Well thank you very much for the hospitality and the honor of being here with you today. Let me say that there is an old saying around Washington that a day spent away from Washington is a day well spent, even hours spent away from Washington are a day well spent. So it is a particular pleasure for me to be here today. I have a lot to cover. One of the things that I thought I would do to begin is to reflect back on my open session with the Senate Intelligence Committee a couple of weeks ago. The subject was Guatemala and it was a very rough session for those of us in the Intelligence Community. It is something which Les Aspin's Intelligence Oversight Board is going to be working on in the future.
Let me say that, obviously, US intelligence, particularly the CIA and its clandestine service, is under fire today. And [it is] subject to review--appropriately I think, by the Aspin blue ribbon commission. There are also many other reviews running parallel with this. The House Permanent Select Committee on Intelligence has an effort ongoing called "The Intelligence Community: the 21st Century" better known as IC21. We are also involved in the Administration's National Performance Review Phase Two, which takes a look at what parts of the activities of the federal government can be devolved or eliminated or franchised or privatized. It's an effort that all the departments and agencies of government are dealing with. NPR Phase One was the streamlining and downsizing effort last year. The Council on Foreign Relations has now decided to conduct a special review of intelligence for the future. The Georgetown Institute for the Study of Diplomacy has produced a major pamphlet [on the Intelligence Community] which is excellent. It doesn't go enough into the defense side of [intelligence] but I recommend it for your review if you have an opportunity to see it.
Given, what I would call, the liberal and negative nature of some of the media's commentary and treatment of intelligence, the shrillness of the intelligence detractors, and the slide of confidence in understanding of US intelligence and in particular the CIA, it is important that we have this blue ribbon commission at this particular point in time.
Let me talk a little bit about the things that contribute to declining appreciation for the role of intelligence in the world of tomorrow. Clearly the end of the Cold War was a major factor. Some people have alleged that because the world is fundamentally now more open, you don't need secret intelligence. In fact, some people say that open source intelligence provides all the sources and methods that you would ever need to understand what is going on in the world. There are people clearly viscerally opposed to the concept of secrecy. They say that there is too much secrecy, that secrecy is bad. And let me say that there is another commission running in parallel to your Commission chaired by Senator Moynihan, which is going to be looking at secrecy in government. Add to that the fact that there is a lack of historical understanding of the role that intelligence plays in American society and also in the national security. This is not well treated in history. I think this tells us that there is a fundamental need for more openness and more transparency about what intelligence is and how it fits into the overall national security arena.
From my own point of view--my historical experiences dominated by the Cold War--I'd say that the national security stool of the Cold War period stood on three legs, defense, diplomacy, and intelligence. [Intelligence] was that significant an input to national security during the Cold War. I think the historical work that is yet to be done will prove that. Of course during that period of time, we were standing on a floor of unambiguous economic superiority, as well.
Clearly the current slide, the defining events of the last year and a half or so, probably started with the Ames case. In the context of how CIA internally managed and treated Ames himself, this story is not explainable. We had a rough time last year between the DCI and the Senate Intelligence Committee. Disclosures in that interaction I think turned out to be tempests in teapots--things like concerns over the existence of a "phantom" National Reconnaissance Office building and issues like that. More recently the French going public on CIA operations in France, and even more recently Congressman Torricelli's accusations against the CIA with regard to Guatemala. So these I think set the stage for placing intelligence under scrutiny, an issue that I think is legitimate at this time.
Some people also feel that intelligence costs too much. I am not allowed to formally give you how much intelligence costs, but let me say that the figures that have been mentioned in public are on the order of $27 or $28 billion dollars a year: that's more than 10 percent of the Defense budget. Let's not get confused here, public media also says that the CIA's part of the intelligence budget is only about one tenth of that large number. So the CIA number really is small when compared to this larger alleged number; presumably the other numbers relate to the cost of the Intelligence Community.
We don't talk very much about the programs that we buy in intelligence, but let me speak a little bit to them in broad terms. Some of our satellites cost up to a billion dollars to place on orbit, and there is no guarantee that once you launch that satellite it's actually going to arrive on orbit, deploy, and be operational. But a single satellite can cost up to a billion dollars. We have substantially more than a dozen and a half of these vehicles on orbit on any given day. Many of these satellites now are quite old, some of them approaching ten years of age; that gives you a feel for how you can very quickly spend large sums of money. A super-computer or a high-performance computing engine designed to do code breaking or perhaps to do sophisticated programming for imagery satellites costs between $20 and $30 million apiece. We have several dozen of these machines. We have peripheral reconnaissance aircraft. We have tens of thousands of people whose salaries have to be paid in the intelligence business. After a while it all adds up to what they say in Washington is real money.
I have been the Deputy Director of Central Intelligence now for over three years. I have lived through the period of Bob Gates. I have lived through the period of Jim Woolsey. And I am now getting ready hopefully to break in a new Director of Central Intelligence--John Deutch has been nominated for that position. Let me address some positive things that have happened in the past or are happening in the Intelligence Community. I believe intelligence has done more than virtually any other federal government agency or department to adjust to the new world. More needs to be done. I think that's where the Blue Ribbon Commission will play a vital role. But let me talk a little bit about some of the things that have happened over the last three years. These points are rarely discussed when the Intelligence Community or the CIA is under fire.
Downsizing. The Intelligence Community started downsizing in 1990 on a program that was to be a ten-year effort to reduce the size of the Intelligence Community by almost 25 percent. Those reductions are likely to have to continue past the year 2000, when it will be closer to a 30 percent reduction. The National Performance Review target for the downsizing of the rest of the federal government on the civil service side was only 12 percent. We already have segments of the Intelligence Community that have been reduced by 12 percent right now in 1995.
In terms of streamlining and restructuring, [there have been] massive closures of overseas sites. One of the things we have been accused of is not adjusting our Cold War stance. The National Security Agency, already mentioned, has gone from 40 sites in one area of management to 24 and in the next several years they will be down to 20 sites. Over half of the major Cold War sites that were surrounding the communist world have been closed. Facilities associated with satellite management have and will continue to be consolidated. We have been aggressively attacking duplication within the Intelligence Community. For example, now there is very little analysis going on inside CIA on the military problem. CIA is closing many of its stations overseas, while it is also opening some new ones in the changed world, particularly in the former Soviet Union. We are doing extensive building consolidations and a lot of infrastructure consolidation in the Community.
We are aggressively implementing quality management. Les Aspin will be talking with companies here in the Milwaukee area about applying modern management techniques across the Intelligence Community, [including defense intelligence]. [We have undertaken] a major effort to apply quality management techniques. We developed a new framework strategy which defines for us a future world in which flexibility, adaptability, economy, efficiency, and reach rather than full time presence, are basic elements. The requirement [for intelligence] is to have surge [capability], not to have total presence all around the world. We are focusing extensively on the concept of community. The idea here is that the whole is greater than the sum of the parts.
We have restructured and improved the way that the intelligence budget, which is done jointly between the Director of Central Intelligence and the Secretary of Defense, is managed. And there has been a lot of innovative work done over the last two years, particularly under Jim Woolsey, to identify savings in those areas.
We are defining the entire requirements process, or the needs process, including our ability to do evaluations. The President just signed Presidential Decision Directive 35 (PDD-35), that defines our requirements from tier 0 to tier 4. Tier 0 is warning and crisis management. Tier 4 is countries that are virtually of no interest to the United States. [The PDD] specifically identifies targets that we will not collect against.
We have been dramatically improving our open source posture. Open sources now are a very important part of our business, because they can define much of the data we need, so that we need not use scarce secret resources going after information that is already available in the public domain.
We are standardizing accountability for the management of all the intelligence disciplines. The Director of the National Security Agency is responsible for signals intelligence, the CIA Director for Operations is responsible for human intelligence and running the clandestine service, the Central Imagery Office is responsible for imagery, a designated manager is responsible for business related to open sources and another for other more arcane disciplines.
We are introducing a major redesign of the clandestine service. This plan [deals with] counterintelligence, accountability, career development, and training and education all the way from recruitment to retirement. [We are] taking a look at how human intelligence business will work for the future including the human and the human technical part of it; looking at how covert action--which is another mission that only the CIA has--will be operated in the future world; taking a look at how our analysts and our clandestine service, and people who have information in other discipline areas will operate together to create a finer focus on human operations; and again, overlaying all of this is our continued initiatives in quality management.
We are leaders in ideas of innovative civil service reform. I won't elaborate on this but in looking at opportunities for selective early retirement we are going to be talking with the Congress about an up-or-out policy for the Intelligence Community, using the Director of Central Intelligence authority.
We have had a wholesale review of the entire security establishment under the Joint Security Review.
We have just completed a major intelligence bottom-up review paralleling the Defense Department's bottom-up review effort to fight simultaneously two separate geographic wars.
We are focusing also on trying to refine and reform cost effectiveness of our sources and methods in other classified areas.
In the future, a lot of interaction will occur between foreign intelligence and law enforcement. What happened in Oklahoma City is going to force a great overlap or parallelism with law enforcement as we attempt to deal with issues like narcotics, terrorism, proliferation, international organized crime, illegal mass migration, and other issues like this where law enforcement and foreign intelligence find themselves operating against targets simultaneously.
We have redesigned virtually all aspects of the reconnaissance systems for the future and there is a lot of work going on in reconnaissance surveillance, both air breathers and in the satellite world.
And of course all of this time we have also had to support [US policy in] the real world--Haiti, Rwanda, Somalia, Iraq, Iran, terrorism, Angola, and what is happening with the former Soviet Union.
Under the last two DCIs more than 60 studies and task forces have been undertaken to take a look at everything from politicization within the Intelligence Community to the issue of how the Intelligence Community can better display its history and achieve more openness and transparency.
In the Washington world of unrelenting negativism, not much credit or interest is taken in these accomplishments. But I believe that they will serve the future DCIs in good stead, and over the longer term I think that they are clearly going to propel us into a better future. And when we combine this with what we hope to be the fruitful efforts that come out of the Aspin Commission, I think that there is real room for optimism.
So what is my personal view about where the Aspin Commission should be going? What intelligence issues should be focused upon by the Aspin Commission? Well, as Les has already indicated, his Commission is doing three things: mission and functions of intelligence, the structure of intelligence, and the cost of intelligence.
The mission and functions part, I think, basically is effectively defined for us. The Presidential Decision Directive 35 defines those basic missions and functions for intelligence. I would like to articulate them in a slightly different way than the tier way that they are explained. The mission and functions for the intelligence of the future are traditional political military things that we do: looking at the residual of the former communist world, whether it's Cuba or North Korea; looking at the former Soviet Union; states that represent strategic threats to the United States; regional, ethnic, tribal conflicts of that type. Economic intelligence, less industrial espionage--we will not be doing industrial espionage for reasons I won't define here because it takes about twenty minutes to go through a rationale for why that's the case. And of course the transnational issues I've already defined. Again terrorism, narcotics, proliferation, international organized crime, and the like. These are areas that we share with law enforcement.
In my view the Aspin Commission needs to then focus on the issue of structure and the issue of cost. Our budgets in intelligence have been flat for the last four years. By flat I mean we have actually "eaten" inflation. So they have in fact gone down by a substantial amount in real terms--by more than ten percent.
On the issue of cost, I fundamentally believe that the intelligence budget, that is the amount of money available for intelligence for the future, will remain about level or perhaps will slightly increase over time but it will be up to us and the results of the Commission to define whether or not that is going to be the case. The areas that are the cost drivers relate to things like technical investment. We have a major ambitious effort ongoing right now to consolidate and to improve and to reduce the overall cost of an aging satellite architecture. In fact we are living off, effectively, the architecture of the past and the fat of the land, satellites that have lasted a lot longer than they were intended to last.
Support to military operations is clearly a very important component of that account. Support to military operations means providing intelligence to the war fighter. The Department of Defense is a very demanding customer. Intelligence occupies every significant level of command in the Department of Defense. It is the primary mission, the one which intelligence considers to be the all out, stressing mission. And clearly when the Intelligence Community is not engaged and does not support the Department of Defense on the battlefield, we have resources available to do other things. So it is the stressing and defining mission. There are clearly also new directions and demands in internationalization of intelligence, commercialization of reconnaissance, and other factors that relate to this. I would maintain to you that the threat basis is actually larger and more diverse than it was in the Cold War and it takes an entirely different approach although the fundamentals are still the same.
The cost of "ownership" of people has almost doubled in the last several years in the federal service--just "owning" a civil service employee. So we are buying people at the expense of program. We are buying people at the expense of investment. That is why there is a lot of pressure to try to downsize the people side of the government. But we have to be very careful with regard to how we deal with people who are intelligence professionals.
Technology investment in my view needs to be retained. For example, encryption technology is proliferating now at a great rate in the technology world, particularly in signals intelligence. The world is going from analog to digital and that provides a lot of stress for the technical fields. There is the growth of new threats such as information warfare. And again I think the vivid images of Oklahoma City yesterday transmitted around the country say much about terrorism as a target.
The question here has to do with how much do our targets understand their own vulnerability to our intelligence. I would tell you that the greater openness in intelligence has sensitized our traditional targets. They have come to know more about their vulnerabilities. They have hardened themselves and have steeled themselves against our means. They have done this by physically going underground, using denial and deception, and focusing on dramatically improved security techniques. This relates a little bit to the conversation we had about understanding how intelligence occasionally has to penetrate the ugly in order to understand the ugly.
So let me talk specifically about the issues that I think are appropriate for the Aspin Commission to focus on. First, if you are going to look at the structure of intelligence: Are you going to take a revolutionary approach? Are you going to allow the Intelligence Community to evolve? I would say to you that the Intelligence Community is not yet fully evolved and that evolution may be better than revolution. I would also suggest that if you try revolution, you are going to spend a lot of money. The costs that you are going to have to lay out are real dollars. And there are going to be costs in terms of dysfunction while the Community adjusts to the new revolutionary structure. Even in evolution, I think that there are a lot of issues that need sensitive review and would require some kind of costly implementation. Some of these issues are as follows. First, clearly implementing the true concept of community. The concept of intelligence together. I am talking about the Intelligence Community equivalent to the concept of jointness as it was applied to the Department of Defense. We are taking a look at the role, authority, structure, tenure, lots of issues associated with the top management elements of the Intelligence Community. In this case we are talking about the Director of Central Intelligence or the Director of National Intelligence or whatever term you want to use. However you put it, the mix of civilian and military [functions] as it relates to the Directors and Deputy Directors, how the staff works with the National Intelligence Council, CIA analytical component, the CIA itself, the Community Management Staff, the other things that are considered to be top tier need to be associated with this DCI or DNI. And then of course, [we are looking at] the relationship of the DCI with the CIA, to the President, to the government, to the Congress, to the budget authorities, how that fits with the Department of Defense in relationship with OMB, the Office of Management and Budget, and how the budget should be structured and the openness of the budget process. How should intelligence counterespionage and security be managed in this country? Issues related to defense intelligence management--specifically, the defense intelligence component. We are talking here about the Defense Intelligence Agency. The services that the DIA Director provides in his role as the chairman of military intelligence Board, as the senior functional manager for all of the intelligence budget, and as a manager for certain aspects of human and other intelligence disciplines. There is obviously the question of what to do about CIA, particularly the human intelligence part of it and the management of the clandestine service. How can we improve the management of imagery? The imagery world has been quite dispersed and we have taken some initial steps to fight battles in the Central Imagery Office but we didn't go as far as we probably should have. And that is clearly going to be an issue for the Aspin Commission. How can we improve support to underdeveloped customers? If we are going to be supporting Congress, the National Economic Council, the Treasury Trade representatives in dealing with the economic intelligence issues, we have to fit the intelligence structure to those departments and customers. Again, law enforcement and Intelligence Community coordination, the whole future of covert action, improving openness and communicating the mission of intelligence, and implementation of quality management. How to perhaps improve the oversight process at the congressional level. Again we are finding requirements and needs and evaluations related to intelligence activities. The implications of the internationalization of intelligence. We are now talking about the fact that we are every day having to provide support to the UN or other kinds of covert activity. Other possibilities for reducing duplication and cost in the Intelligence Community, managing our intelligence partnerships. We have intelligence partnerships with almost 400 police, counterintelligence, security, law enforcement, and counterpart intelligence services around the world. This is a very interesting and complex issue to manage for the future. I believe that the American people would like to see their federal institutions, such as the Intelligence Community, working smoothly. I also believe that they have a basic instinct that intelligence is something that the country requires.
Particularly strong criticism recently has been focused on CIA. And I would like to make a few comments about CIA. First, it is important for you to understand how CIA is constructed. It is constructed in basically four separate directorates. The clandestine service itself, the Directorate for Operations, which does the human intelligence work around the world and also manages covert action around the world. It has an all source intelligence branch, a multi-disciplinary top level analytical branch that provides support to the President and the Departments, all source intelligence support. It has a Directorate of Science and Technology that builds technology for everybody from spies to satellites. And it has an administrative overlay that manages people, does training and education, does budget, does all the other kinds of things to manage communications and logistics that an institution this size would require. So CIA does two things, covert action and foreign intelligence. It's perhaps the covert action part of it that most confuses the American people. CIA doesn't invent covert action, covert action is a policy instrument of the American government. It falls between diplomacy and defense. It is a policy instrument decided upon by policy people not by intelligence officers. It is the National Security Council, the President, the State Department, the Defense Department that decides on covert action policy. We do not decide on it on our own. They give us the money for it or they authorize the money for it in the Executive Branch. And this money is also appropriated and authorized on the Hill and all covert actions are informed to the Hill in the context of findings in memorandums of notification. The civics part of it I simply don't think people understand. So CIA does not run off on its own to invent its own covert actions. I think that if you didn't have a Central Intelligence Agency you would have to reinvent one for the future. Because covert action in my view is not an instrument that the federal government is going to disavow. You need a clandestine service to run foreign intelligence human operations. You need a top level analytical instrument to provide support to the Presidency, and you need Science and Technology to support that. So essentially you will have to either reinvent CIA or at least retain in a divested way all of its critical parts.
However, CIA is a culture in change. Part of its liability, interestingly enough, may come out of the context of more of its history having been exposed. And I think that there is an issue here that we are going to have to continue to deal with, particularly if this history is left to interpretation by a new wave of political correctness. The people at CIA are of an incredible caliber, in my own view. The business is very complex. We are not without our own mistakes. But when we do make mistakes it's clear today that they can cost both in lives and in our reputation. I think that one of the great advantages here is that out of the Aspin Commission we, the Intelligence Community and perhaps the CIA, will perhaps emerge stronger and more relevant and in my view more of a contributor. And I would like to see this be the end the product of Les Aspin's work. So thank you very much.