information from certain key platforms;
           Insufficient funds to complete a major 
        acquisition program; and
           Inadequate funds to ensure that information 
        collected by the next generation of collection 
        platforms will be processed, exploited, and 
        appropriately disseminated to intelligence analysts.
    These shortfalls are not the only ones facing the 
Intelligence Community. Additionally, as the war against 
terrorism continues into its next phase, a series of 
intelligence challenges will likely arise which will further 
tax the resources and overall capabilities of the people and 
programs comprising the National Foreign Intelligence Program.
    The Committee credits the Administration for responding 
forcefully, in the midst of the ongoing war against terrorism, 
to improve the posture of the Intelligence Community in 
carrying out its all-important national security mission. More 
work, however, remains to be done. Beyond any specific measures 
proposed for fiscal year 2003, the Administration must continue 
to devote attention to the five priority areas identified by 
the Committee, as well as a host of resource-related issues 
that must be addressed if near-term increases in intelligence 
capabilities are to translateinto sustained intelligence 
successes against complex and long-term threats to our nation. The 
Committee looks forward to working with the Administration on this 
overall effort in the days ahead.

                CONGRESS AND THE INTELLIGENCE COMMUNITY

Clarification of Intelligence Community reporting requirements

    One important mechanism for oversight by the Committee is 
to require annual and one-time reports by the Director of 
Central Intelligence to the intelligence committees of the 
Congress. As the Committee conducts its oversight 
responsibilities each year, it identifies problems, issues and 
subject areas about which it needs additional information from 
the Community. In most cases, the Committee needs the 
information sought in the reports in order to inform the 
drafting of legislation or the budget authorization decisions 
for the following year. Accordingly, it is important that such 
reports be accurate and thorough. It is equally important that 
they be submitted on or before their due dates.
    The Committee has taken a close look at the performance of 
the Director of Central Intelligence in providing these 
important reports in a timely manner. The results of this 
review are dismal. Between December 1, 2001, and May 1, 2002, 
the Intelligence Community was required to submit a total of 84 
annual and one-time reports to the congressional intelligence 
committees. Of this number, 18 were submitted after their due 
date; eight were incomplete, interim reports; and 51 were not 
submitted at all. Perhaps most disturbing, 10 of the reporting 
requirements not met were contained in statute. In sum, of the 
84 reports required, seven were submitted by the deadline, for 
an overall record of eight percent compliance.
    By clarifying and reorganizing the various reporting 
requirements, Title IV of the bill is intended to address the 
problem of repeated failure by the Director of Central 
Intelligence to comply with the legal requirements to provide 
reports to Congress. First, the Committee has attempted to 
baseline all the annual and semi-annual reports that are 
required by prior statutes, intelligence committee reports, and 
classified annexes. Section 401 establishes a uniform due date 
for annual and semi-annual reports in the National Security Act 
of 1947 (50 U.S.C. Sec. 401 et seq.). Also, in an effort to 
ensure that all of the reports required are, in fact, important 
to the fulfillment of the Committee's responsibilities, the 
Committee surveyed the outstanding requirements. Section 441 
repeals certain reports that the Committee found were no longer 
necessary. Further, in recognition that intelligence officers 
have critical duties that may inhibit their ability to meet the 
reporting deadlines in some circumstances, Section 401 provides 
for an automatic 30-day extension of any report deadline with 
written notice to the congressional intelligence committees. 
Beyond the 30-day extension, the due date for a report may be 
further extended by certification to the intelligence 
committees by the responsible official, the Director of Central 
Intelligence, Secretary of Defense, or Attorney General, that 
preparation and completion of the report by the due date would 
be detrimental to national security. Section 105 also resolves 
any ambiguity as to the legal status of reports required in 
committee reports and classified annexes by incorporating them 
by reference into the statute. Sections 411-431 incorporate 
certain recurring reports that were required in previous 
intelligence committee reports.
    The Committee expects that Section 401 will improve 
compliance by the Intelligence Community with the reporting 
requirements. In that regard, Section 401 requires by December 
1, 2002, that the General Counsel of the Central Intelligence 
Agency, the legal advisor to the Director of Central 
Intelligence, prepare and provide a report describing the steps 
that have been taken to ensure that the Director obeys the law 
in the future.
    The Committee has directed in the Classified Annex to this 
bill that a portion of the funds requested for fiscal year 2003 
for the Office of the Director of Central Intelligence not be 
obligated or expended until reports to the congressional 
intelligence committees have been provided in accordance with 
Title IV.

Specificity of national foreign intelligence budget amounts for 
        counterterrorism, counterproliferation, counternarcotics and 
        counterintelligence

    The Committee believes that it is essential to a rational 
budgeting process that budgets be built to reflect key concerns 
of policymakers. Unfortunately, this does not take place with 
respect to certain disciplines of vital concern to our nation's 
security. Specifically, it is very difficult from existing 
Congressional Budget Justification Books to determine how much 
money the Intelligence Community has budgeted for 
counterterrorism, counternarcotics and counterproliferation. 
Counterintelligence, as an intelligence discipline, is 
accounted for in annual summary budget materials describing the 
National Foreign Intelligence Program, butthere is no 
requirement for the Intelligence Community to continue to do so. This 
is not the first time the Congress has addressed this issue. In Section 
1051 of the 1998 National Defense Authorization Act (P.L. 105-85) the 
Congress required the Administration to provide information on 
Executive branch funding to combat terrorism, including intelligence 
funding. Such information has proven useful in assisting this Committee 
in carrying out its budgeting and policy oversight responsibilities. 
The need for information on counterterrorism spending is all the more 
important in the wake of the terrorist attacks of September 11, 2001. 
The Committee notes, however, that the Administration's ``cross-cut'' 
report on fiscal year 2002 counterterrorism spending levels has not yet 
been received and is past due. The result is that the Congress must 
review the President's Fiscal Year 2003 budget request without the 
benefit of the report.
    The Committee believes that it is important for both the 
Executive and Legislative branches to be fully informed about 
annual resource levels requested by the Intelligence Community 
for the important disciplines of counterterrorism, 
counterproliferation, counternarcotics and counterintelligence. 
Accordingly, Section 304 will ensure that the National Foreign 
Intelligence Program budget, as submitted next year and in 
years following, will contain this essential ``cross-cut'' 
information.

Modification of authority to make funds for intelligence activities 
        available for other intelligence activities

    The Committee takes great care to set the amount authorized 
for a specific intelligence activity at the proper level to 
enable that program to be conducted in an effective and 
efficient manner. In some cases, however, the funding needs for 
a particular activity or program change after the intelligence 
authorizations have been enacted by Congress and signed by the 
President. In those cases, in accordance with the terms of 
Section 504 of the National Security Act of 1947 (50 U.S.C. 
Sec. 414), the Director of Central Intelligence may notify the 
intelligence committees that funds need to be reprogrammed from 
one activity to another. In addition to this notification, 
Section 504(a)(3) also requires that in such instances, (1) the 
activity to be funded be of a ``higher priority'' than the 
activity from which the funds are taken and (2) the need for 
funds for such activity be based on ``unforeseen'' 
requirements.
    The Committee is concerned that the correspondence it 
receives notifying it of the reprogramming of funds from one 
activity to another often does not set forth clearly how the 
Section 504 requirements of ``higher priority'' and 
``unforeseen'' circumstances have been satisfied. Section 305 
clarifies the ``unforeseen'' requirement by stating that such a 
requirement does not include the failure of the Director of 
Central Intelligence to anticipate an action by Congress, such 
as an authorization or appropriation level for an activity at a 
level lower than that requested in the President's budget. 
Section 305 also amends Section 504 to require the Director of 
Central Intelligence to certify the facts that meet those 
statutory requirements.

Presidential determinations to limit access to reporting of covert 
        actions

    This Committee expressed concern in Senate Report 107-63 
accompanying S. 1428, the Intelligence Authorization Bill for 
Fiscal Year 2002, with Executive branch compliance in some 
cases with the requirement in the National Security Act of 1947 
(50 U.S.C. Sec. 401 et seq.) to provide the intelligence 
committees with written notice of Presidential covert action 
findings.
    Section 503 of the National Security Act (50 U.S.C. 
Sec. 413b) describes the process by which the President 
authorizes the conduct of covert actions by departments, 
agencies, or entities of the United States Government. Under 
this provision, the President may authorize a covert action if 
``the President determines such an action is necessary to 
support identifiable foreign policy objectives of the United 
States and is important to the national security of the United 
States, which determination shall be set forth in a finding * * 
* [and] [e]ach finding shall be in writing. * * *'' Section 
503(a)(1) and (c)(1) set forth special circumstances in which 
the President is given the authority either to delay the 
written notification for 48 hours in an emergency situation, or 
to limit the access to the written finding in extraordinary 
circumstances to only eight members of Congress--the leadership 
of the Senate and House of Representatives and the leadership 
of the intelligence committees. In those special circumstances, 
however, the President is not relieved of his statutory 
responsibility to provide a copy of the finding in writing. 
Section 503(c)(3) and (4) state clearly that whenever prior 
notice of a covert action is not given to Congress, or 
Committee access is limited, the written finding shall state 
the reasons justifying those special circumstances.
    The Committee restates its belief that the provision of 
written copies of the President's findings is essential to 
effective congressional oversight of covert action programs. In 
cases in which access has been limited to the leadership of the 
Senate and House of Representatives and the leadership of the 
intelligence committees--and denied, because of the extreme 
sensitivity of the program, to the other members of the 
intelligence committees who are charged with oversight of the 
activities of the Intelligence Community--section 503(c)(4) 
requires that the President provide to the Chairmen of the 
intelligence committees a copy of the finding, including the 
reasons for such limited access. This is necessary in order to 
allow proper oversight, as contemplated by the statute, of 
these important and sensitive programs that the President has 
determined ``affect the vital interests of the United States.''
    Accordingly, the Chairman and Vice Chairman of the Senate 
Select Committee on Intelligence direct that, whenever they are 
notified about a covert action initiative, an Executive branch 
official should bring the written copy for their personal 
review at the time of the notification. The Committee respects 
the desire of the Executive branch to keep custody of these 
sensitive documents and believes that this accommodation can 
satisfy the needs of both branches of government to fulfill 
their respective responsibilities.

Effective provision of intelligence to, and use by, Congress

    In Senate Report 107-63 accompanying S. 1428, the Committee 
noted the importance of the role of Congress as a ``consumer of 
intelligence to inform its decisionmaking on policy, and its 
concern that there had ``been little effort to develop 
mechanisms to ensure that members of Congress receive 
intelligence, in a form tailored to their unique needs, to 
enable them to perform their policy-making responsibilities 
efficiently and effectively.'' In an attempt to address this 
issue, the Committee directed the Director of Central 
Intelligence to prepare a comprehensive report on the subject. 
The Director has not, as yet, complied with this directive.
    Recent events have underscored the importance of Congress 
being informed with timely, relevant and accurate intelligence. 
Thus, the failure of the Director of Central Intelligence to 
comply with this directive is particularly troubling. The 
Committee also notes that this failure is, unfortunately, 
consistent with the pattern described above of noncompliance 
with requests, directives and statute concerning the provision 
of reports to Congress.
    Accordingly, the Committee adopts and renews the directive 
contained in Senate Report 107-63 concerning this report.

Clarification of authority of Intelligence Community to furnish 
        information on intelligence activities to Congress

    Section 306 reaffirms longstanding requirements that the 
Intelligence Community must report to the intelligence 
committees of the Congress all information necessary for those 
committees to fulfill their oversight responsibilities. This 
includes a duty to fulfill the Intelligence Community's 
reporting requirements under sections 501, 502, and 503 of the 
National Security Act of 1947, and other statutes. Section 306 
is designed to preserve the Intelligence Community's unique 
relationship with its oversight committees in the wake of the 
USA PATRIOT Act of 2001, which gave intelligence agencies 
access to sources of information that were previously denied 
it. In order to ensure continued effective oversight of 
Intelligence Community activity, this section would make clear 
that it remains lawful for the Director of Central Intelligence 
to transmit information to Congress pursuant to the above- 
mentioned reporting requirements. This provision does not 
authorize Congress to have direct access to grand jury or other 
protected information in the possession of the law enforcement 
community. In the interest of ensuring continued oversight of 
Intelligence Community activities, it merely authorizes access, 
pursuant to existing statutory reporting requirements, to such 
otherwise protected information as may be used by intelligence 
officials in conducting analysis or making operational 
decisions.
    The Committee is well aware of the unique constitutional, 
statutory and historical aspects of the grand jury, and is 
extremely sensitive to the need to ensure that vigorous 
oversight by Congress is reconciled with the need for an 
independent grand jury. This legislation is not intended to 
change this balance, but merely to recognize that where grand 
jury-derived or other sensitive law enforcement information is 
made available to the Intelligence Community, it is the 
responsibility of the Congress to exercise meaningful oversight 
of how it is used. Similarly, where such information 
contributes to analytic products or operational decision 
making, the Congress, as a policy-making and oversight 
organization which, as a matter of law, must be kept informed 
of intelligence activities and other intelligence information, 
cannot be barred by statute from having access to the 
information necessary to fulfill its responsibilities.
    The tension between grand jury secrecy and Congressional 
oversight, after all, is not a unique dynamic. A similar 
tension exists between the President's constitutional foreign 
affairs role (and the Director of Central Intelligence's 
statutory duty to protect sources and methods) and the 
intelligence committees' oversight function. It is the 
Committee's view that this tension has been resolved 
successfully during the 25-year history of the intelligence 
oversight committees. The Committee is confident that a similar 
accommodation can be reached in the context of grand jury 
information and other protected law enforcement information 
that is provided by law enforcement entities to the 
Intelligence Community pursuant to the USA PATRIOT Act, or 
other authorities. This legislation simply sets out a statutory 
framework for resolving these issues, and is designed 
principally to clarify the relationship between Rule 6(e) of 
the Federal Rules of Criminal Procedure and the oversight 
provisions of the National Security Act of 1947, as amended. It 
does not seek to alter or describe the constitutionally-derived 
relationship between the three branches of government.

                    INTELLIGENCE COMMUNITY PERSONNEL

Standards and qualifications for the performance of intelligence 
        activities

    Section 308 clarifies the role of the Director of Central 
Intelligence, as head of the Intelligence Community, as the 
official responsible for ensuring that there are common 
standards and qualifications for individuals performing 
intelligence functions throughout the Community. The provision 
provides the Director broad flexibility to establish such 
standards and qualifications and it is the Committee's hope 
that he will integrate this effort with the ongoing personnel 
programs detailed in the Classified Annex to this bill.
    The impetus for this legislation is two-fold. First, the 
Committee has an overall interest in ensuring that the Director 
vigorously exercise his authorities and prerogatives as head of 
the Intelligence Community. It is the view of the Committee 
that ensuring basic standards and qualifications for 
intelligence officers, whether they be collectors, analysts, or 
technical experts, is a fundamental element of leading a 
community. In this respect it is not the Committee's intention 
to require the Director to intrude into the internal personnel 
practices and decisions of the constituent elements of the 
Intelligence Community. He must, however, set some guidelines 
for the Community within which these elements can make their 
own judgments.
    Second, the Committee has become concerned that, 
particularly in the area of analysis, elements of the 
Intelligence Community are denominating individuals as 
``analysts'' or ``intelligence analysts'' without adherence to 
a meaningful common definition of that word. Since September 
11, 2001, the Committee has been struck by the ever-growing 
number of individuals who are called ``intelligence analysts,'' 
particularly in the area of terrorism. It is the Committee's 
intention to require the Director to ensure that individuals 
performing analytic or other intelligence functions meet clear 
and rational minimum standards for performing those jobs.

Military support to the National Foreign Intelligence Program

    The Committee continues to be concerned about the high 
percentage of military billets programmed for National Foreign 
Intelligence Program (NFIP) agencies that go unfilled each 
year. The problem continues to plague, in particular, the 
General Defense Intelligence Program, the Consolidated 
Cryptologic Program, and the National Imagery and Mapping 
Agency Program. Historically, approximately 3,000 military 
intelligence billets go unfilled in the NFIP by the Department 
of Defense each year. This accounts for well over $100 million 
that must be included in the NFIP budget, but from which the 
Intelligence Community receives no benefit. To date, however, 
no comprehensive solution has been worked out within the 
Executive branch that satisfies the concerns of the Department 
of Defense, the Intelligence Community, and the Congress. In 
the absence of any solution, intelligence requirements in 
support of policy-makers and military forces will go unmet, 
while the amount of funding devoted to intelligence activities 
will continue to be overstated to the Congress.
    Last year, the Committee noted that, for a variety of 
reasons, the military services might choose to assign personnel 
to intelligence positions at rates that are less than those 
stated in budget justification materials. The Committee also 
noted that it opposed such a practice, given the critical, 
ongoing importance of intelligence in supporting national 
decision-makers and deployed military forces. In light of the 
contributions of intelligence to the ongoing war against 
terrorism, the Committee believes that filling intelligence 
billets within the NFIP should be a top priority of the 
Department of Defense. In particular, the Committee believes 
that it is unacceptable that over 70 intelligence analytic 
billets are currently vacant at the U.S. Central Command, which 
is leading the fight against al Qaida terrorists in 
Afghanistan. The Committee is not alone in this view. It is the 
Committee's understanding that the issue of unfilled military 
intelligence billets has been raised by the Commander of the 
U.S. Central Command in discussions with the Secretary 
ofDefense and the Chairman of the Joint Chiefs of Staff. Clearly, a 
solution must be found for this ongoing problem.
    The Committee notes that the Office of the Secretary of 
Defense agreed to provide a fair share of any military 
reprogramming back to the NFIP beginning in fiscal year 2001. 
To date, however, and despite the persistent nature of unfilled 
military billets in the NFIP, no military reprogramming has 
taken place. The Committee understands that the Department of 
Defense is currently studying the unfilled military billet 
problem, given concerns raised about the issue by the Defense 
Health Program and the Special Operations Command. The study, 
being carried out by the Program Analysis and Evaluation Office 
in the Office of the Secretary of Defense, has developed a 
number of options to address the overall issue. The Committee 
also understands, however, that any final decisions and 
implementation of agreed-upon solutions may not occur until 
fiscal year 2004.
    The Committee feels that this is too long to wait. Given 
the need to support fully our policy-makers and deployed forces 
with intelligence personnel at a level consistent with the 
Administration's own budget request, the Committee strongly 
urges the Secretary of Defense and the Director of Central 
Intelligence to resolve this matter prior to the submission of 
the fiscal year 2004 budget request.

David L. Boren National Security Education Program

    The National Security Education Program (NSEP), the 
National Security Education Trust Fund, and the National 
Security Education Board are the result of the David L. Boren 
National Security Education Act of 1991 (50 U.S.C. Sec. 1901 et 
seq.) The NSEP was created due to a concern after Operation 
Desert Storm by Senator David L. Boren, then-Chairman of the 
Senate Select Committee on Intelligence, that the Intelligence 
Community lacked Arabic language expertise. Presently, the 
program provides scholarships and grants to students and 
academic institutions focused on those geographic areas, 
languages and fields of study that are deemed most critical to 
U.S. national security.
    The scholarship portion of the NSEP includes both 
undergraduate and graduate programs that seek to provide 
support to students who are interested in studying languages 
and cultures not commonly studied in the United States. It is 
the Committee's understanding that undergraduate students often 
use their scholarships to study abroad or work as interns in an 
American Embassy. Graduate students use the scholarships to 
integrate studies into their existing curriculum by studying 
abroad or taking immersion language courses in the United 
States. An average of 150 students participate in the 
undergraduate program and 80 students participate in the 
graduate program each year. The institutional grant component 
of the program is an annual competition that provides funding 
to universities and colleges throughout the U.S. The grants 
give institutions of higher education financial assistance to 
develop or strengthen their capabilities to educate U.S. 
citizens in critical languages, cultures, and international 
fields. Areas focused upon in the grants programs are similar 
to those in the student program.
    The primary role of the National Security Education Board 
is to develop criteria for awarding scholarships, fellowships, 
and grants for the program. It consists of representatives from 
the Department of Defense, the Department of Education, the 
State Department, the Commerce Department, the Central 
Intelligence Agency, the Department of Energy, the National 
Endowment for the Humanities, and six presidential appointees. 
The Secretary of Defense serves as the Chairman of the Board, 
and the statute requires that the individuals appointed by the 
President be ``experts in the fields of international, 
language, and area studies education.'' The Board meets 
annually.
    The objective of the NSEP is to enhance the national 
security of the United States by increasing its capacity to 
deal effectively with foreign cultures and languages. The 
program seeks to produce an increased pool of applicants for 
work in the departments and agencies of the United States 
Government with national security responsibilities. The 
Committee views the graduate program as the most effective way 
of achieving the stated goal of the program for several 
reasons. First, the graduate program reaches students after 
they have already selected a career path. Also, NSEP officials 
have told the Committee that graduate students are enthusiastic 
about serving as federal employees, and generally seek 
employment in national security positions. The Committee notes 
that the undergraduate program, while providing unique learning 
opportunities, is an inadequate mechanism for ensuring that 
students will obtain employment with the federal government, 
and thereby fails to meet the stated goal of producing an 
increased pool of applicants to serve in the federal 
government.
    Because the NSEP is essentially taking a ``risk'' on 
students by providing them with a substantial amount of 
financial assistance, the Committee believes it is in the best 
interest of the program to focus on those students most likely 
to seek and attain employment in the field of national 
security. For these reasons, the Committee has included Section 
309 in the bill, which is designed to refocus theNational 
Security Education Program by eliminating the undergraduate portion of 
the Program and mandating the creation of the National Foreign Language 
Initiative.
    The NSEP retains the authority provided in the original 
legislation to award grants to institutions of higher 
education. The amended legislation seeks to streamline the 
grants component of the NSEP by mandating the creation of the 
National Foreign Language Initiative and eliminating the 
original grants component. The Committee notes that no new 
legislative authority is required to implement the Flagship 
Language Initiative; the proposed program is completely 
compatible with NSEP's current legislative mandate.
    The National Foreign Language Initiative will unite the 
federal sector with the higher education community by utilizing 
the management and structure of the NSEP, the Defense Language 
Institute, the National Foreign Language Center, located at the 
University of Maryland, and several of the nation's leading 
universities. Overall management of the initiative will be 
provided for the NSEP by the National Foreign Language Center 
at the University of Maryland. The National Foreign Language 
Center will, through institutional grants, establish working 
relationships with a set of flagship programs at major 
universities, which will commit to specific goals and 
objectives.
    The goal is to produce students with professional 
proficiency in critical foreign languages. At this so-called 
``level three'' standard, the individual is capable of speaking 
with sufficient structural accuracy and vocabulary to 
participate effectively in most formal and informal 
conversations on practical, social, and professional topics. It 
is the intention of the Committee that the creation of the 
National Foreign Language Initiative lead to the creation of a 
permanent national capacity for advanced ability in critical 
languages. The flagship initiative will, in its first stage, 
focus on highly critical languages including Arabic, Chinese, 
Japanese, Korean, Russian, Hindi, Persian/Farsi, and Turkish.
    The Committee endorses the proposal submitted by the NSEP 
to establish the National Foreign Language Initiative. It is 
the intent of the Committee that this proposal be followed 
strictly. The Committee, therefore, requires that any changes, 
updates or modifications made to the proposal be submitted to 
the Committee in writing so that the Committee may provide its 
views prior to implementation.
    The Committee directs that no new grants be awarded under 
the previous program. Upon enactment of this legislation, all 
grants shall be awarded under the umbrella of the National 
Foreign Language Initiative. The Committee recognizes, however, 
that the NSEP may have outstanding grants that must be 
fulfilled. Once those obligations are met, the NSEP shall have 
no new grants authority, other than those outlined in the 
National Foreign Languages Initiative. No new funds are to be 
authorized for this year and no further funding is to be 
authorized for outstanding grants other than the original 
amount. The NSEP is further directed to use the current 
resources in the National Security Education Trust Fund to 
implement the National Foreign Language Initiative, pending 
development of a new funding mechanism.
    The NSEP was originally created by establishing a trust 
fund consisting of $150 million. The Department of Defense 
Appropriations Act of 1992 (P.L. 102-172), provided that $150 
million of the funds appropriated in that Act were to be 
available only for the trust fund. Subsequently, Section 311 of 
the Intelligence Authorization Act for 1994 (P.L. 103-178) 
required that the amount in the fund in excess of $120 million 
was to be transferred to the Treasury as miscellaneous 
receipts. Following that action, an additional $75 million of 
the fund was rescinded by the Emergency Supplemental 
Appropriations and Rescissions for the Department of Defense to 
Preserve and Enhance Military Readiness Act of 1995 (P.L. 104-
6). Today, the fund contains approximately $43 million. Based 
on budget projections, the trust fund will require additional 
financial resources by Fiscal Year 2006 if the program is to 
continue.
    Based on the above data and the impending depletion of the 
National Security Education Trust Fund, it is the view of the 
Committee that incorporating the program into the regular 
annual appropriations process is the best way to ensure the 
continuity and success of the program. Therefore, the Committee 
directs the Secretary of Defense, in conjunction with the 
Director of Central Intelligence, to conduct a study, and 
publish a report based on that study, examining the best way to 
allow for a smooth transition from the trust fund to the 
regular appropriations process within the Department of 
Defense. This report shall be due 90 days after enactment of 
this provision.

Scholarships and work-study for pursuit of graduate degrees in science 
        and technology

    The Intelligence Community has a growing requirement for 
scientists and engineers to ensure the strength of its 
technology development and analysiscapabilities. The Community 
must compete against private industry to recruit these scientists and 
engineers. The requirement of a lengthy clearance process, however, has 
sometimes hampered the Community in its efforts to attract the best and 
brightest. While the pay is often lower in the Intelligence Community 
than in industry, the Committee is convinced that once individuals 
experience the sense of mission and public service of intelligence 
work, the Intelligence Community will be substantially enhanced in its 
ability to hire and retain top scientists and engineers.
    In light of the need to attract scientists and engineers to 
the Intelligence Community, and noting both the direct and 
indirect benefits to the Intelligence Community of involving 
the talents of young scientific professionals in its work, 
Section 310 directs the creation of a Director of Central 
Intelligence Science and Technology Graduate Scholarship 
Program. The primary purpose of the program is to provide 
funding for graduate scholarships at the Masters and Ph.D. 
levels in the areas of advanced science and technology of 
greatest importance to the Intelligence Community through work-
study opportunities and post-graduation service obligations.
    Section 310 sets forth the basic eligibility requirements 
for participation in the program. To ensure that there is a 
possibility of full employment in the Intelligence Community 
upon completion of the academic program, the Committee has 
directed that the applicants be required to obtain a SECRET 
level clearance as a condition of acceptance into the program. 
The program should provide for higher level clearances as 
needed. The Committee believes that the scholarship should pay 
the full tuition for applicants and that, in return, the 
applicants should commit to work in some element of the 
Intelligence Community. In this regard, the Committee believes 
that the Director of Central Intelligence should ensure that 
adequate personnel billets are available for each of the 
accepted applicants. Two options should be available to the 
recipients for completion of their service obligation: (1) if 
the scholarship recipient attends a college or university with 
classified information facilities or near an Intelligence 
Community entity, the recipient may work on classified projects 
during the academic year or during periods between academic 
years; (2) if the recipient does not select the first option, 
the work program can begin after graduation.
    The Committee believes the scholars emerging from this 
program should be under the direction of the Community 
Management Staff with options for rotation among various 
elements of the Intelligence Community. At the end of the 
service obligation, the scholars will then have a number of 
options for Intelligence Community employment. The program, 
therefore, should be overseen by the Assistant Director of 
Central Intelligence for Administration with the support of the 
Intelligence Community's Chief Technical Officer. The Committee 
also believes that endowed academic chairs might offer the 
Intelligence Community with additional science and technology 
options.
    The Committee directs that by July 1, 2002, the Deputy 
Director of Central Intelligence for Administration, in 
consultation with the Intelligence Community's Chief Technical 
Officer and the leading technical officers within the 
individual intelligence agencies, shall submit a plan to the 
intelligence committees recommending the optimal implementation 
of the Director of Central Intelligence Science and Technology 
Graduate Scholarship Program. The implementation plan should 
specify, at a minium, the most appropriate size of the program, 
optimal resources, security clearance considerations, academic 
qualifications of scholarship recipients, work study and future 
Intelligence Community employment considerations, and work 
products required of scholarship recipients. The plan should 
also discuss any administrative or legal requirements necessary 
for successful implementation. Furthermore, the plan should 
include views on the option of endowing academic chairs in 
Science and Technology as part of this program. The Committee 
expects to review the implementation plan prior to final 
congressional action on the fiscal year 2003 Intelligence 
Authorization Act.

          INTELLIGENCE COLLECTION, ANALYSIS AND DISSEMINATION

Establishment of the National Commission for the review of the research 
        and development programs of the U.S. Intelligence Community

    The Committee supports a strong Intelligence Community 
research and development program. Research and development 
efforts support virtually all other Intelligence Community 
efforts by laying the groundwork for the necessary 
modernization and innovation of intelligence capabilities. The 
Committee remains focused on research and development as a key 
priority for current and future Intelligence Community 
resources.
    The Committee further believes that the Intelligence 
Community's research and development program should be focused 
on Community-wide, rather than agency-specific, requirements 
and priorities as much as practicable. Traditionally, however, 
the Intelligence Community has not taken a centrally-managed 
approach to research and development investment. While a 
program such as the IntelligenceTechnology Innovation Center 
concentrates on channeling research and development funding to tackle 
intelligence problems of common concern, individual agencies, which 
retain the majority of research and development funding across the 
National Foreign Intelligence Program, still retain a large amount of 
flexibility in determining their own research and development agendas. 
Complicating the situation is a lack of common definitions across the 
Community as to what constitutes research and development. This leads 
in some cases to the funding of programs more commonly related to 
acquisition than to research. Additionally, it remains unclear as to 
whether the Intelligence Community's designated lead officials for 
research and development possess the insight into specific agency 
programs that is necessary to construct a unified, coherent research 
and development program.
    In an effort to allow for increased understanding and focus 
of the Intelligence Community's research and development 
efforts, the Committee has established, in Title VI of the 
bill, the National Commission for the Review of the Research 
and Development Programs of the U.S. Intelligence Community. 
The purpose of the Commission, to be composed of government 
officials and private sector experts, is to review the current 
state of research and development within the Intelligence 
Community. The Commission will pay particular attention to the 
individual research and development activities being sponsored 
across each intelligence agency or program, the level of 
resources devoted to research and development, and whether 
current activities are aligned with those scientific or 
technological fields judged to be of greatest importance to the 
anticipated intelligence efforts of the future. The Committee 
has provided for the transfer of $2 million from the Community 
Management Account to allow the Commission to carry out its 
work.

National Virtual Translation Center

    In Senate Report 107-63 the Committee noted its concern 
``that intelligence in general, and intelligence related to 
terrorism in particular, is increasingly reliant on the ability 
of the Intelligence Community to quickly, accurately and 
efficiently translate information in a large number of 
languages.'' The Committee suggested that this problem could 
be, in part, ``alleviated by applying cutting-edge Internet-
like technology to create a `National Virtual Translation 
Center.' '' The Committee, however, declined to recommend 
establishing such a Center in law without thoughtful commentary 
from the Intelligence Community. Pursuant to Section 907 of the 
USA PATRIOT Act, such a report was required to be submitted on 
or before February 1, 2002. The report was received more than 
two months late, a delay which, in addition to contravening the 
explicit words of the statute, deprived the Committee of timely 
and valuable input into its efforts to craft this legislation.
    Despite the delay, the report, when finally received, was 
helpful. It is adopted by reference into this report. (See 
Director of Central Intelligence Report on the National Virtual 
Translation Center: A Concept Plan to Enhance the Intelligence 
Community's Foreign Language Capabilities, April 29, 2002.) 
Section 311 of the bill establishes in law the National Virtual 
Translation Center as outlined in the Director's report. The 
Committee looks forward to the growth of what it anticipates 
will be a valuable Intelligence Community tool.

Foreign Terrorist Asset Tracking Center

    In Senate Report 107-63, the Committee ``endorse[d], in 
principle, efforts to develop elements within the Intelligence 
Community designed to exploit effectively financial 
intelligence,'' and noted that the ``Foreign Terrorist Asset 
Tracking Center'' (FTATC), then located in the Department of 
Treasury, showed ``promise as a vehicle to address this need.'' 
The Committee was hesitant to draft legislation directing 
Executive branch action on this vital issue without the benefit 
of receiving the carefully considered views of the Director of 
Central Intelligence and the Secretary of the Treasury. 
Accordingly, the Committee directed that a ``report assessing 
the feasibility and advisability of establishing an element of 
the federal government to provide for effective and efficient 
analysis and dissemination of foreign intelligence related to 
the financial capabilities and resources of international 
terrorist organizations.'' That report has not been provided to 
the Committee.
    The same issue was addressed in Section 906 of the USA 
PATRIOT Act of 2001 (P.L. 107-56). In that statute, Congress 
again directed the Director of Central Intelligence and the 
Secretary of the Treasury to prepare the report called for in 
Senate Report 107-63. This time the Congress required in law 
that the report be provided on or before February 1, 2002. The 
Director of Central Intelligence and the Secretary of the 
Treasury failed to provide a report, this time in direct 
contravention of a section of the USA PATRIOT Act.
    Despite the lack of Administration compliance with the 
statutory reporting requirement, the Committee continued its 
own analysis of the situation, and concluded that such an 
entity is a necessary component of the Intelligence Community, 
and that it would be best placed within the Central 
Intelligence Agency. Accordingly, Section 312 establishes the 
FTATC, under the direction of the Director of Central 
Intelligence, within the Central Intelligence Agency.
    The Committee further directs that the statutorily-directed 
report be completed immediately, and that it should include a 
section describing the circumstances which led to the 
Director's failure to comply with lawful reporting 
requirements.

Terrorist Identification Classification System

    In the aftermath of the September 11, 2001, terrorist 
attacks against the United States, the Committee reviewed the 
Intelligence Community's process for storing, retrieving, and 
disseminating intelligence collection and analysis regarding 
known or suspected international terrorists, and known or 
suspected international terrorist organizations. During a 
number of hearings this year, Committee members queried 
witnesses concerning the ability of CIA and FBI officials to 
derive a comprehensive list of the identities and biographic 
information on known or suspected international terrorists from 
the multitude of intelligence reports and databases containing 
potentially relevant information. The Committee found that, 
although the Intelligence Community did have a significant 
amount of intelligence concerning known or suspected 
international terrorists and terrorist organizations, the main 
databases used to store this information were not well-
configured to provide it to those responsible for protecting 
American citizens from international terrorists. The Committee 
also believes that the current lack of a centralized system to 
handle such information not only hinders effective 
counterterrorism efforts, but makes meaningful oversight of 
Intelligence Community handling of United States person 
information contained in these databases more difficult.
    On May 6, 2002, Senator Wyden introduced S. 2459, a bill to 
require the creation of Terrorist Identification Classification 
System (TICS). The purpose of this legislation was to provide 
for the establishment and maintenance of a data system that 
both stores and retrieves the identities and biographic 
information of known or suspected international terrorists, as 
well as known or suspected international terrorist 
organizations, and to ensure that those federal, state, and 
local officials responsible for protecting Americans from this 
threat have appropriate, timely, and thorough access to this 
information. The Committee has incorporated a version this 
legislation into Section 313 of the Fiscal Year 2003 
Intelligence Authorization Bill.
    This provision directs the Director of Central Intelligence 
to establish and maintain a list of individuals who are known 
or suspected international terrorists and organizations that 
are known or suspected international terrorist organizations. 
The Director of Central Intelligence must also ensure that 
pertinent information on this list is shared with departments 
and agencies of the Federal Government, State and local 
government agencies, and foreign governments or international 
organizations as the Director considers appropriate. This 
system also must be interoperable to the maximum extent 
practicable with the information systems of those departments, 
agencies, and organizations to ensure timely and thorough 
access to this vital information in the effort against 
terrorism. Pursuant to this provision, moreover, the DCI shall 
prescribe specific procedures for ensuring the appropriate 
standards for including names on--or removing names from--this 
list.
    The Committee intends that this system be maintained in 
accordance with existing laws and regulations governing the 
collection, storage, and dissemination of intelligence 
concerning United States persons. This provision does not 
confer additional authorities to the Director or any other 
element of the United States Government regarding the 
collection, retention, or dissemination of intelligence 
information on United States persons.

Counterdrug

    The events of September 11, 2001, have demonstrated the 
pressing importance of strengthening our counterterrorism 
efforts. Recent analysis, however, has uncovered considerable 
information that terrorist groups often use illegal narcotics 
trafficking to raise funds for their operations. This 
illustrates the continuing importance of the United States' 
counterdrug fight.
    For example, it is clear that the Taliban in Afghanistan 
procured significant funding by trafficking in the derivatives 
of the opium poppy plant. The Revolutionary Armed Forces of 
Colombia (FARC) has become a major force in the production of 
Colombian cocaine, which enables it to expand its terrorist 
insurgency activities, reported to include obtaining training 
in bomb-making from other international terrorist groups. Not 
only do illegal drugs threaten our national security through 
the scourge of addiction among Americans, they also provide the 
financial wherewithal for terrorists to carry out their 
murderous operations around the world. As such, the 
Intelligence Community must continue to make vigorous efforts 
to stem the flow of illegal drugs.
    As was described in last year's public report to accompany 
the Intelligence Authorization bill (S. Report 107-63), on 
April 21, 2001, an American missionary plane was mistakenly 
shot down by a Peruvian Air Force jet operating as part of the 
``air bridge denial'' program. In H.R. 2883, the Fiscal Year 
2002 IntelligenceAuthorization Act, Congress required the 
President to provide an annual report to Congress concerning any such 
program no later than February 1 of each year. Congress has still not 
received the report for 2002.
    The Administration is currently examining options for 
resuming support to air interdiction efforts in Peru and 
Colombia. State Department representatives have kept Committee 
staff informed of the status of this review. The Committee 
appreciates this consultative effort and looks forward to 
continuing this dialogue as an implementation plan is 
developed.

National Imagery and Mapping Agency support to homeland security

    The Committee recognizes the valuable role that the 
National Imagery and Mapping Agency (NIMA) can play in 
supporting homeland security operations generally, and the 
newly-created U.S. Northern Command, specifically. Exceptions 
to the standing prohibition against the NIMA tasking satellites 
to image the United States currently require detailed 
justifications that are adjudicated by a separate group of 
government officials outside the normal imagery tasking 
process, in order to ensure that the requests pass legal 
muster. With the prospect of increased imaging of the United 
States being necessary in support of homeland security and the 
war on terrorism, the Committee is concerned that the checks 
and balances in place to ensure against improper imaging 
requests not be circumvented or otherwise diminished. At the 
same time, the Committee does not want the added scrutiny given 
to such requests to unnecessarily hinder urgent collection 
needs that may arise.
    Accordingly, the Committee directs the Director of Central 
Intelligence, in coordination with the NIMA Director and the 
National Reconnaissance Office (NRO) Director, to provide a 
report detailing the process for approving the use of National 
Technical Means to image the United States and what changes to 
this process, if any, are being proposed or considered in the 
wake of the stand-up of the U.S. Northern Command and other 
homeland security initiatives. The report shall be submitted to 
the Committee no later than March 1, 2003. The Committee also 
directs the NIMA Director to provide a semi-annual report to 
the Committee detailing the number and purpose of all requests 
for imaging of the United States approved in the prior six 
month period. The semi-annual report will be due in accordance 
with the provisions in Section 401.

Annual report on foreign companies involved in the proliferation of 
        weapons of mass destruction that raise funds in the United 
        States capital markets

    Section 314 requires the Director of Central Intelligence 
to submit a report to Congress each year setting forth certain 
foreign entities that he believes are involved in raising, or 
attempting to raise, money in United States capital markets by 
means of bond floats, initial public offerings, stock listings, 
or other such activities. Companies covered by this report 
should include any foreign company the Director believes to be 
involved in the proliferation of weapons of mass destruction--
including nuclear, biological, or chemical weapons--and the 
means to deliver them, whether or not such transfers violate 
specific conventions, treaties, or the provisions of 
international export control regimes. This report must be 
submitted in unclassified form, but the Committee anticipates 
that it may be necessary to provide an associated classified 
annex in order to protect intelligence sources and methods 
involved in assessing certain entities' involvement in 
proliferation activities. (In the event that the Director 
should determine that no such entities are involved in the U.S. 
capital markets, the Committee anticipates that the 
abovementioned report shall simply state this.) This section is 
not intended, and should not be construed, to authorize or 
encourage any restrictions upon access to U.S. capital markets. 
Rather, it is intended instead simply to provide national 
security decision-makers with visibility into the efforts of 
problem entities to raise money in the United States.

                          Counterintelligence

FBI implementation of Webster Commission Report recommendations

    The findings and recommendations of the March 2002 report 
of the Commission for the Review of Federal Bureau of 
Investigation (FBI) Security Programs (the ``Webster 
Commission'') have underscored the fact that the FBI has 
significant and systemic security problems that need to be 
addressed. The Committee commends the FBI for the efforts made 
to improve security under the leadership of the new Assistant 
Director of Security. Nevertheless, this bill recommends 
resources in excess of the Administration's request to address 
unfunded security requirements at the FBI in fiscal year 2003. 
The Committee remains concerned, however, that even in the wake 
of the Robert Hanssen espionage case, the Bureau's perceived 
operational needs may still take inappropriate precedence over 
security concerns. The Committee believes that thesecurity 
problem at the Bureau will never be addressed effectively unless and 
until senior FBI management becomes committed to making security--which 
has often been, at most, a secondary priority--an important part of its 
culture.
    The Committee has directed in the Classified Annex to this 
bill that a portion of the funds requested for the Bureau's 
Foreign Counterintelligence Program in Fiscal Year 2003 not be 
obligated or expended until both the Attorney General and the 
Director of the FBI provide the intelligence oversight 
committees, and other relevant committees of the Congress, with 
a written report on the Bureau's plans to implement the 
recommendations contained in the Webster Commission report--
including the time frame and funding necessary for their full 
implementation, as well as their plans to make security an 
integral part of the FBI's culture.

FBI counterintelligence and counterterrorism training and analysis

    The Committee is concerned about the adequacy of the 
Federal Bureau of Investigation's training for its agents and 
analysts for counterintelligence and counterterrorism. 
Accordingly, the Committee directs the Director of the FBI, in 
consultation with the Director of Central Intelligence, to 
provide the intelligence committees with a written report no 
later than February 1, 2003, assessing the adequacy of the 
Bureau's training program and career tracks for both its agents 
and its analytic cadre involved with counterintelligence and 
counterterrorism, as well as its plans to enhance the 
effectiveness of these programs. Specifically, the Committee 
requests that this report include the FBI's criteria for 
developing certified expertise in counterintelligence and 
counterterrorism, a description of the required career 
milestones for such specialties, and how FBI 
counterintelligence and counterterrorism analytical products 
are disseminated within the Bureau and elsewhere in the 
Intelligence Community. In addition, the report should include 
an assessment of whether the FBI employees whose job duties 
include intelligence analysis meet Intelligence Community-wide 
standards of education, training and experience.

The National Counterintelligence Executive

    In 2001, the President affirmed Presidential Decision 
Directive 75 (PDD-75) which created a new, national-level 
counterintelligence system to address both traditional and 
emerging counterintelligence threats in the 21st century. PDD-
75 established the National Counterintelligence Executive 
(NCIX) to serve as the substantive leader of national-level 
counterintelligence policy and stipulated that the National 
Counterintelligence Executive must have sufficient personnel 
and funds to carry out assigned duties. The PDD mandated that 
the NCIX provide the U.S. Government with strong, policy-driven 
leadership by creating new and enhanced counterintelligence 
capabilities; ensure coherent programs, strategies and 
cooperative approaches; and conduct effective oversight.
    The PDD also established a National Counterintelligence 
Board of Directors, chaired by the Director of the FBI, and 
comprised of the Deputy Secretary of Defense, the Deputy 
Director of Central Intelligence and a senior representative of 
the Department of Justice. The Board's mission is to select, 
oversee and evaluate the National Counterintelligence Executive 
and to promulgate the mission, role and responsibilities of the 
NCIX.
    The specific duties set out for the NCIX include:
           Identifying and prioritizing what must be 
        protected (U.S. Critical National Assets);
           Producing strategic counterintelligence 
        analysis;
           Developing a prioritized national threat 
        assessment;
           Formulating a National Counterintelligence 
        Strategy;
           Creating an integrated counterintelligence 
        budget;
           Establishing a strategic outreach program to 
        the private sector;
           Implementing a unified counterintelligence 
        training and education program; and
           Carrying out program reviews and 
        evaluations.
    The first National Counterintelligence Executive assumed 
his duties in early May 2001, and began the process of building 
a new office focused on PDD-75 priorities. However, this 
individual, an FBI detailee, was transferred back to the Bureau 
in February 2002. This important position remains vacant.
    The Office of the National Counterintelligence Executive 
has also confronted notable resource constraints. The resource 
base for the new office consisted of the funds, positions and 
people that supported the former National Counterintelligence 
Center (NACIC). Although the Office of the National 
Counterintelligence Executive was tasked with building new 
capabilities while continuing NACIC legacy activities, it 
received no new resources in fiscal year 2001 and only a small 
increase for fiscal year 2002. The Committee believes that the 
Administration request for the Office of the National 
Counterintelligence Executive for fiscal year 2003 doesnot 
address the Office's requirements. The Committee has addressed this 
deficiency in the Classified Annex by recommending additional resources 
for the Office of the National Counterintelligence Executive.
    The Committee, which was a strong supporter of the creation 
of the Office of the National Counterintelligence Executive, 
believes that the Office of the NCIX is an essential component 
of our nation's strategic approach to the counterintelligence 
threat. The recent Hanssen, Montes and Regan espionage cases--
coupled with the national security implications of the tragic 
events of September 11, 2001--highlight the need for a 
cooperative, national-level focus on counterintelligence, as 
envisioned by PDD-75, as an integral element of our nation's 
homeland security effort. However, the Committee does not 
believe that the current placement of the Office of the 
National Counterintelligence Executive in the Executive branch 
has given the office the appropriate level of stature and 
effectiveness that it requires.
    Sections 502-504 codify into statute the authorities and 
responsibilities of the National Counterintelligence Executive 
as contained in PDD-75, and places the Office of the National 
Counterintelligence Executive into the Executive Office of the 
President, reporting directly to the President. The Committee 
believes that moving the Office of the NCIX to the Executive 
Office of the President with a direct reporting line to the 
President will optimize the effectiveness--and accountability--
of the National Counterintelligence Executive's mission, and 
give counterintelligence the appropriate emphasis and 
visibility it deserves as a core U.S. national security 
priority.

Counterintelligence at the Department of Energy and the National 
        Nuclear Security Administration

    This Committee has a long-standing interest in supporting a 
strong counterintelligence program at the Department of Energy 
(DOE). In 1996, at the request of this Committee, the 
Intelligence Authorization Act for fiscal year 1997 directed 
the FBI Director, in coordination with the Director of Central 
Intelligence, to provide a written assessment of the adequacy 
of the DOE's current and planned counterintelligence activities 
at headquarters as well as the National Laboratories, and 
identify recommendations for needed improvements. This report, 
completed in 1997, noted that, although DOE's 
counterintelligence program had made significant strides in 
recent years, problem areas persisted. For example, the 
Bureau's report found that the counterintelligence mission at 
the DOE was unevenly or inadequately funded and lacked the 
central management and focus that would establish consistent 
and effective counterintelligence policy across the Department 
of Energy complex. (It is noteworthy that the FBI, in the wake 
of the Hanssen espionage case, is currently reorganizing itself 
to more effectively address the counterintelligence threat by 
centralizing its managerial focus on counterintelligence.) As a 
result of the concerns raised in this report, a 1998 
Presidential Decision Directive (PDD-61) directed the Secretary 
of Energy to establish an Office of Counterintelligence in the 
Department, and this was done that same year.
    In 1999, Congress directed the creation of the National 
Nuclear Security Administration (NNSA), a semi-autonomous 
entity within the DOE with the mandate to streamline the 
management of the nation's nuclear weapons and national 
security programs. This new entity included an Office of 
Defense Nuclear Counterintelligence. The Chief of this Office 
reports directly to the Administrator and addresses the 
management of counterintelligence in the NNSA through the 
implementation of the policies of both the Secretary of Energy 
and the Administrator of the NNSA. A Secretarial Memorandum was 
signed that laid out the responsibilities and relationship 
between the new Office of Defense Nuclear Counterintelligence 
and its parent organization, the DOE Office of 
Counterintelligence. These two elements comprise the DOE 
Counterintelligence Program. Accordingly, there are now two 
directors--the Director of the DOE Office of 
Counterintelligence and the Chief of the NNSA Office of Defense 
Nuclear Counterintelligence--who both manage the same program 
staff at DOE Headquarters and manage their field programs at 
sites delineated along lines of the NNSA/DOE organization. 
However, although the sites are characterized as either DOE or 
NNSA, the program activities are not as easily separated since 
many NNSA program activities are supported by DOE sites. The 
Committee is concerned that this bifurcation has created 
administrative inefficiencies that affect day-to-day 
operations, has an adverse impact on counterintelligence 
investigations management, and diminishes the lines of program 
responsibility as well as overall accountability.
    Accordingly, the Committee directs the Office of the 
National Counterintelligence Executive--in consultation with 
the Secretary of Energy, the Administrator of the National 
Nuclear Security Administration, the Director of Central 
Intelligence and the Director of the Federal Bureau of 
Investigation--to review and assess the effectiveness of the 
division of the DOE Office of Counterintelligence and the NNSA 
Office of Defense Nuclear Counterintelligence, to include 
administrative and resource implications, as well as to assess 
the implications of consolidating the two programs. The 
Committee directs the Office of the National 
Counterintelligence Executive to provide a written report to 
theintelligence committees, and other relevant committees of 
the Congress, regarding this matter no later than December 1, 2002. 
This report should include recommendations to optimize the 
effectiveness and efficiency of the DOE/NNSA counterintelligence 
function.

 intelligence community financial management, planning and performance

Intelligence Community compliance with Federal financial accounting 
        standards

    A January 1997 Presidential report on Executive Branch 
oversight of the Intelligence Community budget stated that 
Department of Defense (DoD) elements implementing programs and 
activities of the National Foreign Intelligence Program were 
subject to the Chief Financial Officers (CFO) Act of 1990 (as 
amended). Additionally, the National Security Agency (NSA), the 
Defense Intelligence Agency (DIA), and the National 
Reconnaissance Office (NRO) were directed to prepare classified 
financial statements beginning with their reporting of fiscal 
year 1997 financial information.
    To date, the NRO has most vigorously pursued compliance 
with the CFO Act. An independent public accounting firm 
conducted an audit of the NRO's Fiscal Year 2000 financial 
statements. The audit, however, revealed significant 
shortcomings in the NRO's financial management practices. These 
deficiencies caused the accounting firm to issue a disclaimer 
of opinion on the fiscal year 2000 statements. The NRO has 
worked aggressively to rectify these deficiencies. The 
independent accounting firm's audit of the fiscal year 2001 
financial statements indicated substantial improvement by the 
NRO. As a result, the accounting firm was able to issue a 
qualified opinion on the statements. Nevertheless, progress has 
been limited for the remainder of the Intelligence Community.
    Senate Report 107-63 expressed the Senate Select Committee 
on Intelligence's concerns about the financial management 
practices throughout the Intelligence Community. The Report 
required the Director of Central Intelligence, in consultation 
with the Secretary of Defense, to direct the appropriate 
statutory Inspectors General to perform an audit of the form 
and content of the Fiscal Year 2001 financial statements of the 
DIA, NSA, National Imagery and Mapping Agency (NIMA), and the 
Central Intelligence Agency (CIA). The principal purpose of the 
audits was to determine if the agencies were preparing their 
financial statements consistent with Federal financial 
accounting standards and appropriate Office of Management and 
Budget guidance. Section 414 of this bill institutes a 
statutory requirement for an annual report describing the 
activities of each agency to ensure that their financial 
statements can be audited in accordance with Office of 
Management and Budget requirements.
    The Committee has received responses from the DoD and CIA 
Inspectors General outlining the results of their review of the 
form and content of the financial statements of the DIA, NSA, 
NIMA and CIA. The responses revealed that none of these 
agencies are able to produce auditable financial statements. 
Weaknesses include the improper preparation of selected 
required statements, failure to use accrual accounting, 
inability to reconcile the Fund Balance with Treasury, and 
inaccurate reporting of property, plant, and equipment. In 
fact, the newly-confirmed Inspector General for the Central 
Intelligence Agency identified these problems as a top priority 
in his testimony before the Committee at his confirmation 
hearing. The Committee is most concerned by the lack of 
internal controls reflected by these problem areas. The 
independent accounting firm audit conducted at the NRO also 
revealed a number of other weaknesses, particularly in the area 
of information systems security, that were not covered by the 
Inspector General form and content reviews.
    The response provided by the DoD Inspector General states 
that the NSA halted its plan to purchase a compliant accounting 
system based on guidance from the Under Secretary of Defense 
(Comptroller). The DoD Comptroller's instruction reflected a 
desire to develop a Department-wide Financial Management 
Modernization Program. The impact of this guidance is 
significant for the Intelligence Community because the DIA and 
the NIMA utilize portions of the NSA's accounting system. While 
the Committee understands the need for the DoD to have a common 
architecture for its myriad accounting systems, we are 
concerned that implementation of that standardized system is 
not estimated to be completed until 2007. Although the NSA has 
a plan to maintain and improve its current accounting system 
until the DoD completes its modernization program, its ability 
to fully comply with the CFO Act and other accounting 
requirements will be hindered. There also will be an impact on 
those agencies that rely on the NSA's accounting system. In 
order to monitor the impact of the development of the DoD's 
Financial Management Modernization Program, the Committee 
requests that the annual agency reports outlining progress 
towards auditable financial statements include a description of 
the impact of the modernization program and the stepsbeing 
taken to make current systems compliant with Federal standards in the 
interim.
    Senate Report 107-63 also directed that the Director of 
Central Intelligence, in consultation with the Secretary of 
Defense, ensure that the DoD intelligence agencies and the CIA 
receive an audit of their financial statements no later than 
March 1, 2005. The audits are to be performed by a statutory 
Inspector General or a qualified Independent Public Accountant, 
at the discretion and under the direction of the appropriate 
Inspector General. In order to ensure that the Director of 
Central Intelligence and the agency heads within the 
Intelligence Community have adequate financial data, the 
Committee restates the requirement that the CIA, NSA, NIMA and 
DIA receive an audit of their financial statements no later 
than March 1, 2005.
    The Committee notes that while the DoD and CIA Inspectors 
General complied with the requirement for form and content 
audits as stated in Senate Report 107-63, they did not receive 
direction from the Director of Central Intelligence. The 
Committee is concerned that this inaction is indicative of a 
hands-off approach to financial management by the Intelligence 
Community. The Community Management Staff has increased its 
efforts in this area to a degree, primarily in response to 
Senate Report 107-63. However, it has still conducted minimal 
proactive oversight. For example, the Community Management 
Staff has not been actively involved in meetings on the 
creation of the DoD Financial Management Enterprise 
Architecture. While the Community Management Staff would have 
little influence on its development, it should be engaged in 
discussions on the ability of this architecture to be linked to 
new financial management systems installed within the DoD's 
Intelligence Community elements. Such access will be crucial if 
the Community Management Staff is to provide the oversight 
necessary to ensure Community compliance with applicable 
financial reporting requirements.
    In order to facilitate adequate oversight of the 
Intelligence Community's financial management systems and 
practices, the Committee directs that no later than February 1, 
2003, the Deputy Director of Central Intelligence for Community 
Management provide the congressional intelligence committees 
with a report on how the Community Management Staff is 
structured to monitor Intelligence Community compliance with 
the CFO Act and related Office of Management and Budget 
guidance. This report should include planned actions to monitor 
the ability of each agency to comply with the Committee's 
requirement for a financial statement audit by 2005. It should 
also include a description of the Community Management Staff's 
ability to access the financial systems of each agency in order 
to generate required oversight information.

Strategic and performance planning for the Intelligence Community

    In response to a Committee request, the Intelligence 
Community recently completed its strategic and performance 
plans for fiscal year 2003. The plans address the priorities 
and goals of both the Intelligence Community and the individual 
agencies within the National Foreign Intelligence Program 
aggregation. Consistent with the Committee's report 
accompanying the Fiscal Year 2002 Intelligence Authorization 
Bill, the purpose of the plans is to provide the Director of 
Central Intelligence with vehicles with which to articulate 
program goals, measure program performance, improve program 
efficiency, and aid in resource planning. Updated performance 
plans for Fiscal Year 2004 are due to the Congress by March 1, 
2003.
    The Committee has reviewed the strategic and performance 
plans for fiscal year 2003 and compliments the Director of 
Central Intelligence's Community Management Staff for producing 
the first-ever plans coordinated across the Intelligence 
Community aimed at establishing performance measures aligned 
with the Director of Central Intelligence's stated priorities. 
The Committee believes, however, that more work needs to be 
done by the intelligence agencies, in close cooperation with 
the Community Management Staff, in developing refined program 
performance measures that can be used to determine if the 
Intelligence Community is achieving its stated strategic goals. 
A key issue is the development of performance plans and 
measures that are not focused solely on the attainment of 
intelligence capabilities but also on the value received from 
such capabilities in pursuit of Intelligence Community 
missions. The Committee feels that such ``mission-based'' 
performance plans and measures should be an essential element 
in any comprehensive effort to understand and evaluate the 
overall achievement of the Intelligence Community.
    The Committee thus directs the Director of Central 
Intelligence to include such output measures, designed to 
determine the value of Intelligence Community capabilities in 
achieving its stated strategic goals, in its fiscal year 2004 
performance plans. The Committee further directs that the 
fiscal year 2004 performance plans include specific information 
on how they were utilized by the individual intelligence 
agencies in preparing their sections of the fiscal year 2004 
budget for the National Foreign Intelligence Program.

               SECTION-BY-SECTION ANALYSIS AND DISCUSSION

                    TITLE I--INTELLIGENCE ACTIVITIES


Section 101. Authorization of appropriations

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

Section 102. Classified schedule of authorizations

    Section 102 states that the details of the amounts 
authorized to be appropriated for intelligence and 
intelligence-related activities and personnel ceilings for the 
entities listed in Section 101 for Fiscal Year 2003 are 
contained in a classified Schedule of Authorizations. The 
Schedule of Authorizations is incorporated into the Act by this 
section.

Section 103. Personnel ceiling adjustments

    Section 103 authorizes the Director of Central 
Intelligence, with the approval of the Director of the Office 
of Management and Budget, to exceed in Fiscal Year 2003 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 Director may exercise this authority 
only when necessary for the performance of important 
intelligence functions or to the maintenance of a stable 
personnel force, and any exercise of this authority must be 
reported to the intelligence committees of the Congress.

Section 104. Community Management Account

    Section 104 provides details concerning the amount and 
composition of the Community Management Account (CMA) of the 
Director of Central Intelligence.
    Subsection (a) authorizes appropriations for Fiscal Year 
2003 for the staffing and administration of various components 
under the CMA. Subsection (a) also authorizes funds identified 
for advanced research and development to remain available for 
two years.
    Subsection (b) authorizes 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) expressly authorizes the classified portion 
of the CMA.
    Subsection (d) requires that personnel be detailed on a 
reimbursable basis, with certain exceptions.
    Subsection (e) authorizes appropriations in the amount 
authorized for the CMA under subsection (a) to be made 
available for the National Drug Intelligence Center. Subsection 
(e) requires the Director of Central Intelligence to transfer 
these appropriations to the Department of Justice to be used 
for National Drug Intelligence Center activities under the 
authority of the Attorney General, and subject to Section 
103(d)(1) of the National Security Act of 1947 (50 U.S.C. 403-
3(d)(1)).

Section 105. Incorporation of reporting requirements

    Section 105 incorporates reporting requirements in the 
conference report, and House and Senate reports, and classified 
annexes thereto, into the Act.

 TITLE II--CENTRAL INTELLIGENCE AGENCY RETIREMENT AND DISABILITY SYSTEM


Section 201. Authorization of appropriations

    Section 201 authorizes appropriations for fiscal year 2003 
for the Central Intelligence Agency Retirement and Disability 
Fund.

                     TITLE III--GENERAL PROVISIONS


Section 301. Increase in employee compensation and benefits authorized 
        by law

    Section 301 provides that appropriations authorized by the 
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 the Act shall not be deemed to constitute 
authority for the conduct of any intelligence activity which is 
not otherwise authorized by the Constitution or laws of the 
United States.

Section 303. Definition of congressional intelligence committees

    Section 303 adds a definition of congressional intelligence 
committees to the National Security Act of 1947.

Section 304. Specificity of National Foreign Intelligence Program 
        budget amounts for counterterrorism, counterproliferation, 
        counternarcotics and counterintelligence

    Section 304 requires the National Foreign Intelligence 
Program budget submission to include cross-agency budget 
aggregates for total expenditures in the Intelligence Community 
in the areas of counterterrorism, counterproliferation, 
counternarcotics and counterintelligence. This information will 
assist the authorizing and appropriating committees of Congress 
to make informed decisions about funding levels in those 
critical areas.

Section 305. Modification of authority to make funds for intelligence 
        activities available for other intelligence activities

    Section 305 is intended to clarify Section 504 of the 
National Security Act of 1947 with respect to the reprogramming 
of funds from one intelligence activity to another. The 
provision makes clear that the ``unforeseen'' requirement in 
Section 504 does not include the fact that it was unforeseen by 
the Executive branch that Congress would lower the level of 
funding for a particular activity. Section 305 also requires 
the Director of Central Intelligence to certify in his letter 
to the congressional committees that the need for the 
reprogramming is both unforeseen and necessary to move funds 
from a lower to a higher priority activity.

Section 306. Clarification of authority of Intelligence Community to 
        furnish information on intelligence activities to Congress

    Section 306 reaffirms longstanding requirements that the 
Intelligence Community must report to its oversight committees 
all information necessary for those committees to fulfill their 
responsibilities. This includes the duty to abide by the 
Intelligence Community's reporting requirements under Sections 
501, 502, and 503 of the National Security Act of 1947, and 
other statutes. This provision is intended to clarify and 
preserve the Intelligence Community's unique relationship with 
its oversight committees in the wake of the USA PATRIOT Act of 
2001, which gave intelligence agencies access to new sources of 
information.

Section 307. Standardized transliteration of names into the Roman 
        alphabet

    Section 307 requires the Director of Central Intelligence 
to establish a standardized method for transliterating personal 
and place names originally rendered in any language that uses 
an alphabet other than the Roman alphabet, and to ensure that 
the method established is used across the Intelligence 
Community.

Section 308. Standards and qualifications for the performance of 
        intelligence activities

    Section 308 requires the Director of Central Intelligence 
to prescribe standards and qualifications for individuals who 
perform intelligence or intelligence-related activities for use 
by all of the agencies of the Intelligence Community. These 
standards and qualifications will ensure that there is a 
uniform understanding throughout the Intelligence Community of 
the Director's expectations for the performance of intelligence 
duties.

Section 309. Modification of David L. Boren National Security Education 
        Program

    Section 309 provides for the modification of the David L. 
Boren National Security Education Program by eliminating the 
undergraduate section of the Program and by restructuring the 
grants component to create a National Foreign Language 
Initiative. Section 309 also requires the Secretary of Defense, 
in conjunction with the Director of Central Intelligence, to 
produce a report outlining ways in which to move the Program 
from the trust fund into the regular appropriations process.

Section 310. Scholarships and work-study for pursuit of graduate 
        degrees in science and technology

    Section 310 directs the creation of a Director of Central 
Intelligence Science and Technology Graduate Scholarship 
Program and recommends authorization of funds to initiate the 
program. The primary purpose of the program is to provide 
funding for graduate scholarships at the Masters and Ph.D. 
levels in areas of advanced science and technology of greatest 
need to the Intelligence Community, with work-study 
opportunities and post-graduation service obligations. Section 
310 directs the submission of a plan recommending the optimal 
implementation of the Director of Central Intelligence Science 
and Technology Graduate Scholarship Program.

Section 311. National Virtual Translation Center

    Section 311 requires the Director of Central Intelligence 
to establish within the Intelligence Community the National 
Virtual Translation Center in order to link by secure 
electronic means the elements of the Community responsible for 
collection, storage, translation, analysis or other functions 
for which timely access to such information is important to the 
efficient and effective performance of their duties.

Section 312. Foreign Terrorist Asset Tracking Center

    Section 312 requires the Director of Central Intelligence 
to establish within the Central Intelligence Agency the Foreign 
Terrorist Asset Tracking Center to conduct all-source 
intelligence analysis of the finances and financial 
interactions of international terrorists and international 
terrorist organizations.

Section 313. Terrorist Identification Classification System

    Section 313 requires the Director of Central Intelligence 
to develop and maintain a list of known or suspected 
international terrorists and terrorist organizations and ensure 
that such list is available to all elements of the Federal, 
State and local governments that have a need for such 
information. This system will enable the various elements of 
the Intelligence Community that are engaged in counterterrorist 
activities to have a common source defining the parameters of 
the terrorist target and provide access to this information for 
those Federal, State and local officials responsible for 
protecting United States citizens from terrorist attacks.

Section 314. Annual report on foreign companies involved in the 
        proliferation of weapons of mass destruction that raise funds 
        in the United States capital markets

    Section 314 requires the Director of Central Intelligence 
to prepare an annual report setting forth whether--and, where 
appropriate, which--any foreign companies involved in the 
proliferation of weapons of mass destruction, or the means to 
deliver them, are involved in raising money through offerings 
in U.S. capital markets.

Section 315. Two-year extension of Central Intelligence Agency 
        Voluntary Separation Pay Act

    Section 315 extends the Central Intelligence Agency 
Voluntary Separation Pay Act for two years, to September 30, 
2005.

Section 316. Additional one-year suspension of reorganization of 
        Diplomatic Telecommunications Service Program Office

    Section 316 suspends until October 1, 2003 the effective 
date of the provisions in the Intelligence Authorization Act 
for Fiscal Year 2001 that require reorganization of the 
Diplomatic Telecommunications Service Program Office.

                    TITLE IV--REPORTING REQUIREMENTS


Section 401. Dates for submittal of various annual and semi-annual 
        reports to the congressional intelligence committees

    Section 401 identifies the various annual and semi-annual 
reports required to be submitted to the congressional 
intelligence committees under provisions in previous 
intelligence authorization acts and various other statutes. The 
section sets a uniform due date for annual and semi-annual 
reports, and provides for extensions of approximately 30 days 
of the due dates for annual, semi-annual and non-recurring 
reports with written notice to the congressional intelligence 
committees. Additional extensions are permitted if the official 
responsible for the report certifies that preparation of the 
report by the due date would be detrimental to national 
security.

Section 411. Annual assessment of satisfaction of Intelligence 
        Community with collection, analysis, and production of 
        intelligence

    Section 411 creates a statutory requirement to conduct an 
annual review required by Senate Report 106-48.

Section 412. Annual report on threat of attack on the United States 
        using weapons of mass destruction

    Section 412 creates a statutory requirement to submit an 
annual report required by Senate Report 105-24.

Section. 413. Annual report on covert leases

    Section 413 creates a statutory requirement to submit an 
annual report required by Senate Report 105-24.

Section 414. Annual report on improvement of financial statements of 
        certain elements of the Intelligence Community for auditing 
        purposes

    Section 414 creates a statutory requirement to submit an 
annual report required by Senate Report 107-63.

Section 415. Annual report on activities of Federal Bureau of 
        Investigation personnel outside the United States

    Section 415 creates a statutory requirement to submit an 
annual report required by House Report 104-832.

Section 416. Annual report of Inspectors General of the Intelligence 
        Community on proposed resources and activities of their offices

    Section 416 creates a statutory requirement to submit an 
annual report required by Senate Report 106-48.

Section 417. Annual report on counterdrug intelligence matters

    Section 417 creates a statutory requirement to submit an 
annual report required by Senate Report 106-279.

Section 431. Evaluation of policies and procedures of Department of 
        State on protection of classified information at Department 
        headquarters

    Section 431 creates a statutory requirement to submit an 
annual report required by Senate Report 106-279.

Section 441. Repeal of certain report requirements

    Section 441 repeals two existing annual report 
requirements.

                TITLE V--COUNTERINTELLIGENCE ACTIVITIES


Section 501. Short title; purpose

    Section 501 cites the title as the ``Counterintelligence 
Enhancement Act of 2002'' with the purpose of facilitating the 
enhancement of the counterintelligence activities of the United 
States Government.

Section 502. National Counterintelligence Executive

    Section 502 establishes the Office of the National 
Counterintelligence Executive.

Section 503. National Counterintelligence Policy Board

    Section 503 establishes the National Counterintelligence 
Policy Board, to be chaired by the National Counterintelligence 
Executive.

Section 504. Office of the National Counterintelligence Executive

    Section 504 establishes the Office of the National 
Counterintelligence Executive, to be headed by the National 
Counterintelligence Executive. The Office of the National 
Counterintelligence Executive shall be located in the Executive 
Office of the President.

TITLE VI--NATIONAL COMMISSION FOR REVIEW OF RESEARCH AND DEVELOPMENT OF 
                THE UNITED STATES INTELLIGENCE COMMUNITY


Section 601. Findings

    Section 601 presents the findings of Congress with respect 
to the importance of the research and development programs of 
the United States Intelligence Community.

Section 602. National Commission for Review of Research and Development 
        Programs of the United States Intelligence Community

    Section 602 establishes the National Commission for the 
Review of the Research and Development Programs of the United 
States Intelligence Community. Section 602 provides for the 
composition and membership of the Commission, identifies the 
duties of the Commission, and the subject matters for the 
Commission's review.

Section 603. Powers of the Commission

    Section 603 describes the powers of the Commission to hold 
hearings, obtain information and testimony, and seek 
cooperation from agencies of the federal Government in support 
of the Commission's work.

Section 604. Staff of Commission

    Section 604 provides for the hiring of staff and 
consultants for the Commission.

Section 605. Compensation and travel expenses

    Section 605 provides the procedures for paying compensation 
and travel expenses to Commission members.

Section 606. Treatment of information relating to national security

    Section 606 directs that the Director of Central 
Intelligence assume responsibility for national security 
information that is considered or used by the Commission.

Section 607. Final report; termination

    Section 607 provides the due date for the Commission's 
final report and the date of termination of the Commission.

Section 608. Assessments of final report

    Section 608 requires the Director of Central Intelligence 
and Secretary of Defense to provide an assessment of the 
Commission's final report to the congressional intelligence 
committees.

Section 609. Inapplicability of certain administrative provisions

    Section 609 exempts the Commission from the Federal 
Advisory Committee Act and the Freedom of Information Act.

Section 610. Funding

    Section 610 describes the funding for the Commission.

Section 611. Definitions

    Section 611 provides definitions for this title.

                            COMMITTEE ACTION

    On May 8, 2002, the Select Committee on Intelligence 
approved the Bill and ordered that it be favorably reported.

                           ESTIMATE OF COSTS

    Pursuant to paragraph 11(a) of Rule XXVI of the Standing 
Rules of the Senate, the estimated costs incurred in carrying 
out the provisions of this Bill for fiscal year 2003 are set 
forth in the Classified Annex to this Bill. Estimates of the 
costs incurred in carrying out this Bill in the five fiscal 
years thereafter are not available from the Executive Branch, 
and therefore the Committee deems it impractical, pursuant to 
paragraph 11(a)(3) of Rule XXVI of the Standing Rules of the 
Senate, to include such estimates in this report. On May 10, 
2002, the Committee transmitted this Bill to the Congressional 
Budget Office and requested that it conduct an estimate of the 
costs incurred in carrying out the provisions of this Bill.

                    EVALUATION OF REGULATORY IMPACT

    In accordance with paragraph 11(b) of Rule XXVI of the 
Standing Rules of the Senate, the Committee finds that no 
regulatory impact will be incurred by implementing the 
provisions of this legislation.

                        CHANGES IN EXISTING LAW

    In the opinion of the Committee it is necessary to dispense 
with the requirements of paragraph 12 of Rule XXVI of the 
Standing Rules of the Senate in order to expedite the business 
of the Senate.

                                  [all]