Congressional Documents

                                  59 006                                 



                            105 th Congress                             



                                 Report                                 



                                                                            



                                                                             



                        HOUSE OF REPRESENTATIVES                        



                               2d Session                               



                                105 508                                 



                                                                        







                 INTELLIGENCE AUTHORIZATION ACT FOR FISCAL YEAR 1999           







                                                                         



  May 5 , 1998.--Committed to the Committee of the Whole House on the    

 State of the Union and ordered to be printed                            

                                                                         



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

 submitted the following                                                 

                                  REPORT                                 



                         [To accompany H.R. 3694]                        



       [Including cost estimate of the Congressional Budget Office]      





     The Permanent Select Committee on Intelligence, to whom was referred 

  the bill (H.R. 3694) to authorize appropriations for fiscal year 1999   

  for intelligence and intelligence-related activities of the United      

  States Government, the Community Management Account, and the Central    

  Intelligence Agency Retirement and Disability System, and for other     

  purposes, having considered the same, report favorably thereon with an  

  amendment and recommend that the bill as amended do pass.               



                               CONTENTS                                 

         The bill as reported                                             2

         Purpose                                                          5

         Overall perspective on the intelligence budget and committee inte6

         Scope of committee review                                        6

         Committee findings and recommendations                           7



   Areas of Special Interest                                               



        9                                                                       



                    The National Security Agency Budget, Culture, Method

          of Operation                                                  

        9                                                                       



          National Reconnaissance Program                               



        11                                                                      



          The National Imagery and Mapping Agency (NIMA)                



        12                                                                      



          Imagery Archiving                                             



        13                                                                      



          Automated Intelligence Data Fusion                            



        14                                                                      



          Imagery Server Systems                                        



        14                                                                      



          Defense Counterintelligence                                   



        15                                                                      



          Intelligence Congressional Justification Books                



        16                                                                      



   Joint Military Intelligence Program                                     



        16                                                                      



   Tactical Intelligence and Related Activities                            



        28                                                                      



   Section-by-Section Analysis of the Bill as Reported                     



        33                                                                      



          Title I--Intelligence Activities                              



        33                                                                      



   Section 101--Authorization of Appropriations                            



        33                                                                      



   Section 102--Classified Schedule of Authorizations                      



        33                                                                      



   Section 103--Personnel Ceiling Adjustments                              



        33                                                                      



   Section 104--Community Management Account                               



        33                                                                      



                     Title II--Central Intelligence Agency Retirement   

          and Disability System                                         

        35                                                                      



   Section 201--Authorization of Appropriations                            



        35                                                                      



           Title III--General Provisions                                



        35                                                                      



      Section 301--Increase in Employee Compensation and Benefits          

   Authorized by Law                                                       

        35                                                                      



   Section 302--Restriction on Conduct of Intelligence Activities          



        35                                                                      



   Section 303--Application of Sanctions Laws to Intelligence Activities   



        35                                                                      



   Section 304--Sense of Congress on Intelligence Community Contracting    



        36                                                                      



          Title IV--Central Intelligence Agency                         



        36                                                                      



   Section 401--Extension of CIA Voluntary Separation Pay Act              



        36                                                                      



      Section 402--Enhanced Protective Authority for CIA Personnel and     

   Family Members                                                          

        37                                                                      



   Section 403--Technical Corrections                                      



        38                                                                      



          Title V--Department of Defense                                



        38                                                                      



      Section 501--Extension of Authority to Engage in Commercial          

   Activities as Security for Intelligence Collection Activities           

        38                                                                      



   Committee position                                                      



        39                                                                      



      Findings and recommendations of the Committee on Government Reform   

   and Oversight                                                           

        39                                                                      



   Oversight findings                                                      



        39                                                                      



   Fiscal year cost projections                                            



        39                                                                      



   Congressional Budget Office estimates                                   



        39                                                                      



   Committee cost estimates                                                



        41                                                                      



      Specific Constitutional authority for Congressional enactment of this

   legislation                                                             

        42                                                                      



   Changes to existing law                                                 



        42                                                                      





   The amendment is as follows:                                           



     Strike out all after the enacting clause and insert in lieu thereof  

  the following:                                                          





          SECTION 1. SHORT TITLE; TABLE OF CONTENTS.                              



     (a) Short Title.--This Act may be cited as the ``Intelligence        

  Authorization Act for Fiscal Year 1999''.                               

     (b) Table of Contents.--The table of contents for this Act is as     

  follows:                                                                





      Sec. 1. Short title; table of contents.                                 



                              TITLE I--INTELLIGENCE ACTIVITIES                    



      Sec. 101. Authorization of appropriations.                              



      Sec. 102. Classified schedule of authorizations.                        



      Sec. 103. Personnel ceiling adjustments.                                



      Sec. 104. Community management account.                                 



           TITLE II--CENTRAL INTELLIGENCE AGENCY RETIREMENT AND DISABILITY SYSTEM 



      Sec. 201. Authorization of appropriations.                              



                               TITLE III--GENERAL PROVISIONS                      



            Sec. 301. Increase in employee compensation and benefits          

      authorized by law.                                                      

      Sec. 302. Restriction on conduct of intelligence activities.            



      Sec. 303. Application of sanctions laws to intelligence activities.     



      Sec. 304. Sense of Congress on intelligence community contracting.      



                           TITLE IV--CENTRAL INTELLIGENCE AGENCY                  



      Sec. 401. Extension of the CIA Voluntary Separation Pay Act.            



            Sec. 402. Enhanced protective authority for CIA personnel and     

      family members.                                                         

      Sec. 403. Technical amendments.                                         



                   TITLE V--DEPARTMENT OF DEFENSE INTELLIGENCE ACTIVITIES         



            Sec. 501. Extension of authority to engage in commercial          

      activities as security for intelligence collection activities.          



           TITLE I--INTELLIGENCE ACTIVITIES                                        



          SEC. 101. AUTHORIZATION OF APPROPRIATIONS.                              



     Funds are hereby authorized to be appropriated for fiscal year 1999  

  for the conduct of the intelligence and intelligence-related activities 

  of the following elements of the United States Government:              

    (1) The Central Intelligence Agency.                                   



    (2) The Department of Defense.                                         



    (3) The Defense Intelligence Agency.                                   



    (4) The National Security Agency.                                      



       (5) The Department of the Army, the Department of the Navy, and the 

   Department of the Air Force.                                            

    (6) The Department of State.                                           



    (7) The Department of the Treasury.                                    



    (8) The Department of Energy.                                          



    (9) The Federal Bureau of Investigation.                               



    (10) The National Reconnaissance Office.                               



    (11) The National Imagery and Mapping Agency.                          



          SEC. 102. CLASSIFIED SCHEDULE OF AUTHORIZATIONS.                        



     (a) Specifications of Amounts and Personnel Ceilings.--The amounts   

  authorized to be appropriated under section 101, and the authorized     

  personnel ceilings as of September 30, 1999, for the conduct of the     

  intelligence and intelligence-related activities of the elements listed 

  in such section, are those specified in the classified Schedule of      

  Authorizations prepared to accompany the bill H.R. 3694 of the 105th    

  Congress.                                                               

     (b) Availability of Classified Schedule of Authorizations.--The      

  Schedule of Authorizations shall be made available to the Committees on 

  Appropriations of the Senate and House of Representatives and to the    

  President. The President shall provide for suitable distribution of the 

  Schedule, or of appropriate portions of the Schedule, within the        

  executive branch.                                                       

          SEC. 103. PERSONNEL CEILING ADJUSTMENTS.                                



     (a) Authority for Adjustments.--With the approval of the Director of 

  the Office of Management and Budget, the Director of Central            

  Intelligence may authorize employment of civilian personnel in excess of

  the number authorized for fiscal year 1999 under section 102 when the   

  Director of Central Intelligence determines that such action is         

  necessary to the performance of important intelligence functions, except

  that the number of personnel employed in excess of the number authorized

  under such section may not, for any element of the intelligence         

  community, exceed two percent of the number of civilian personnel       

  authorized under such section for such element.                         

     (b) Notice to Intelligence Committees.--The Director of Central      

  Intelligence shall promptly notify the Permanent Select Committee on    

  Intelligence of the House of Representatives and the Select Committee on

  Intelligence of the Senate whenever he exercises the authority granted  

  by this section.                                                        



          SEC. 104. COMMUNITY MANAGEMENT ACCOUNT.                                 



     (a) Authorization of Appropriations.--There is authorized to be      

  appropriated for the Community Management Account of the Director of    

  Central Intelligence for fiscal year 1999 the sum of $139,123,000.      

  Within such amount, funds identified in the classified Schedule of      

  Authorizations referred to in section 102(a) for the Advanced Research  

  and Development Committee shall remain available until September 30,    

  2000.                                                                   

     (b) Authorized Personnel Levels.--The elements within the Community  

  Management Account of the Director of Central Intelligence is authorized

  283 full-time personnel as of September 30, 1999. Personnel serving in  

  such elements may be permanent employees of the Community Management    

  Staff or personnel detailed from other elements of the United States    

  Government.                                                             

   (c)  Classified Authorizations.--                                      



       (1) Authorization of appropriations.--In addition to amounts        

   authorized to be appropriated for the Community Management Account by   

   subsection (a), there is also authorized to be appropriated for the     

   Community Management Account for fiscal year 1999 such additional       

   amounts as are specified in the classified Schedule of Authorizations   

   referred to in section 102(a).                                          

       (2) Authorization of personnel.--In addition to the personnel       

   authorized by subsection (b) for elements of the Community Management   

   Account as of September 30, 1999, there is authorized such additional   

   personnel for such elements as of that date as is specified in the      

   classified Schedule of Authorizations.                                  

     (d) Reimbursement.--Except as provided in section 113 of the National

  Security Act of 1947, during fiscal year 1999, any officer or employee  

  of the United States or a member of the Armed Forces who is detailed to 

  the staff of the Community Management Account from another element of   

  the United States Government shall be detailed on a reimbursable basis, 

  except that any such officer, employee or member may be detailed on a   

  nonreimbursable basis for a period of less than one year for the        

  performance of temporary functions as required by the Director of       

  Central Intelligence.                                                   

   (e)  National Drug Intelligence Center.--                              



       (1) In general.--Of the amount appropriated pursuant to the         

   authorization in subsection (a), the amount of $27,000,000 shall be     

   available for the National Drug Intelligence Center. Within such amount,

   funds provided for research, development, test, and evaluation purposes 

   shall remain available until September 30, 2000, and funds provided for 

   procurement purposes shall remain available until September 30, 2001.   

       (2) Transfer of funds.--The Director of Central Intelligence shall  

   transfer to the Attorney General of the United States funds available   

   for the National Drug Intelligence Center under paragraph (1). The      

   Attorney General shall utilize funds so transferred for the activities  

   of the National Drug Intelligence Center.                               

       (3) Limitation.--Amounts available for the National Drug            

   Intelligence Center may not be used in contravention of the provisions  

   of section 103(d)(1) of the National Security Act of 1947 (50 U.S.C. 403

   3(d)(1)).                                                               

       (4) Authority.--Notwithstanding any other provision of law, the     

   Attorney General shall retain full authority over the operations of the 

   National Drug Intelligence Center.                                      

     (f) Transfer Authority for Funds for Security Requirements at        

  Overseas Locations.--                                                   

       (1) In general.--Of the amount appropriated pursuant to the         

   authorization in subsection (a), the Director of Central Intelligence   

   may transfer funds to departments or other agencies for the sole purpose

   of supporting certain intelligence community security requirements at   

   overseas locations, as specified by the Director.                       

       (2) Limitation.--Amounts made available for departments or agencies 

   under paragraph (1) shall be--                                          

    (A) transferred to the specific appropriation;                         



       (B) allocated to the specific account in the specific amount, as    

   determined by the Director;                                             

       (C) merged with funds in such account that are available for        

   architectural and engineering support expenses at overseas locations;   

   and                                                                     

       (D) available only for the same purposes, and subject to the same   

   terms and conditions, as the funds described in subparagraph (C).       

           TITLE II--CENTRAL INTELLIGENCE AGENCY RETIREMENT AND DISABILITY SYSTEM  



          SEC. 201. AUTHORIZATION OF APPROPRIATIONS.                              



     There is authorized to be appropriated for the Central Intelligence  

  Agency Retirement and Disability Fund for fiscal year 1999 the sum of   

  $201,500,000.                                                           

           TITLE III--GENERAL PROVISIONS                                           



                    SEC. 301. INCREASE IN EMPLOYEE COMPENSATION AND BENEFITS      

          AUTHORIZED BY LAW.                                                      

     Appropriations authorized by this Act for salary, pay, retirement,   

  and other benefits for Federal employees may be increased by such       

  additional or supplemental amounts as may be necessary for increases in 

  such compensation or benefits authorized by law.                        

          SEC. 302. RESTRICTION ON CONDUCT OF INTELLIGENCE ACTIVITIES.            



     The authorization of appropriations by this Act shall not be deemed  

  to constitute authority for the conduct of any intelligence activity    

  which is not otherwise authorized by the Constitution or the laws of the

  United States.                                                          

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



     Section 905 of the National Security Act of 1947 (50 U.S.C. 441d) is 

  amended by striking out ``January 6, 1999'' and inserting in lieu       

  thereof ``January 6, 2000''.                                            

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



     It is the sense of Congress that the Director of Central Intelligence

  should continue to direct that elements of the intelligence community,  

  whenever compatible with the national security interests of the United  

  States and consistent with operational and security concerns related to 

  the conduct of intelligence activities, and where fiscally sound, should

  competitively award contracts in a manner that maximizes the procurement

  of products properly designated as having been made in the United       

  States.                                                                 

           TITLE IV--CENTRAL INTELLIGENCE AGENCY                                   



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



     Section 2(f) of the Central Intelligence Agency Voluntary Separation 

  Pay Act (Public Law 103 36, 50 U.S.C. 403 4 note) is amended by striking

  out ``September 30, 1999'' and inserting in lieu thereof ``September 30,

  2001''.                                                                 

                    SEC. 402. ENHANCED PROTECTIVE AUTHORITY FOR CIA PERSONNEL AND 

          FAMILY MEMBERS.                                                         

     Section 5(a)(4) of the Central Intelligence Agency Act of 1949 (50   

  U.S.C. 403f(a)(4)) is amended by striking out ``and the protection of   

  Agency personnel and of defectors, their families'' and inserting in    

  lieu thereof ``and the protection of current and former Agency personnel

  and their immediate families, and defectors and their immediate         

  families''.                                                             

          SEC. 403. TECHNICAL AMENDMENTS.                                         



     (a) Central Intelligence Agency Act of 1949.--(1) Section 5(a)(1) of 

  the Central Intelligence Agency Act of 1949 (50 U.S.C. 403f(a)(1)) is   

  amended--                                                               

       (A) by striking out ``subparagraphs (B) and (C) of section          

   102(a)(2)'' and inserting in lieu thereof ``paragraphs (2) and (3) of   

   section 102(a)'';                                                       

       (B) by striking out ``(c)(5)'' and inserting in lieu thereof        

   ``(c)(6)'';                                                             

    (C) by inserting ``(3),'' after ``403(a)(2),'';                        



    (D) by inserting ``(c)(6), (d)'' after ``403 3''; and                  



    (E) by inserting ``(a), (g)'' after ``403 4''.                         



     (2) Section 6 of such Act (50 U.S.C. 403g) is amended by striking out

  ``(c)(5)'' each place it appears and inserting in lieu thereof          

  ``(c)(6)''.                                                             

     (b) Central Intelligence Agency Retirement Act.--Section 201(c) of   

  the Central Intelligence Agency Retirement Act (50 U.S.C. 2011(c)) is   

  amended by striking out ``(c)(5)'' each place it appears and inserting  

  in lieu thereof ``(c)(6)''.                                             

           TITLE V--DEPARTMENT OF DEFENSE INTELLIGENCE ACTIVITIES                  



                    SEC. 501. EXTENSION OF AUTHORITY TO ENGAGE IN COMMERCIAL      

          ACTIVITIES AS SECURITY FOR INTELLIGENCE COLLECTION ACTIVITIES.          

     Section 431(a) of title 10, United States Code, is amended by        

  striking out ``December 31, 1998'' and inserting in lieu thereof        

  ``December 31, 2001''.                                                  



                                          PURPOSE                                 



   The bill would:                                                         



       (1) Authorize appropriations for fiscal year 1999 for (a) the       

   intelligence and intelligence-related activities of the U.S. Government,

   (b) the Community Management Account, and (c) the Central Intelligence  

   Agency Retirement and Disability System;                                

       (2) Authorize the personnel ceilings on September 30, 1999 for the  

   intelligence and intelligence-related activities of the U.S. Government 

   and permit the Director of Central Intelligence to authorize personnel  

   ceilings in Fiscal Year 1999 for any intelligence element up to two     

   percent above the authorized levels, with the approval of the Director  

   of the Office of Management and Budget;                                 

       (3) Authorize $27 million for the National Drug Intelligence Center 

   in Johnstown, Pennsylvania;                                             

       (4) Extend the authority of the President to defer the imposition of

   sanctions through January 6, 2000, when to proceed without delay would  

   seriously risk the compromise of an intelligence source or method, or an

   ongoing criminal investigation;                                         

       (5) Extend the CIA's authority to offer ``early out'' incentives to 

   employees to enable the CIA to meet the intelligence personnel needs of 

   the next century;                                                       

       (6) Enhance the CIA's ability to provide personal protection to its 

   employees and defectors and the families of such protectees in          

   situations presenting specific or credible threats of physical harm; and

       (7) Extend the current Department of Defense authority to engage in 

   commercial activities as security for intelligence collection.          

            OVERALL PERSPECTIVE ON THE INTELLIGENCE BUDGET AND COMMITTEE INTENT   



      The classified annex to this public report includes the classified   

   Schedule of Authorizations and its associated language. The committee   

   views the classified Annex as an integral part of this legislation. The 

   classified Annex contains a thorough discussion of all budget issues    

   considered by the committee, which underlies the funding authorization  

   found in the Schedule of Authorizations. The committee intends that all 

   intelligence programs discussed in the classified Annex to this report  

   be conducted in accord with the guidance and limitations set forth as   

   associate language therein. The classified Schedule is incorporated     

   directly into this legislation. The classified Annex is available for   

   review by all Members of the House of Representatives, subject to the   

   requirements of clause 13 of rule XLIII of the House.                   

                                 SCOPE OF COMMITTEE REVIEW                        



      U.S. intelligence and intelligence-related activities under the      

   jurisdiction of the committee include the National Foreign Intelligence 

   Program (NFIP), and the Tactical Intelligence and Related Activities    

   (TIARA) and the Joint Military Intelligence Program (JMIP) of the       

   Department of Defense.                                                  

      The NFIP consists of all programs of the Central Intelligence Agency,

   as well as those national foreign intelligence and/or                   

   counterintelligence programs conducted by: (1) the Department of        

   Defense; (2) the Defense Intelligence Agency; (3) the National Security 

   Agency; (4) the Departments of the Army, Navy, and Air Force; (5) the   

   Department of State; (6) the Department of the Treasury; (7) the        

   Department of Energy; (8) the Federal Bureau of Investigation; (9) the  

   National Reconnaissance Office; and (10) the National Imagery and       

   Mapping Agency.                                                         

      The Department of Defense TIARA are a diverse array of reconnaissance

   and target acquisition programs that are a functional part of the basic 

   military force structure and provide direct information support to      

   military operations. TIARA, as defined by the Joint Chiefs of Staff and 

   the Secretary of Defense, include those military intelligence activities

   outside the General Defense Intelligence Program that respond to the    

   needs of military commanders for operational support information, as    

   well as to national command, control, and intelligence requirements. The

   Committee on National Security in the House of Representatives has joint

   oversight and authorizing jurisdiction of the programs comprising TIARA.

      The JMIP was established in 1995 to provide integrated program       

   management of defense intelligence elements that support defense-wide or

   theater-level consumers. Included within JMIP are aggregations created  

   for management efficiency and characterized by similarity, either in    

   intelligence discipline (e.g., Signals Intelligence (SIGINT), Imagery   

   Intelligence (IMINT)), or function (e.g., satellite support, aerial     

   reconnaissance). The following aggregations are included in the JMIP:   

   (1) the Defense Cryptologic Program (DCP); (2) the Defense Imagery and  

   Mapping Program (DIMAP); (3) the Defense General Intelligence           

   Applications Program (DGIAP), which itself includes (a) the Defense     

   Airborne Reconnaissance Program (DARP), (b) the Defense Intelligence    

   Tactical Program (DITP), (c) the Defense Intelligence Special           

   Technologies Program (DISTP), (d) the Defense Intelligence Counterdrug  

   Program (DICP), and (e) the Defense Space Reconnaissance Program (DSRP).



                           COMMITTEE FINDINGS AND RECOMMENDATIONS                 



      The committee completed its review of the President's fiscal year    

   1999 budget, carrying out its annual responsibility to prepare an       

   authorization based on close examination of intelligence programs and   

   proposed expenditures. The review reflected the committee's continuing  

   belief that intelligence activities must be examined by function as well

   as by program. Thus, the committee's review was structured across       

   program lines and intelligence disciplines and themes. The committee    

   held seven full committee budget-related hearings on budgetary issues,  

   including: acquisition of overhead collection systems, SIGINT issues,   

   IMINT issues, Human Intelligence (HUMINT) issues, Analysis and          

   Production, and Covert Action. A specific hearing was also held that    

   dealt with the Future Imagery Architecture, and two hearings were held  

   at which the Director of Central Intelligence (DCI) testified, in order 

   to understand his views and plans for the future of intelligence and the

   Intelligence Community (IC). The committee also held six full-committee 

   briefings on areas such as commercial mapping technology, collection    

   management, and the status of the space reconnaissance programs, in     

   particular, and the status of IC acquisition processes, in general.     

   There were, in addition, numerous individual briefings of Members and   

   over 100 staff briefings on programs, specific activities, and budget   

   requests.                                                               

      The committee continued to place heavy emphasis on understanding and 

   addressing the future needs of the IC, and the several distinct roles   

   that it plays in national security. For the past three years, the       

   committee has discussed the fact that our national security is affected 

   by a set of issues more broad than those emphasized for the past 50     

   years. Heretofore, some of these issues have not been identified so     

   readily with our global interests. Throughout our continuing review,    

   there has been a constant theme: the threats that face our nation demand

   that the IC be vigilant on both the strategic and tactical levels and   

   the IC must maintain a world-wide view, with a highly flexible set of   

   resources.                                                              

      The committee is struck by what can be characterized as a growing    

   sense of apathy toward our national security and intelligence. Because  

   the threats are less obvious and untraditional, many inside and outside 

   of government believe that our nation has fewer worries and is somehow  

   safer. That we can dramatically reduce our intelligence and defense     

   resources, because we are at peace, is a concept that many endorse,     

   especially when weighing such expenditures against those needed         

   domestically. Unfortunately, our nation is no less at risk now than     

   during the Cold War. What has changed is the nature of the threat. The  

   likelihood of a major nuclear confrontation has receded. But other      

   aspects of our security are at greater risk, including the growing      

   possibility that a rogue nation will attack United States' interests, or

   even the United States itself, with a nuclear device or some other      

   weapon of mass destruction.                                             

      Two specific incidents occurred recently that have shown light on how

   much at risk, and how ill-prepared, we are. First is the most recent    

   confrontation with Iraq. Yet again, the United States faced a dilemma in

   how to deal with Saddam Hussein, a dictator possessing weapons of mass  

   destruction and a demonstrated will to use them, who has consistently   

   threatened stability of a critically important, strategic region. The   

   real issues in this situation could be boiled down to two--did we have a

   policy, and did we have the intelligence that would not only support a  

   policy decision and its implementation, but would also provide the      

   information necessary to develop options? Regarding the latter, the     

   answer was a resounding ``no.''                                         

      The second incident is related to our nation's vulnerability to      

   technological attack. In February 1998, Department of Defense computer  

   systems fell victim to systematic, coordinated attacks by individuals   

   who, luckily, appeared to be driven by the challenge of conducting such 

   attacks rather than by malicious intent. Regardless of intent, the      

   attack again demonstrates that information technology has become this   

   nation's strength as well as its Achilles' heel. Consequently, high     

   priority must be placed on developing our abilities to warn, detect and 

   defend against such attacks, as well as to be positioned to conduct such

   attacks when necessary. The committee stresses that this is a national  

   security issue that encompasses the entirety of our nation's            

   infrastructure, not just that of Defense or of the government. Likewise,

   this issue must be faced in terms of threat and attack, not just in     

   terms of law enforcement. At the end of the day, we must be vigilant in 

   ensuring that the IC is positioned to address this new challenge.       

      Our intelligence capabilities have dwindled since the breakup of the 

   Soviet Union, and we have failed to build new capabilities that will    

   become increasingly critical. This is especially true in the areas of   

   espionage, covert action, and in our toughest SIGINT activities. We, as 

   a nation, cannot continue this course. The world is such that           

   individuals and groups will continue to disrupt our foreign policy      

   objectives and threaten our national security. The only thing that will 

   change will be that their resources will increase and their capabilities

   will grow ever more fearsome. We must be prepared, by having the        

   intelligence resources we need, well before a crisis occurs, and        

   preferably in a fashion that might allow us to preempt it. We can do no 

   less.                                                                   

      As a result of these demands, the committee evaluated the budget     

   submission with an eye toward looking at future needs and capabilities. 

   Specifically, five major themes came out of this evaluation:            

       We must invest in a recapitalization and modernization of our SIGINT

   capabilities;                                                           

       We must invest in re-establishing and rebuilding our clandestine    

   espionage or HUMINT infrastructure;                                     

       We must continue to invest in all-source analysis, establishing a   

   ``global,'' strategic outlook that will allow for proper indications and

   warning for the policymakers and key decision makers throughout         

   government;                                                             

    We must rebuild covert action capabilities; and,                       



       We must invest in advanced research and development in all programs 

   within the IC.                                                          



      Likewise, the committee's review brought to light some fundamental   

   questions that are partially addressed in this budget, and will be      

   specifically pursued over the next year. These include:                 

      Will the growing cost of the National Reconnaissance Program (NRP)   

   continue unabated, and how is this affecting the other programs within  

   the NFIP?                                                               

      Are we placing the proper requirements on the development of our     

   future overhead systems? In essence, are we structuring it only to      

   monitor and surveil known targets, or do we want to develop systems that

   focus on reconnaissance and uncovering truly secret information?        

      Is financial management within the IC, specifically within the NRP   

   and the National Imagery and Mapping Program, rigorous enough that the  

   DCI can make needed tradeoffs?                                          

      Is the balance of investment between overhead systems and other      

   methods of collection correct, given the types of information that is   

   needed for national security and foreign policy planning?               

      Are we properly emphasizing and investing in areas such as           

   processing, analysis and distribution, the activities that make useful  

   the massive amounts of data that is anticipated with new technical      

   collection systems?                                                     

      Is the IC approaching information operations in a fashion that       

   properly positions us to face the future challenges?                    

      Are we investing properly in the right types of research and fully   

   exploiting commercially available technologies?                         

      These are questions that must be addressed. They will be the focus of

   the committee's future oversight and actions.                           

                                 AREAS OF SPECIAL INTEREST                        



    THE NATIONAL SECURITY AGENCY BUDGET, CULTURE, METHOD OF OPERATION    



      The committee has concluded that very large changes in the National  

   Security Agency's culture and method of operations need to take place,  

   including changes in its budget methodology. NSA should be given credit 

   for many changes already introduced, but the committee believes that the

   results have not gone far enough, and that NSA will not meet its Unified

   Cryptologic Architecture (UCA) goals without tackling head-on some very 

   fundamental internal obstacles.                                         

      Additions to the Consolidated Cryptologic Program (CCP) budget are   

   being used as leverage to effect some of the internal reforms urgently  

   needed. This is being done in several ways. First, the committee is     

   funding and mandating external management reviews. Second, the committee

   is attempting to infuse fresh thought, needed expertise (especially in  

   systems engineering), and greater fairness by insisting that significant

   portions of certain categories be contracted out and that outside       

   proposals and expertise be solicited, notably in systems engineering,   

   advanced research and development, and in development activities        

   conducted by the Advanced Technology Centers. Third, fences have been   

   placed on portions of the budget, with the prospect that a considerable 

   amount of money could be reprogrammed for other IC needs if NSA does not

   develop detailed strategic and business planning.                       

      These steps are taken partially because the committee has been       

   frustrated in attempts to start needed reforms during fiscal year 1998. 

   Outside management reviews, budget cuts and adds to reduce acquisition  

   cycle time, plus cuts to lower the budget percentage allocated to       

   support, were initiated in the fiscal year 1998 authorization process,  

   but all have met resistance and have been deflected from their intended 

   purpose. Subsequently, the committee also found unreceptiveness to      

   development of cost effectiveness analyses that could direct the        

   agency's and SIGINT community's investment priorities. It also found    

   that fiscal year 1998 and fiscal year 1999 investments of money and     

   personnel in categories critical to the future, continue to be          

   minimized, at best, and that NSA often cannot track allocations for     

   critical functions that cross the old program and bureaucratic lines,   

   much less enforce implementation of DIRNSA policy priorities.           

      Therefore, the committee concludes that a far more radical revision  

   of the budget process than presently contemplated is necessary. Just as 

   the military must train the way it will fight, NSA must budget according

   to the critical categories of a new and completely different            

   architecture and mode of operations. Further, the old budget categories 

   have provided little insight into and fulfillment of the old            

   architecture.                                                           

      Most difficult of all, NSA must develop a new culture in which all   

   team together on a new architecture, rather than bubbling up disparate  

   ideas and programs from across NSA and expending much of its energy on  

   probable duplication. This challenge cannot be minimized, because much  

   of NSA's past strength has come from its localized creativity and       

   quick-reaction                                                          



                    capability, which enabled it to rise when necessary to        

          overcome the stultifying effect that the bureaucracy of such a large    

          organization can have.                                                  

      It has often been said, by both Congress and the administration, that

   the IC neglects processing and the entire ``downstream'' area in favor  

   of more exotic and interesting collection programs, and that this trend 

   has worsened in recent years. The committee requests that, after        

   receiving this bill, the Community Management Staff (CMS) organize an   

   effort to provide statistics on trends for investment in collection as  

   opposed to processing or downstream areas. Even if comparable data      
   cannot be found to document the balance over the past ten years, we     

   should establish a 1997 baseline, if practicable, and keep track        

   thereafter. Eventually, we may be able to establish some rule of thumb  

   for the amount of downstream investment required to use efficiently our 

   investments in collection, although this could be subject to changing   

   technology and the effect on costs at either end. The CMS is asked to   

   explore this possible system for tracking SIGINT investment, in         

   conjunction with NSA, which has thought about potential methodologies.  

   CMS participation appears necessary because much SIGINT collection and  

   processing crosses program boundaries and accumulation of the data would

   require access to information outside NSA, as well as the presence of an

   objective arbiter.                                                      

      For the same reasons, CMS is also asked to undertake immediately the 

   establishment of meaningful metrics to evaluate henceforth the cost     

   effectiveness of various SIGINT collection programs. NSA has resisted   

   this on grounds that meaningful metrics cannot be found, but the        

   committee believes they must be found and that NSA and other community  

   programs must be run more like a corporation that systematically        

   evaluates the productivity of various lines of operation, terminates or 

   downgrades some accordingly, and switches available dollars to those    

   that produce the most return or have the greatest promise. Such data is 

   needed across the IC to determine where our funds should be placed, and 

   should have been developed to help guide the UCA deliberations. It can  

   still have a major impact on UCA implementation plans. There are many   

   other potential uses, including for decisions on the elimination of     

   legacy systems within NSA and for DCI and DoD consideration of          

   cross-program trades.                                                   

      Finally, the committee has requested that an independent panel assess

   community-wide Electronic Intelligence (ELINT) planning and budgeting.  

                     National Reconnaissance Program                     



      For several years, the committee has been concerned with the         

   increasing costs of several major National Reconnaissance Office (NRO)  

   programs and the NRP's growing share of the NFIP budget. Not seeing any 

   relief from the tight fiscal environment, the committee has sought to   

   find technological innovations and managerial reforms in the NRP that   

   could reduce costs. This goal lay behind the committee's push to shift  

   to larger numbers of smaller satellites, which the committee thought    

   also would provide better performance against hard targets, reduce      

   satellite vulnerability, and help to counter foreign denial and         

   deception practices.                                                    

      The committee had hoped that acquisition reform and a shift in       

   strategy to smaller satellites would control if not reduce costs in the 

   near-term, and enable the DCI to increase investment elsewhere in the   

   NFIP and the NRO to invest new technologies, in support of new or higher

   priority missions, like counter-proliferation. So far, however, this    

   hope has not been fulfilled, but the committee still believes that this 

   strategy, if properly enforced, will produce results in time. The       

   committee is now exploring also the benefits of cost caps, believing    

   with the DCI that they may help to discipline the acquisition system.   

      The committee, in summary, is not satisfied that all appropriate     

   measures have been taken to reduce or control costs in the NRP or to    

   adequately measure the cost-effectiveness of all overhead collection    

   activities. The committee believes that the DCI needs to exercise much  

   more knowledgeable and diligent oversight of NRO programs, with an eye  

   to freeing up funds for investment elsewhere, wherever possible. This   

   oversight must extend from requirements tradeoffs, to cost estimating,  

   to acquisition oversight. The DCI also needs to acquire the expertise   

   necessary to make tradeoffs across the major NFIP programs. The DCI can 

   no longer afford to rely on the major program managers to police their  

   organizations and budgets. The committee has recommended additional     

   funds for the DCI to accelerate the development of these capabilities.  

              The National Imagery and Mapping Agency (NIMA)             



      The committee is very concerned about incidents which cause it to    

   question the adequacy of financial management at NIMA. Although the     

   committee appreciates the extra information given in the CBJB addenda   

   and found the data to be helpful in tracking general costs, it has been 

   almost impossible to get consistent budget information from NIMA on     

   detailed questions. There have been numerous instances over the past few

   months where NIMA has provided conflicting data on major programs and   

   has been unable to reconcile the different numbers. Committee inquiries 

   aside, these are basic questions that NIMA must be able to answer       

   internally in order to function.                                        

      Of further concern, the committee learned the evening before the     

   committee mark that NIMA is facing a shortfall in fiscal year 1999 in   

   its civilian pay, similar to that faced last year. Although the         

   committee understands the difficulty in forecasting civilian pay, most  

   agencies' problems occur during a fiscal year when promotions or new    

   hiring outpaces attrition. The committee does not understand why NIMA is

   already forecasting a shortfall for fiscal year 1999, especially since  

   the agency lost hundreds of employees in fiscal year 1998.              

      The committee is also concerned about the internal reallocation of   

   funds that NIMA has implemented, thus far, in fiscal year 1998. Although

   the committee understands that NIMA took its share of unallocated cuts, 

   this does not fully explain the movement of money between programs, nor 

   why reprogramming requests were not received. Further, the apparent     

   ambiguity associated with these actions, the apparent fungibility of the

   accounts, and the fact that, on occasion, NIMA had difficulty explaining

   such actions, draws into question whether the management at NIMA has the

   ability or desire to force analytic rigor over the budget process.      

      The committee is concerned that NIMA either simply does not want to  

   tell Congress of its dealings, or it simply doesn't know how money is   

   being spent and managed. Neither option                                 



                    is good. Generally, the committee is skeptical regarding      

          whether NIMA has the ability to forecast, manage, and execute its       

          budget.                                                                 

      Two factors weigh in NIMA's favor, however. First, the new Director  

   of NIMA has indicated his understanding that changes, and some difficult

   decisions, must be made. He has also indicated his willingness and      

   desire to work with the committee to take on these challenges. Second,  

   the committee is aware of the DCI's budget task force on NIMA (within   

   the Community Management Staff) and strongly supports this effort. The  

   committee encourages the Director of NIMA to fully utilize the task     

   force resources to provide concrete steps in getting NIMA on track. Put 

   simply, NIMA must make significant changes in the way it executes and   

   manages its budget, and relates this information to Congress, in order  

   to establish any credibility.                                           

                            Imagery Archiving                            



      The committee believes there is a need for a long-term, cohesive     

   strategy for preserving the Nation's investment in space and airborne   

   reconnaissance imagery (including all formats: film-based,              

   electro-optic, infrared, radar and video). Currently, the responsibility

   of archiving imagery belongs to various organizations, including the    

   NIMA, the Defense Intelligence Agency (DIA), and the National Archives. 

   Each maintains literally millions of images in various formats.         

      The committee is concerned that these archiving efforts are          

   disjointed and do not provide an indefinite, cost-effective retention   

   solution. Although much of the value associated with investments in     

   imagery relates to short-term, national defense requirements, the future

   value to scientific and domestic requirements cannot be adequately      

   estimated. The life expectancy of archived imagery, however, is         

   dependent on the various storage media; some of these media may not     

   survive even for longer-term national defense use. The committee        

   believes recent technological developments in the commercial sector can 

   provide economical and extremely long-life mass imagery storage. These  

   technologies also provide an opportunity for developing and instituting 

   a cohesive long-term strategy for archiving imagery.                    

      The committee directs the Secretary of Defense and the DCI to        

   develop, and report to the congressional defense and intelligence       

   committees not later than February 28, 1999, a cohesive and coordinated 

   set of practices and procedures for storing and archiving all           

   imagery--both U.S. reconnaissance and, to the extent necessary,         

   commercially-procured imagery. This report will include a recommendation

   for consolidating these responsibilities under a single organization.   

   Further, the report will include the new processes and technologies     

   necessary for maintaining imagery ``on-line'' for national and military 

   use and the processes for subsequently archiving all U.S. government    

   imagery indefinitely and at the lowest cost. The committee recommends   

   that the Administration investigate the latest data storage technologies

   that are capable of indefinitely maintaining data quality to determine  

   whether their application will decrease archival costs by allowing,     

   among other things, higher density storage, longer-term (hundreds of    

   years) storage between restorations, and less stringent                 

   storage-environment requirements.                                       

                    Automated Intelligence Data Fusion                   



      The committee is disturbed by the number of requests in the          

   Congressional Justification Books (CJBs) that are justified by the      

   development and fielding of data ``fusion'' algorithms, systems, and    

   processes. Although the committee fully supports the need to assist     

   human analytical processes with automated capabilities, the committee   

   believes there is no intelligence community leadership coordinating     

   these various developments and activities to ensure that the proper     

   fusion efforts are being undertaken and that there are no, or at least  

   minimal, duplications of effort.                                        

      Further, the committee notes that the very notion of data fusion is  

   enigmatic to the point that ``correlation'' and ``fusion'' become       

   interchangeable, and the very definitions preclude a holistic view of   

   the issue. There have been no agreed goals regarding what fusion is to  

   provide, what it is to accomplish or what products it is to create.     

   Simply put, there is no way the Congress can fully understand the issues

   of intelligence data fusion because the IC does not seem to understand  

   it.                                                                     

      The committee believes that community-wide emphasis is necessary to  

   address the many issues surrounding ``fusion.'' Therefore, the committee

   requests that the Deputy Director of Central Intelligence for Community 

   Management (DDCI/CM) and the Assistant Secretary of Defense (Command,   

   Control, Communications, and Intelligence)(ASD(C\3\I)) provide the      

   intelligence committees with a long-term strategy and plan for          

   coordinating and developing the various intelligence data fusion        

   efforts. The committee believes that this plan should include the       

   establishment of community-wide definitions, required products and      

   services of fusion developments, a highly visible insight as to the     

   numerous projects to promote interoperability and coordination of       

   developments, and a detailed funding plan for community-wide fusion     

   needs. The committee requests this plan be provided no later than April 

   15, 1999.                                                               

                          Imagery Server Systems                         



      In response to a critical need for imagery dissemination, the Office 

   of Special Technologies, ASD (C\3\I), sponsored a U.S. Pacific Command  

   project to put digitized imagery on a server-based network. This project

   became known as the Demand Driven Direct Digital Dissemination System,  

   or 5D. This system was meant as an interim solution, to eventually be   

   incorporated into NIMA's Imagery Product Archive/Imagery Product Library

   (IPA/IPL) server system.                                                

      The committee understands that, despite expectations, the 5D imagery 

   server system will not be replaced soon by NIMA's libraries program. The

   reasons for this are numerous, and range from slow software development 

   for the IPA and the initial version of the IPL, to obsolete 5D hardware 

   that cannot run the new IPL software. This latter issue is particularly 

   problematic since it means that replacement of 5D systems requires new  

   hardware procurement that is not funded in NIMA's current Libraries     

   budget. In fact, there are many 5D terminals not included in the IPL    

   systems currently funded in NIMA's budget.                              



      The committee notes that NIMA will soon field the national-level     

   Library and expects that 5D users will want to be able to interface with

   it immediately. As stated before, this may not be possible with current 

   5D hardware. The committee believes that 5D systems should be replaced  

   as soon as possible, but that current users cannot afford a lapse in    

   image product availability. Finally, the committee notes that NIMA funds

   the maintenance of the 5D but that the ASD(C\3\I) sponsors the system,  

   and that both have informed the committee that there are limited funds  

   available to keep 5D fully functional. These problems must be solved.   

      The committee requests that ASD(C\3\I) and the Director of NIMA      

   provide the committee a report on the background, status, direction, and

   cost of both the 5D and IPL systems. Further, the committee requests    

   that during the preparation of the fiscal year 2000 budget request, a   

   plan be prepared for correcting the funding and system fielding problems

   outlined above.                                                         

                       DEFENSE COUNTERINTELLIGENCE                       



      For several years, the committee has raised concerns about downsizing

   Department of Defense Counterintelligence (CI) personnel and funding at 

   the same time that Defense CI is being asked to take on additional      

   responsibilities and cope with an unprecedented increase in operations  

   tempo. For example, the FCIP has been challenged to improve its         

   counterterrorism and force protection capabilities. The revised DoD CI  

   strategic plan suggests that future FCIP budgets may reflect further    

   shifts in resources to support military commanders in these areas. At   

   the same time, the FCIP must continue its traditional counterespionage  

   activities, provide protection to U.S. military acquisition activities, 

   better analyze and detect anomalies that might detect espionage         

   activities and, most recently, develop a computer intrusion             

   investigations capability and training regimen. The downsizing of CI    

   seems to take place almost absent analysis of the importance of the CI  

   contribution, for example, to the intelligence effort supporting        

   deployed commanders. Feedback from recent deployments indicates that CI 

   and HUMINT have been preeminent intelligence disciplines and, in fact,  

   have been described by G2s and commanders as the disciplines of choice  

   within the Defense Department. Yet, in the competition for funding      

   within the Defense Department and across the National Foreign           

   Intelligence Program, the FCIP's resource needs, in the committee's     

   opinion, are frequently shortchanged.                                   

      The program elements that fund counterintelligence within the Defense

   Department are complex and spread across the Department. In addition to 

   the FCIP, CI programs can be found in the Tactical Intelligence and     

   Related Activities budget. Dispersed CI funding has value in that       

   tactical CI elements maintain close operational relationships with their

   assigned units, both in terms of presence and resources. Totally        

   centralized management of CI might diminish these operational           

   relationships and the responsiveness of the elements to unique Service  

   requirements. However, the limited authority that the Office of the     

   Secretary of Defense (OSD) focal point for CI has to oversee and        

   evaluate the various CI programs within the Department has made it      

   difficult to develop or sustain a comprehensive CI capability for       

   Defense. This is particularly evident in the apparently limited ability 

   of OSD to influence resource allocation decisions concerning the        

   Department's aggregate CI capabilities.                                 

      The committee understands that efforts are underway to centralize and

   improve OSD's focus on significant CI activities government-wide which  

   have an impact on the Department. This is a step in the right direction.

   Yet, there may be need for more to be done. For example, many have been 

   concerned that limited procurement dollars in the FCIP and other CI     

   programs can make even modest equipment acquisition or modernization    

   programs almost impossible. Repeatedly, Congress has had to increase    

   funding lines so that reasonable levels of modernization or equipment   

   purchases could occur. The intelligence committees have acted to repair 

   shortages in funding for operational and investigative activities in the

   last few FCIP budget submissions, and they have expressed concern about 

   the impact of continued manpower downsizing on the CI program.          

              INTELLIGENCE CONGRESSIONAL JUSTIFICATION BOOKS             



      In the committee report on H.R. 1119 (H. Rept. 105 132), the         

   committee directed that the Congressional Justification Books (CJB) and 

   the Congressional Budget Justification Books (CBJB) accompanying the    

   intelligence budget request must contain all direct costs of a program, 

   including the costs of operating and maintaining the systems or project.

   The committee notes the very good progress the Intelligence Community   

   made in this respect with the fiscal year 1999 CBJBs, but that the      

   materials received were still not complete with the information         

   required. For example, in the CJBs, the operations and maintenance costs

   of some intelligence aircraft systems show the direct operating costs,  

   but do not reflect the direct depot maintenance costs. Numerous service 

   systems show procurement costs, but do not reflect the operations costs 

   for fielded systems nor the personnel required to man them. In the      

   CBJBs, there were large gaps in necessary budget crosswalks from past   

   years to the current year. In fact, some of the fiscal year 1999 CBJBs  

   had less budget information on programs than was available in the fiscal

   year 1998 CBJB. At best, these gaps make understanding the total costs  

   of a program difficult; at worst, this is suggestive of an attempt to   

   hide total program costs.                                               

      The committee directs, beginning with the fiscal year 2000 budget    

   request that the Secretary of Defense and the Director of Central       

   Intelligence include all associated costs of an intelligence program or 

   project within the justification materials. The committee will monitor  

   progress carefully over the next year and will consider stronger        

   measures as necessary.                                                  



                            JOINT MILITARY INTELLIGENCE PROGRAM                   



           ES 3A,-$3.2 million                                                     



      The budget request contained $3.2 million in research and            

   development, Defense-Wide, for continued upgrade of the SIGINT systems  

   on the ES 3A aircraft.                                                  

      The committee has been informed that the Navy has decided to         

   terminate this aircraft. The committee, therefore, recommends no funding

   for the requested upgrades.                                             

           Tactical Control and Analysis Center, Transfer $800,000                 



      The budget request included $800,000 in research and development,    

   Defense-Wide, for continued development of the Marine Corps Tactical    

   Control and Analysis Center (TCAC).                                     

      The committee believes the development of an analytical center for   

   Marine Corps tactical operations is more appropriately a Marine Corps   

   responsibility rather than a National Security Agency, Defense          

   Cryptologic Program activity. Therefore, the committee recommends the   

   budget request in research and development, Marine Corps, line 170.     

           Information production, -$10.0 million                                  



      The committee understands that NIMA is testing and evaluating COTS   

   applications as part of the USIGS migration and firmly approves of this 

   approach. However, it also appears that NIMA continues to do a          

   substantial amount of proprietary development. Therefore, the committee 

   authorizes a reduction to this account by $10.0 million and recommends  

   that NIMA decrease its development of proprietary applications.         

           Information production: Product generation, -$15.0 million              



           Information production: Product outsourcing, +$15.0 million             



           Information production: Integrated product cells, +$5.0 million         



      The budget request contains $740.6 million for National Imagery and  

   Mapping Agency (NIMA) operations, including $391.5 million for          

   geospatial information production.                                      

      The committee is very supportive of NIMA's efforts to outsource the  

   acquisition of a global feature foundation database. Because of this,   

   the committee believes that NIMA should not wait to develop the most    

   manpower intensive of the production functions--NIMA's standard         

   products--within the private sector. The committee authorizes an        

   additional $15 million to the geospatial information production request 

   to be used to begin demonstrations with industry similar to the process 

   whereby NIMA-qualified contractors produce its feature foundation data. 

      The committee has also been impressed with the efficiencies gained in

   NIMA's integrated production cells, now called NIMA Production Cells.   

   NIMA is only projecting an increase of about five new cells per year    

   over the FYDP. The committee authorizes an additional $5.0 million over 

   the budget request, to allow NIMA to acquire more cells in fiscal year  

   1999.                                                                   

      As indicated above, the committee is interested in seeing NIMA's     

   efficiencies increase through the use of more modern technologies and   

   outsourcing. NIMA faces a funding shortfall in its civilian pay accounts

   and also must modernize its infrastructure to effectively produce       

   products in a timely fashion. NIMA can no longer afford a               

   disproportionate portion of its budget going to civilian pay and        

   maintenance of legacy systems. NIMA must move more of its funds to      

   investment. By outsourcing, NIMA will be able to leverage leading-edge  

   commercial imaging and mapping technologies and production capabilities.

   To further encourage NIMA to address this issue in the near term, the   

   committee decreases the overall amount requested in operations and      

   maintenance by $15.0 million. This decrease may be applied as NIMA      

   judges most appropriate, except that no reductions should be made to the

   funds authorized and appropriated for outsourcing or for NIMA Production

   Cells, and no more than half of the decrease may be applied to          

   personnel. The committee will evaluate any potential impacts this       

   reduction may have on NIMA as it prepares for conference. NIMA is       

   encouraged to develop options and impact assessments for this purpose.  

                      Information Applications & Systems/National Technology       

           Alliance (NTA), +$5.0 million                                           

      The committee continues to believe that NIMA must pursue commercial  

   alternatives to its legacy systems. The National Technology Alliance    

   (NTA) has developed an alternative approach to the Defense Dissemination

   System (DDS) and the Enhanced Processing Segment (EPS) in response to   

   the Navy's concern over high operations and maintenance costs for the   

   DDS system. Therefore, the committee authorizes $5.0 million within the 

   US Imagery and Geospatial Information System line for the NTA to        

   demonstrate this capability with the Navy. The committee requests a     

   progress report on this activity by January 31, 1999, including an      

   evaluation by the Navy's N6 organization and NIMA.                      

           Sustaining capabilities, -$14.0 million                                 



      The committee does not understand why the Joint Military Intelligence

   Program (JMIP) portion of sustaining capabilities is only reduced by    

   $4.2 million between fiscal years 1998 and 1999. NIMA lost the lease on 

   the old DMA headquarters building when it consolidated at the Bethesda  

   facility. Also, the Philadelphia distribution center is being closed as 

   well as other Washington, DC facilities as described in the             

   Congressional Justification Book. Further, the committee is confused as 

   to why this activity has increased its personnel by 65 people (all in   

   the civilian workforce) during this same period, when NIMA lost about   

   800 people in fiscal year 1998. The committee assumes that, with less   

   people in the workforce, corporate affairs, and management and          

   administration would also need less personnel and should see a          

   corresponding reduction, not an increase. Finally, the committee        

   assumes, with the implementation of the Peoplesoft software that        

   automates many of the functions of the human resources (HR) area, NIMA  

   would be able to downsize its HR department. Given all of this, the     

   committee would expect to see a larger reduction in the O&M of NIMA's   

   sustaining capabilities segment and, therefore, recommend a reduction to

   this account of $14.0 million.                                          



           Geospatial database integration and display, no budgetary change        



      In two studies, NIMA has concluded that the commercial sector has    

   already developed innovative, high quality, affordable software products

   to integrate and display NIMA's digital geospatial databases. However,  

   the services and defense agencies continue to invest substantial funds  

   in government-developed, custom products that cost the government more  

   than they should, inhibit achieving a common operating picture, and     

   complicate training. The committee is particularly concerned that the   

   Defense Information Systems Agency (DISA) is funding a custom software  

   development program for the Joint Mapping Tool Kit (JMTK) module of the 

   Global Command and Control System (GCCS), even though commercial        

   products already exist that can meet the need and even though NIMA, the 

   functional manager with expertise in this area, has recommended against 

   this acquisition strategy.                                              

      The committee notes that NIMA is trying again to convince DISA of the

   wisdom of a commercial procurement. The committee recommends that no    

   funds authorized and appropriated to NIMA be made available for the JMTK

   module for GCCS until the Assistant Secretary of Defense for Command,   

   Control, Communications and Intelligence certifies that DISA will       

   procure this module commercially, or reports to the Congressional       

   intelligence and defense committees as to why a commercial procurement  

   does not make sense. The committee requests that the Assistant Secretary

   also establish a defense-wide policy for acquiring geospatial database  

   integration, display, and visualization capabilities. As part of this   

   policy review, the Assistant Secretary should examine individual service

   and defense agency acquisition programs to ensure that they are         

   cost-effective, and not duplicative.                                    

      In addition, although NIMA is itself utilizing commercial            

   visualization tools internally, the committee is concerned that NIMA is 

   not aggressively taking steps to ensure that such database integration  

   and display capabilities are available for procurement, or licensing, by

   its customers, apart from the JMTK module in GCCS. These capabilities,  

   after all, are a central part of NIMA's mission and provide a primary   

   means by which NIMA's customers can understand and exploit the          

   underlying data and products that NIMA provides. The committee notes    

   that the recent Defense Science Board study of DoD mapping urged that   

   NIMA rapidly develop or acquire such capabilities. The committee        

   recommends that NIMA begin to acquire the ability to make these products

   available to its customers in fiscal year 1999 from within available    

   resources, and develop a plan to expand and sustain this effort in      

   fiscal year 2000 and beyond.                                            

           Geospatial database production, no budgetary change                     



      The mapping strategy of the Defense Mapping Agency had been to meet  

   as many of its customers' requirements for detailed, comprehensive      

   mapping products in as many areas of the world as possible. Since       

   resources were quite limited, however, this strategy meant that only a  

   small portion of overall requirements could be met, and large parts of  

   the world were not mapped at all or the products that were available    

   were terribly out of date.                                              

      NIMA's strategy is to try to produce a minimal set of mapping data   

   for the world, or most of it, and enhance that data as rapidly as need  

   arises. This strategy requires NIMA's customers to accept less detail   

   and comprehensiveness in some geographic areas--presumably high priority

   ones--in exchange for a higher overall readiness level in much larger   

   geographic areas.                                                       

      The key issues facing NIMA as it tries to implement this strategy are

   these:                                                                  

      Will NIMA require additional funding up front to create the          

   foundation level data base, or can it generate the necessary resources  

   through internal reforms, competitive outsourcing, process              

   modernization, and shifts in priorities?                                

      Once created, is this data base inexpensive to keep current, since it

   is less detailed than the standard products NIMA produces today and     

   since much of it is automated? In other words, would the investment     

   needed to create the data base above NIMA's planned budgets truly be a  

   non-recurring expense?                                                  

      If additional funding is required, will the Defense Department agree 

   that the requirement competes favorably with other defense priorities?  

      If not, could less than global coverage for the foundation level data

   base be acceptable? Alternatively, is it acceptable for NIMA to achieve 

   the desired level of geographic coverage for its foundation level data  

   base over a longer period of time, without causing the data base to     

   become stale?                                                           

      At what pace will NIMA's customers allow it to cut back on the       

   production of standard products now to shift resources to building the  

   foundation level data base? How far can NIMA go in the near-term in     

   shifting resources to this function, given that NIMA will have to retain

   the ability to surge to enhance the foundation data base to support     

   ongoing operations, potential major and minor contingencies, and other  

   crises (since the commercial sector does not yet possess much capacity  

   for this function)?                                                     

      How much efficiency will NIMA gain by modernizing its production     

   processes under the so-called ``USIGS Migration'' program? Can these    

   gains be realized in time to help with the near-term creation of the    

   foundation level data base?                                             

      How much will NIMA be able to reduce the time required to enhance the

   foundation data base to support crises, through equipment and process   

   modernization and through outsourcing? Will it be enough to support the 

   overall strategy?                                                       

      The answers to these questions will determine the pace by which NIMA 

   can competitively procure a foundation level data base. The committee   

   believes that these issues must be addressed as part of the preparation 

   of the fiscal year 2000 Future Years Defense Program budget. The        

   committee requests the DCI and the Deputy Secretary of Defense assign   

   these issues to the Intelligence Program Review Group and Expanded      

   Defense Resources Board, or some other suitable forum, for resolution.  

   In any event, the committee requests the NIMA                           



                    Director to prepare answers to these questions and report to  

          the Congressional intelligence and defense committees by March 1, 1999. 

           Endurance unmanned aerial vehicle, No budgetary change                  



      The budget request contained $178.7 million in PE 35205D8Z for       

   endurance unmanned aerial vehicles, and included $40.6 million for the  

   Dark Star stealthy high altitude endurance (HAE) unmanned aerial vehicle

   (UAV), $90.1 million for Global Hawk HAE UAV, and $48.0 million for the 

   common ground segment.                                                  

      The committee is aware that Global Hawk has made its first flight,   

   but that continuing problems with the Dark Star development has         

   prevented its continued flight test. The committee is concerned by      

   continuing delays in the Dark Star testing, reportedly caused by a lack 

   of redundancy of the aircraft's systems and a continuing series of      

   hardware and software failures. Further, the committee is aware that    

   there has been a tendency to describe existing advanced concept         

   technology demonstration (ACTD) aircraft such as Dark Star and Global   

   Hawk as systems that may, in part, replace manned reconnaissance        

   aircraft. Though noting that ACTD aircraft may form the basis for a     

   future capability, the committee has been informed by operational users 

   that the new HAE UAVs must undergo a thorough user evaluation to        

   determine military utility. Such demonstration aircraft are not, nor    

   were they designed to be, operational aircraft. Potential users note    

   that subsequent to evaluation, the ACTD aircraft design must be         

   modified, as necessary, based on information gathered, to meet an       

   operational requirement. Based on service requirements, they then must  

   be procured using the established acquisition process. Predator, the    

   first ACTD UAV to transition to production has followed this process.   

   The committee reminds the Secretary of Defense that the ACTD program is 

   not to be used to circumvent established acquisition procedures.        

      The committee strongly supports continued development of HAE UAVs as 

   potential replacements for manned reconnaissance aircraft, and          

   recommends $178.7 million only for HAE UAV and common ground segment    

   development.                                                            

           Joint signals intelligence avionics family, No budgetary change         



      The budget request contained $80.4 million in PE 35206D8Z for the    

   joint signals intelligence avionics family (JSAF).                      

      The committee continues to be concerned by problems with JSAF        

   developments. While the committee is encouraged by progress in design of

   the low band subsystem (LBSS), it is concerned by schedule delays and   

   cost increases that have forced reduction of system performance to      

   remain within budget. Further, the committee remains doubtful that the  

   high band subsystem (HBSS) development can successfully meet its cost   

   and performance goals. The committee's concerns are heightened by the   

   fact that the JSAF development is the only planned upgrade for future   

   airborne SIGINT reconnaissance. If JSAF fails to provide the needed     

   capabilities, users ranging from theater tactical forces to national    

   policy makers will be severely impacted.                                

      Executive Order 12333 charges the Director of the National Security  

   Agency (NSA) to conduct ``research and development to meet the needs of 

   the United States for signals intelligence * * *''. To ensure proper    

   joint oversight of JSAF development, the committee recommends the budget

   request be authorized in PE 35885G, the Defense Cryptologic Program. The

   committee believes this will allow the Air Force, as the executive agent

   for JSAF, to continue to execute the program, while providing joint     

   oversight by NSA.                                                       

           Tactical unmanned aerial vehicles, Funding transfers                    



      The budget request contained $75.6 million in PE 35204A and $37.2    

   million in PE 35204D8Z for tactical unmanned aerial vehicles (UAV).     

      The committee notes that the Under Secretary of Defense for          

   Acquisition and Technology recently provided the Congressional defense  

   and intelligence committees with the Department's plan to implement     

   legislative direction included in the National Defense Authorization Act

   for Fiscal Year 1998 (P.L. 105 85) for reorganization of the Defense    

   Airborne Reconnaissance Office (DARO) and commends the Department for   

   its prompt response. The National Defense Authorization Act for Fiscal  

   Year 1998 (P.L. 105 85) contained further direction that the Department 

   of Defense review commercial solutions for the various UAV requirements.

   The committee notes that the Navy is now conducting a three-phase       

   competitive demonstration of vertical takeoff or landing (VTOL) UAVs to 

   meet the Navy and Marine Corps VTAL UAV requirements. The committee     

   continues to support this approach and urges the Navy to continue the   

   multiple-participant competitive demonstration through the shipboard    

   phase prior to final selection using the funds provided.                

      The committee notes the proposed plan for transfer of DARO funding   

   included in the fiscal year 1999 request to appropriate service accounts

   and recommends the following adjustments: $49.6 million in PE 35204A for

   Army tactical UAV, a decrease of $26.0 million; $18.0 million in PE     

   35204N for VTOL UAV; $37.2 million in PE 35204N for ongoing common      

   tactical control system development previously managed by the Joint     

   Program Office; and $8.0 million in PE 35204M for the Marine Corps'     

   close range tactical UAV.                                               

           Defense airborne reconnaissance program management,-$4.7 million        



      The budget request contained $15.7 million for Defense Airborne      

   Reconnaissance Program (DARP) integration and support in PE 35209D8Z.   

      The committee notes that, subsequent to development of this year's   

   budget request, the Defense Airborne Reconnaissance Office (DARO) has   

   been eliminated and its functions absorbed within the reorganized office

   of the Deputy Assistant Secretary of Defense for Command, Control,      

   Communications, Intelligence, Surveillance, and Reconnaissance and      

   within the military services. The committee supports actions that adhere

   to the Department's stated objective of maintaining a very small cadre  

   oversight organizations within the Office of the Secretary of Defense   

   (OSD), focused solely on policy level guidance to ensure reconnaissance 



                    system interoperability and architectural compliance. The     

          Department has indicated that it plans to request reprogramming         

          authority to shift DARO funding for DARP integration and support from PE

          35209D8Z to program elements within the Air Force and other DoD         

          agencies, as well as Defense-wide operations and maintenance.           

      The committee supports this transfer of funding, and, therefore      

   recommends $7.0 million in Operations & Maintenance, Defense-wide, $1.0 

   million in PE 35208F, $1.0 million in PE 35208BQ, $1.0 million in       

   35208G, and $1.0 million in PE 35208L, a total decrease of $4.7 million.

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



      The budget request included $43.4 million for developing the Super   

   Hornet Advanced Reconnaissance Pod (SHARP).                             

      The committee continues to fully support the development of a podded 

   tactical reconnaissance capability for use by fighter aircraft and has  

   supported the concept that a podded reconnaissance capability should not

   be focused strictly on the E/F 18 aircraft. The Navy has agreed with    

   this broader concept and has decided to change the name SHARP to the    

   Shared Reconnaissance Pod to reflect the change in approach.            

      Due to this decision, the committee believes the funds should be more

   appropriately reflected in the Joint Military Intelligence Program,     

   within the Navy's Manned Reconnaissance line. Therefore, the committee  

   recommends $42.4 million in P.E. 35207N for this purpose.               

                      Advanced synthetic aperture radar system improvement program,

           +$8.0 million                                                           

      The budget request contained $5.0 million in PE 35207D8Z for the     

   Advanced Synthetic Aperture Radar System (ASARS) Improvement Program    

   (AIP) for the U 2 aircraft. As a result of the termination of the       

   Defense Airborne Reconnaissance Office, the Deputy Secretary of Defense 

   for Acquisition and Technology sent a letter to the Congress            

   recommending specific redistribution of Defense Airborne Reconnaissance 

   Program funding in fiscal year 1999. Included in this recommendation was

   an additional $2.5 million for AIP research and development. Further,   

   the Air Force has requested a transfer of AIP procurement funding into  

   the research and development account.                                   

      The AIP program will dramatically increase the U 2's radar system    

   with significantly improved synthetic aperture radar imagery, a highly  

   capable moving target indicator tracking capability, and integral       

   onboard processing functions. Unfortunately, the AIP has suffered cost  

   growth and has a fiscal year 1999 shortfall of over $18.0 million. Some 

   of this growth is due to contractor overruns and schedule slips caused  

   by late deliveries of commercial processors. Some of this growth is due 

   to a decision to postpone certain Global Hawk High Altitude Unmanned    

   Aerial Vehicle radar developments that were cost sharing with AIP. This 

   growth has forced the Air Force to make decisions to slip the AIP,      

   thereby further increasing costs. In order to deliver the AIP when      

   required, the Air Force has stated a need to reprogram funding from     

   procurement to research and development in fiscal year 1999. However,   

   such a step would have a significant procurement funding impact in      

   fiscal year 2000.                                                       

      The committee recommends an authorization of $13.0 million, an       

   increase of $8.0 million for AIP development.                           

           Electro-optic framing technologies, +$8.0 million                       



      The budget request contained $5.4 million in PE 35207D8Z for         

   electro-optic (EO) framing technology.                                  

      The committee continues to support the state-of-the-art EO framing   

   with on-chip forward motion compensation (FMC). This technology is      

   proving itself in operationally deployed systems.                       

      The committee recommends $13.4 million, an increase of $8.0 million  

   in PE 35206N for the purposes of furthering the EO with on-chip FMC     

   technologies. Specifically, these additional funds are to be used for   

   continued development of the ultra-high resolution focal plane array and

   conformance with JPEG 2000 compression standards. These developments    

   should produce form/fit operational insertions into currently deployed  

   CA 260 framing cameras. Further, these funds are to be used to develop  

   infra-red EO framing technologies and image intensified EO framing      

   sensors with FMC for operational insertion into existing Air National   

   Guard tactical reconnaissance aircraft and other aircraft as            

   appropriate.                                                            

                      Unmanned aerial vehicle systems integration laboratory, No   

           budgetary change                                                        

      The budget request contained $5.0 million in PE 35204D8Z for the U.S.

   Army's Unmanned Aerial Vehicle (UAV) Systems Integration Laboratory     

   (SIL), and included $3.0 million for continued development of the       

   Multiple UAV Simulation Environment (MUSE).                             

      The committee supports the SIL's joint UAV developmental work and it 

   is concerned that the reorganization of Defense Airborne Reconnaissance 

   Program will leave the SIL without a sponsor, thereby possibly losing a 

   valuable joint UAV integration organization and jeopardizing continued  

   evolution and improvement of the MUSE tool. While SIL is clearly a      

   service organization, it provides joint support that may well be        

   overseen directly by the new Deputy Assistant Secretary of Defense      

   (DASD) for Command, Control, Communications, and Intelligence,          

   Surveillance and Reconnaissance.                                        

      Therefore, the committee directs the Assistant Secretary of Defense  

   (Command, Control, Communications and Intelligence) to provide the      

   congressional defense and intelligence committees a plan, which includes

   a funding profile, for the continued operation of the SIL, no later than

   March 31, 1999.                                                         

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





      The budget request contained $32.1 million for continued development 

   of the unmanned aerial vehicle (UAV) tactical control system (TCS).     

      The committee notes that the TCS will provide interoperability and   

   commonality for mission planning, command and control, communications,  

   and data dissemination for the current and future family of tactical and

   medium altitude endurance UAVS. The multi-function self aligned gate    

   (MSAG) technology developed as part of the TCS development has been     

   successfully demonstrated and is now ready for larger scale testing. The

   committee supports MSAG and recommends $36.1 million, an increase of    

   $4.0 million for fabrication and testing of prototype MSAG active array 

   antennae for TCS UAVS.                                                  

      Finally, the committee is aware that after the field tests of the AAA

   in fiscal year 1998, there are no plans to continue to develop, produce 

   or test this technology. The committee believes this technology has the 

   potential for many applications, including use as highly reliable       

   satellite communications antennas with no mechanical parts. Therefore,  

   committee requests the Assistant Secretary of Defense (Command, Control,

   Communications, and Intelligence) to provide the defense and            

   intelligence committees a plan for moving forward with, and possibly    

   fielding, this technology. This plan should include a spend plan for the

   fiscal year 1999 funding, potential users--including National Foreign   

   Intelligence Program users--and schedule. The committee requests the    

   plan be provided no later than 31 January 1999.                         

           Integrated imagery planning, No budgetary change                        



      The committee believes that the numerous, but separate, Department of

   Defense and Intelligence Community (IC) imagery programs should be      

   closely coordinated and integrated to maximize their collective         

   capabilities. Better planning of visible and multi-spectral imagery,    

   synthetic aperture radar (SAR), moving target indicator (MTI) radar, and

   video collection could improve support to military operations and save  

   resources.                                                              

      Moving target indicator (MTI) radar provides a real-time acquisition 

   and can provide continuous tracking capability, but has limited         

   abilities for target identification. Electro-optic (EO) and SAR imagery,

   in contrast, are excellent for target classification and identification,

   but are exploited by humans and do not provide a continuous tracking    

   capability. It would appear that the two types of imagery are highly    

   complementary, and that their individual strengths offset their         

   individual deficiencies. For example, if proper MTI coverage of an area 

   could be maintained, EO or SAR imagery, even with significant latencies,

   could be used to identify immediate targets without additional imaging. 

   Logically, the need for repeatedly imaging those targets with high      

   resolution sensors might be reduced, as would associated communications 

   requirements. Unfortunately, these complementary types of imagery have  

   been managed, and moreover, tasked, in isolation.                       

      DoD is, for example, acquiring a host of unrelated MTI capable       

   systems. With few exceptions, these systems are not interoperable. If   

   adequate numbers of systems could be fielded and their data streams     

   integrated, however, overall performance could be far greater than the  

   sum of their parts, improving the chances for continuous and precise    

   tracking. Similarly, the DoD and IC are operating and acquiring a host  

   of imagery systems. Although the products may be interoperable in many  

   cases, there is reason for concern that we have not yet determined the  

   right relationship and balance between these systems to best combine    

   their total capabilities.                                               

      Finally, every imagery requirements analysis has concluded that two  

   foot resolution is necessary for imagery analysts conducting wide-area  

   search. Many sensors do not meet this standard--particularly those being

   planned for the unmanned aerial vehicles. Meeting such requirements, and

   absorbing the costs associated, may not be necessary if the various     

   forms of ``imagery'' can be combined into a holistic information effort.

      The committee believes that there is a compelling need to carefully  

   examine ways to integrate imagery and MTI systems to not only make      

   requirements, cost and capability tradeoffs across programs, but,       

   moreover, to take fullest advantage of the totality of all our          

   information capabilities. This will require better mission planning and 

   tasking, more robust connectivity between sensors, fusion developments, 

   and analysis interactions. Further, it will require a removal of        

   stovepiped management processes.                                        

      The committee directs DoD and the IC to conduct a study on the issues

   discussed above, using the study of MTI technical issues and            

   requirements mandated by Congress last year as a model. The committee   

   expects the technical assessment portion of the study to be led jointly 

   by ASD(C3I) in coordination and the Community Management Staff, with    

   appropriate participation of NIMA, NRO, DARPA, the services, and the    

   joint staff. The committee directs that this study be completed and the 

   results conveyed to the congressional defense and intelligence          

   committees no later than March 1, 1999.                                 

           Defense imagery program, Funding transfers                              



      The budget request included $29.4 million in research and            

   development, defense-wide, line 150 for the Common Imagery              

   Ground/Surface Station (CIGSS) and $1.9 million for development of the  

   standards for the Distributed Common Ground Station (DCGS). The         

   committee believes there is a need for the National Imagery and Mapping 

   Agency (NIMA) to create from within existing resources a management     

   structure analogous to the National Security Agency's Defense           

   Cryptologic Program (DCP). The DCP is responsible for coordinating and  

   providing funding for advanced research and development of signals      

   intelligence capabilities that have applicability across all services.  

   This structure requires close coordination with the services as they    

   develop, field, and evolve tactical systems, with the service needs     

   driving the leading edge developments. The committee believes that, just

   as the Director, NSA is responsible for coordinating research and       

   development to meet the tactical needs of the U.S. Cryptologic System,  

   so should the Director, NIMA for the U.S. Imagery System.               

      Therefore, the committee recommends these funding requests be        

   authorized in research and development, defense-wide, line 138A.        

   Further, the committee directs NIMA to create a management structure to 

   provide a Defense Imagery Program within the Defense Imagery and        



                    Mapping Agency Program of the Joint Military Intelligence     

          Program. No additional billets are authorized for this management.      

           Integrated architecture plan, +$3.0 million                             



      The budget request contained $6.1 million for the Command, Control,  

   Communications, Computers, Intelligence, Surveillance, and              

   Reconnaissance (C4ISR) Integrated Architecture Plan (CIAP).             

      CIAP has been strongly endorsed by the Assistant Secretary of Defense

   for Command, Control, Communications, and Intelligence as well as the   

   commanders-in-chief of the nine unified commands. The CIAP developments 

   have included the highly successful C4ISR Architecture Framework for the

   Department of Defense, the Command C4ISR Architectures for the regional 

   Commanders in Chief, and the initiation of the C4ISR Architectures for  

   the Warfighter (CAW) effort at selected unified commands. The committee 

   believes this later effort should be extended to all nine unified       

   commands.                                                               

      The committee believes these architectural developments will provide 

   a cohesive and more cost effective strategy for developing and procuring

   the proper intelligence support systems for the users. The committee    

   recommends $9.1 million for the continuation of these efforts and       

   extension of the CAW to all unified commands.                           

           Joint reserve intelligence program, +$3.0 million                       



      The budget request contained $9.4 million in operations and          

   maintenance, defense-wide, for continued reserve component man days for 

   the conduct of the Joint Reserve Intelligence Program (JRIP).           

      The committee is favorably impressed by the intelligence production  

   mission load the JRIP has been able to accommodate in support of the    

   active forces. This has been particularly true of the JRIP support to   

   the European Joint Analysis Center (JAC) from the Fort Sheridan,        

   Illinois, Joint Reserve Intelligence Center. This world-wide support has

   included direct personnel support via temporary duty assignments as well

   as support from the continental United States via virtual connectivity  

   whereby reservists can drill with their gaining units without having to 

   leave their home area. Further, this support, in excess of 34,000 man   

   days, has provided the active components with critical intelligence     

   augmentation to conduct collection operations, process backlogs, and    

   produce targeting materials, final reports and studies--all without     

   having to use the presidential selected reserve call-up authority.      

      The committee believes this program should be expanded and its       

   benefits maximized to the extent possible. The committee recommends     

   $12.6 million, an increase of $3 million for these purposes.            

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



      The budget request included $4.2 million for operating an all-source 

   intelligence analysis cell for the Joint Inter-Agency Task Force (JIATF)

   West. This cell is focused on coordinating tactical and operational     

   intelligence support to U.S. Embassy Country Teams performing           

   counter-drug operations in the Southeast Asia and Southwest Asia areas. 

      The committee notes that JIATF-West is attached to PACOM, but appears

   to have little command support. Further, the Drug Enforcement Agency,   

   the Crime and Narcotics Center, and other JIATFs have indicated to the  

   committee that this cell offers little value for the funds expended and 

   has not produced any actionable tactical intelligence or strategic      

   analysis. Therefore the committee recommends an authorization of        

   $700,000 for this intelligence function, and recommends an evaluation to

   terminate it altogether.                                                

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



      The budget request contained $7.8 million for Defense Support Program

   Office (DSPO) training and exercise support.                            

      The Secretary of Defense has informed the committee that the DSPO is 

   being abolished and its functions consolidated within the National      

   Reconnaissance Office (NRO). The committee understands that the National

   Military and Operations Support Office within the NRO is also charged   

   with, and funded for, training and exercise support. Therefore, the     

   committee believes the DSPO training and exercise support funding is no 

   longer required and recommends no authorization for this purpose.       



                        TACTICAL INTELLIGENCE AND RELATED ACTIVITIES              



           Tactical exploitation of national capabilities, -$4.6 million           



      The budget request contained $44.7 million in PE 64766A for Army     

   tactical exploitation of national capabilities (TENCAP).                

      The committee notes that the amount requested represents nearly a    

   $26.0 million increase from the level approved for fiscal year 1998. The

   committee is concerned that the Army may be using the TENCAP program as 

   a means for bypassing the ``normal'' acquisition process allowing it to 

   procure and operate combat systems associated with space sensors. The   

   committee is supportive of TENCAP efforts for short-term, high-pay      

   concepts and initiatives that improve the use of national space sensors 

   and systems. The committee will not, however, support TENCAP funded     

   development and production of entire weapons systems. Therefore, the    

   committee directs that future TENCAP requests be limited to space       

   exploitation initiatives and projects that are of short-duration and    

   high payoff.                                                            

      The committee recommends $40.1 million for the Army's TENCAP program 

   in fiscal year 1999, a reduction of 4.6 million in PE 64766A.           

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



      The budget request contained $25.4 million for the GBCS-Light system,

   of which $1.5 million is for the Common Module Electronics Intelligence 

   System (CMES).                                                          

      The committee notes that $1.5 million for CMES procurement is        

   requested twice. Consequently, the committee recommends a reduction of  

   $1.5 million.                                                           

      Additionally, the committee notes that the GBCS-L system has had     

   numerous technical difficulties and experienced a fielding delay as a   

   result of a two-year slip in initial operational test and evaluation    

   (IOT&E). This delay has resulted in the Department twice having used    

   GBCS as a source of funds for reprogramming requests.                   

      Just as the committee was marking up the fiscal year 1999 request, it

   learned that, due to continuing integration problems, the GBCS-L IOT&E  

   will not be conducted again in fiscal year 1998. This third and latest  

   slip is very disturbing and signals to the committee that there are more

   problems with this system than the Army is admitting. As a result of the

   program's past and current performance, it believes that all of the     

   requested funding will not be executable in fiscal year 1999 and it     

   recommends a reduction of $9.7 million for GBCS-L hardware. Finally, the

   committee notes that the Department of Defense has requested nearly $500

   million for this relatively small and low complexity program. This      

   committee finds this cost excessive for the capability required, and    

   therefore requests the Secretary of Defense to conduct an Inspector     

   General audit of the GBCS program; its costs, its technical approach,   

   and management.                                                         

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



      The budget request contained $28.1 million in PE 64321A for the ASAS 

   intelligence support system.                                            

      The committee recommends $30.1 million, an increase of $2.0 million  

   in PE 64321A, to continue the development of situation display fusion   

   algorithms, to transfer these algorithms to the other service           

   intelligence support systems, and to achieve ASAS Block II              

   interoperability with the Defense Intelligence Agency's Modernized      

   Integrated Data Base.                                                   

           Distributed surveillance system, +$6.7 million                          



      The budget request contained $42.0 million in PE 64784N for advanced 

   deployable system (ADS) engineering and manufacturing development.      

      The committee recommends $48.7 million, including an increase of $6.7

   million to continue the planned introduction of automation and data     

   fusion capability for the ADS demonstration system.                     

                      Navy joint surveillance and target attack radar system       

           (JSTARS), +$3.0 million                                                 

      The budget request included no funding for completing the            

   developments for integrating a capability on U.S. Navy surface vessels  

   to receive processed JSTARS MTI data over UHF satellite communications  

   and Link 16.                                                            

      In the National Defense Authorization Act for Fiscal Year 1998,      

   Congress provided $5.0 million for the Navy to begin integrating the    

   Link 16 data into the Joint Maritime Command and Control System (JMCIS) 

   and the Global Command and Control System (GCCS). The committee has     

   learned that the Link 16 integration into GCCS will satisfy many DoD    

   data dissemination requirements, including the JSTARS. Therefore, the   

   committee recommends an additional $3 million for these purposes within 

   the Navy's JMCIS line.                                                  

      Also, as noted elsewhere in this report, the committee is convinced  

   that the Navy will require access to the full range of JSTARS'          

   capabilities to support Navy targeting requirements. Such full access   

   will require a wide-band data link capability between the aircraft and  

   the surface vessels. The wide-band Common Data Link (CDL) is DoD's      

   standard, high-rate data link that will be installed on nearly thirty   

   Navy aircraft carriers, amphibious, and command ships early in the next 

   decade. The committee believes that it would be illogical for the Navy  

   to install another expensive, unique data link such as the low data rate

   Secure Common Data Link (SCDL), currently employed on the JSTARS, on its

   major combatants. Instead, the committee believes it is necessary to add

   as soon as possible a data broadcast capability based on the CDL        

   standard to the JSTARS fleet. Also as noted elsewhere, the Navy clearly 

   needs a CDL capability on the P-3 fleet to take full advantage of the   

   range of radar, SIGINT, and imagery capabilities planned or programmed  

   for the various elements of that fleet.                                 



      If the Navy's requirement for CDL-compatible wide-band airborne data 

   links turns out to be the recently demonstrated Tactical CDL (TCDL), the

   committee believes it would be wise for the Navy to consider modifying  

   its currently planned CDL installations, to be compatible with both the 

   CDL and TCDL, before or as they are installed. The committee will be    

   reluctant to approve purchase of TCDL ground stations without first     

   receiving a solid Navy commitment to modify all of its shipboard CDL    

   systems to be compatible with both.                                     

      Based on the above, the committee directs the Secretary of the Navy  

   to report to the congressional defense and intelligence committees, by  

   March 1, 1999, on the Navy's requirements and plans for                 

   CDL/TCDL-compatible data links.                                         

           Fleet air reconnaissance, -$5.2 million                                 



   The budget request contained $5.2 million for ES 3A modification kits.  



      The Navy has informed the committee that it intends to terminate the 

   ES 3 program in fiscal year 2000. Based on this decision, the committee 

   sees no need for modifying these aircraft prior to their removal from   

   the fleet. The committee, therefore, recommends no funding for these    

   modifications.                                                          

           Marine Corps electronic warfare support system, Fence $16.4 million     



      The budget request contained $16.4 million for acquiring two Marine  

   Corps Electronic Warfare Support Systems (MEWSS).                       

      The committee directs that none of the authorized and appropriated   

   funding be obligated or expended until completion of a successful       

   initial operational test and evaluation (IOT&E). The committee          

   understands the development and IOT&E of the MEWSS is directly tied to  

   the Army' Ground-Based Common Sensor (GBCS) system. The committee       

   believes, however, that IOT&E success or failure, and, therefore,       

   subsequent procurement decisions, should be based on the individual     

   system merits based on their operational concepts. Therefore, the       

   committee does not see a specific need to make a successful IOT&E of    

   MEWSS contingent on a successful IOT&E of GBCS.                         

           Marine Corps tactical intelligence equipment, +$1.0 million             



      The budget request contained no funds for purchasing and evaluating  

   commercial imagery display tools, or modern printer technologies.       

      The committee is aware of the highly successful Marine Corps use of  

   the Remote Replication System (RRS). The RRS allows the Marine          

   Expeditionary Force (MEF) to deploy with automated equipment that       

   provides the capability to ``reach back'' to National Imagery and       

   Mapping Agency data bases and ``pull forward'' data in order to         

   construct mapping and imagery products. The committee believes this     

   concept has the potential to reduce drastically the paper products with 

   which the MEF currently deploys. Despite the success of the RRS concept,

   however, the committee understands that there has been little attention 

   paid to providing modern display and printing technologies. Therefore,  

   the committee recommends $1.0 million in procurement, Marine Corps, for 

   purchasing and evaluating commercial imagery manipulation tools,        

   state-of-the-art display devices, and high quality large format printers

   for field use.                                                          

           Air Force/NRO partnership, -$2.6 million                                



      The budget request contained $17.6 million in research and           

   development, Air Force, for the joint Air Force, National Reconnaissance

   Office, and Defense Advanced Research Projects Agency advanced space    

   technology demonstrator.                                                

      The partnership funding for this demonstration is an equal share of  

   one third each. The fiscal year 1999 Air Force request exceeds its      

   share. Therefore, the committee recommends an authorization of $15      

   million, or a reduction of $2.6 million.                                

           Joint tactical terminal, +$8.0 million                                  



      The budget request contained $6.5 million in other procurement, Army,

   and $4.2 million in other procurement, Air Force, for the Joint Tactical

   Terminal intelligence broadcast transceivers.                           

      These radios are an integral part of the Integrated Broadcast Service

   that the committee fully supports. The committee is concerned that,     

   because of contract protests that have resulted in delays in final      

   contract award, the fielding of these radios has slipped, leaving       

   operational users without the ability to receive tactical intelligence  

   data broadcasts. In order to correct this problem, the committee        

   recommends $11.5 million and $7.2 million, an increase of $5.0 million  

   for the Army and $3.0 million for the Air Force, respectively, for      

   accelerating the purchase and fielding of these radios.                 

           ``Senior Scout,'' No budgetary change                                   



      The budget request contained $14.3 million in operations and         

   maintenance, Air National Guard, partially for the continued operation  

   of the Senior Scout tactical reconnaissance system. Senior Scout is a C 

   130-employed, roll-on/roll-off, reconnaissance capability operated by   

   the Air National Guard. It provides an airborne reconnaissance          

   collection capability that is complementary to other airborne collection

   systems operated by the active component.                               

      The committee perceives a lack of direction and support for Senior   

   Scout, noting that on several occasions, the Air Force has nearly       

   terminated the program, that the system has not been well supported in  

   terms of upgrades or sensor improvements, and that it has certainly not 

   maintained technological pace with the RC 135 Rivet Joint aircraft or   

   other similar reconnaissance platforms. Consequently, the committee does

   not believe continuing the Senior Scout to be either cost or mission    

   effective. The committee believes, however, that the Air National Guard 

   linguists currently operating the Senior Scout are vital to the overall 

   national                                                                



                    reconnaissance effort. The committee perceives a critical need

          to retain these Guard reconnaissance personnel and training them on more

          modern equipment.                                                       

      In fiscal year 1997, Congress authorized and appropriated funding for

   two additional RC 135 Rivet Joint aircraft. The committee has learned   

   that the Air Force is having difficulty fully manning these aircraft.   

   The committee believes that since the Guard personnel are currently     

   tasked to supplement active component RC 135 operations, providing at   

   least one of these aircraft on a rotational basis to the Air National   

   Guard would both resolve the manpower problem and take greater advantage

   of an available resource.                                               

      Therefore, the committee directs the Secretary of the Air Force to   

   provide the congressional defense and intelligence committees a plan for

   phasing out the Senior Scout reconnaissance system and replacing it with

   an RC 135 alternative no later than October 1, 1999.                    

           ``Pacer Coin,'' -$2.4 million                                           



      The budget request contained $2.4 million in aircraft spares and     

   repair parts for the transfer of mission equipment from retiring Pacer  

   Coin aircraft to the non-dedicated, follow-on C 130 reconnaissance      

   aircraft. The committee notes that a fiscal year 1998 reprogramming     

   action stated that all funds for the C 130 follow-on program were       

   included in that request.                                               

      Furthermore, the committee does not agree that $2.4 million of       

   procurement funding is required to transfer equipment from one aircraft 

   to another. Therefore, the committee recommends no funding for this     

   purpose.                                                                

           Joint surveillance and target attack system, Fence $40.2 million        



      The budget request included $123.8 million in research and           

   development for the Joint Surveillance and Target Attack System         

   (JSTARS), including $5.6 million for studies and miscellaneous efforts. 

   The committee recommends a total of $118.2 million for these purposes.  

      The committee is concerned by the extraordinary costs of the JSTARS  

   program. The committee understands each aircraft must undergo a         

   forty-one month, $110 million, refurbishment effort to restore the old  

   707-based airframes to flying condition before the aircraft begins its  

   modification to JSTARS configuration. This is more than triple what the 

   aircraft cost new, and is more expensive than purchasing a new 757      

   aircraft. Further, current projections show that the JSTARS latest      

   improvement program will cost the U.S. taxpayer well in excess of a     

   billion dollars to upgrade only a limited number of the thirteen JSTARS 

   aircraft. While the committee may fully support necessary upgrades to   

   this important system, there needs to be a significant effort to curb   

   costs.                                                                  

      Therefore, the committee requests the Secretary of the Air Force to  

   provide a report of audit on the costs of the JSTARS aircraft: the basic

   airframe costs, the modification costs, and the costs of the upgrade    

   programs. This audit should be provided to the defense and intelligence 

   committees no later than 31 March 1999.                                 

      Finally, the committee has been asked in the President's budget      

   request to authorize the full request of the radar technology           

   improvement program. The Department of Defense has not agreed to brief  

   Members of the committee on all aspects of this upgrade, or even on how 

   the requested funding will be spent. Therefore, the committee directs   

   that no funding for the RTIP upgrade be obligated or expended until the 

   committee is fully briefed on this program.                             

           Special operations intelligence systems, +$5.0 million                  



      The budget request contained $1.8 million in PE 1160405BB for the    

   special operations systems development.                                 

      The committee notes that the special operations forces intelligence  

   vehicle (SOF IV) is an evolutionary ongoing effort that requires        

   additional funding to complete development. The committee recommends    

   $6.8 million, an increase of $5.0 million for SOF IV in PE 1160405BB.   



                    SECTION-BY-SECTION ANALYSIS OF THE BILL AS REPORTED           



           INTELLIGENCE AUTHORIZATION ACT FOR FISCAL YEAR 1999           



           Title I: Intelligence activities                                        



            Section 101--Authorization of appropriations                            



      Section 101 lists those elements of the United States Government for 

   whose intelligence and intelligence-related activities the Act          

   authorizes appropriations for fiscal year 1999.                         

      The Drug Enforcement Administration (DEA) has been listed in section 

   101 of past Intelligence Authorization Acts. The DEA, however, does not 

   receive appropriations authorized by this legislation. Thus, the        

   committee does not include DEA in section 101.                          

      The fact that DEA is no longer included, however, should not be      

   understood by either the DEA or any element of the intelligence         

   community as a reason to reduce the level of cooperation that currently 

   exists between the DEA and the various elements of the community. The   

   committee expects and demands a continuation of the very beneficial     

   working relationship that has developed between the community and the   

   DEA. The committee recognizes the efficacy of the DEA's partnership with

   the intelligence community on the extremely serious national security   

   issue of international drug trafficking. It is the committee's          

   expectation, in spite of the removal of the DEA from section 101 of the 

   Intelligence Authorization Act for Fiscal Year 1999, that this          

   partnership will remain solid and continue to develop in the best       

   interests of the people of the United States.                           

      The committee similarly insists upon a continuation of the level of  

   close communication between the committee and the DEA, with respect to  

   notification of developments, successes, failures, or compromises of the

   foreign counternarcotics activities of the United States. The committee 

   will not countenance any attenuation of its ability to ensure that the  

   intelligence community is working together with law enforcement, where  

   necessary and appropriate, to advance our national security interests.  

            Section 102--Classified schedule of authorizations                      



      Section 102 incorporates by reference the classified Schedule of     

   Authorizations. That schedule sets forth the specific amounts authorized

   to be appropriated for specific intelligence and intelligence-related   

   activities and personnel ceilings for fiscal year 1999 for those United 

   States government elements listed in section 101. The details of the    

   Schedule are explained in the classified annex to this report. The      

   Schedule of Authorizations correlates to the President's budget request,

   which was submitted to Congress, and remains, in classified form.       

            Section 103--Personnel ceiling adjustments                              



      Section 103 authorizes the Director of Central Intelligence, with the

   approval of the Director of the Office of Management and Budget (OMB),  

   in fiscal year 1999, to exceed the personnel ceilings applicable to the 

   components of the intelligence community under section 102 by an amount 

   not to exceed two percent of the total of the ceilings otherwise        

   applicable under section 102. The Director may exercise this authority  

   only when necessary to the performance of important intelligence        

   functions. Any exercise of this authority must be reported to the two   

   intelligence committees of the Congress.                                

      The committee emphasizes that the authority conferred by section 103 

   is not intended to permit the wholesale raising of personnel strength in

   any intelligence component. Rather, the section provides the Director of

   Central Intelligence with flexibility to adjust personnel levels        

   temporarily for contingencies, and for overages caused by an imbalance  

   between hiring of new employees and attrition of current employees. The 

   committee does not expect the Director of Central Intelligence to allow 

   heads of intelligence components to plan to exceed levels set in the    

   Schedule of Authorizations, except for the satisfaction of clearly      

   identified hiring needs that are consistent with the authorization of   

   personnel strengths in this legislation. In no case is this authority to

   be used to provide for positions otherwise denied by Congress.          

            Section 104--Community management account                               



      Section 104 details the amount and composition of the Community      

   Management Account (CMA) of the Director of Central Intelligence.       

      Subsection (a) of section 104 authorizes appropriations in the amount

   of $139,123,000 for fiscal year 1999 for the staffing and administration

   of various components under the CMA. Subsection (a) also authorizes     

   funds identified for the Advanced Research and Development Committee and

   the Environmental Intelligence and Applications Program to remain       

   available for two years.                                                

      Subsection (b) authorizes a total of 283 full-time personnel for     

   elements within the CMA for fiscal year 1999 and provides that such     

   personnel may be permanent employees of the CMA element or detailed from

   other elements of the United States Government.                         

   Subsection (c) explicitly authorizes the classified portion of the CMA. 



      Subsection (d) requires that personnel be detailed on a reimbursable 

   basis, with certain exceptions.                                         

      Subsection (e) authorizes $27,000,000 of the amount authorized for   

   the CMA under subsection (a) to be made available for the National Drug 

   Intelligence Center (NDIC) in Johnstown, Pennsylvania. Subsection (e)   

   requires the Director of Central Intelligence to transfer the           

   $27,000,000 to the Department of Justice to be used for NDIC activities 

   under the authority of the Attorney General, and subject to section     

   103(d)(1) of the National Security Act.                                 

      Subsection (f) earmarks funds that are allocated for the CMA under   

   subsection (a) and authorizes those funds to be made immediately        

   available to the Department of State for the express purpose of         

   supporting intelligence community requirements related to the security  

   of overseas facilities. This subsection authorizes a one-time-only      

   immediate transfer of funds by the Director of Central Intelligence from

   the CMA's Center for Security Evaluation to the Department of State to  

   ensure that architectural and engineering services related to several   

   overseas locations in fiscal year 1999 can begin immediately. These     

   funds shall only be available for the same purposes, and subject to the 

   same terms and conditions, as the funds in the appropriation accounts to

   which these funds will be transferred.                                  

      The committee understands that an agreement among the departments or 

   agencies affected has been reached with respect to the specific amounts 

   and locations involved.                                                 



           Title II: Central Intelligence Agency retirement and disability system  



            Section 201--Authorization of appropriations                            



      Section 201 authorizes appropriations in the amount of $201,500,000  

   for fiscal year 1999 for the Central Intelligence Agency Retirement and 

   Disability Fund.                                                        

           Title III: General provisions                                           



                        Section 301--Increase in employee compensation and benefits 

            authorized by law                                                       

      Section 301 provides that appropriations authorized by this Act for  

   salary, pay, retirement and other benefits for federal employees may be 

   increased by such additional or supplemental amounts as may be necessary

   for increases in such compensation or benefits authorized by law.       

            Section 302--Restriction on conduct of intelligence activities          



      Section 302 provides that the authorization of appropriations within 

   the Act does not constitute authority for the conduct of any            

   intelligence activity that is precluded by the Constitution or other    

   laws of the United States.                                              

                        Section 303--Extension of application of sanctions laws to  

            intelligence activities                                                 

      Section 303 amends section 905 of the National Security Act of 1947, 

   which authorizes the President to delay the imposition of an economic,  

   cultural, diplomatic, or other sanction upon a foreign government based 

   on his determination that proceeding with such sanction could compromise

   an ongoing criminal investigation or an intelligence source or method.  

   Section 905 was first enacted as part of the Intelligence Authorization 

   Act for Fiscal Year 1996. This authority has been extended every year   

   since for one year intervals.                                           

      Section 303 extends this authority until January 6, 2000. The        

   committee finds that there is a continuing need for this authority      

   because the immediate imposition of sanctions, without some delay,      

   could, in particular cases, seriously jeopardize a criminal             

   investigation or sources and methods of intelligence collection.        

      The committee reaffirms, without restating here, the position        

   asserted in its report accompanying the Intelligence Authorization Act  

   for Fiscal Year 1998 (Rpt. No. 105 135, part I), with respect to this   

   section.                                                                

                        Section 304--Sense of Congress regarding intelligence       

            community contracting                                                   

      Section 304 expresses the sense of Congress that the DCI should      

   continue to direct elements of the intelligence community to award      

   contracts in a manner that would maximize the procurement of products   

   produced in the United States, when such action is compatible with the  

   national security interests of the United States, consistent with       

   operational and security concerns, and fiscally sound.                  

           Title IV: Central Intelligence Agency                                   



                        Section 401--Extension of the CIA Voluntary Separation of   

            Pay Act provisions                                                      

      Section 401 amends section 2(f) of the Central Intelligence Agency   

   Voluntary Separation Pay Act (P.L. 103 36)(50 U.S.C. 403 4 note) to     

   extend the Agency's authority to offer ``early-out'' incentives until   

   September 30, 2001. Without this amendment, the Agency's authority to   

   offer such incentives would expire on September 30, 1999.               

      Although, CIA's ``early out'' incentive has been an effective        

   workforce reduction tool, the Agency must continue to address skills mix

   issues, and ensure that personnel reductions are not undertaken simply  

   for the sake of reduction. The net impact of the six CIA early-out      

   exercises thus far, along with normal attrition and reduced hiring, has 

   been a significant drop in the Agency's on-duty strength since the      

   separation incentive program began in fiscal year 1993. The committee is

   concerned that such reductions could result in gaps of coverage,        

   especially in critical areas.                                           

      The committee acknowledges that the CIA has worked hard over the past

   decade to streamline and refocus its workforce to address critical,     

   cutting-edge national security issues. The Agency should be commended   

   for its efforts to reengineer its business processes, hire personnel    

   with new and vital skills, expand the capabilities and experiences      

   within the Agency workforce, and acquire new technologies to meet the   

   demands of today's collection requirements.                             

      Voluntary Separation Incentive Pay authority should only be used for 

   specific, targeted populations and is intended to help the CIA achieve  

   its skill mix goals without resorting to involuntary separations in     

   certain occupational categories.                                        

      The committee believes that without this continued authority         

   separation rates would decline. This would limit the Agency's ability to

   keep pace with rapidly expanding technologies and the dynamic           

   geopolitical realities that we face. The ability to adapt to such       

   dynamic changes is central to the Agency's mission.                     

                        Section 402--Enhanced protective authority for CIA personnel

            and family members                                                      

      Section 402 of the Act amends section 5(a)(4) of the Central         

   Intelligence Agency Act of 1949 (``CIA Act''). This provision will      

   enable the Agency to use firearms to protect current and former Agency  

   personnel and their immediate families, as well as defectors and their  

   immediate families, who are in the United States. This authority is     

   granted for those situations when the Director of Central Intelligence  

   determines such protection is necessary for the performance of the      

   authorized functions of the Central Intelligence Agency.                

      Current Section 5(a)(4) of the CIA Act permits the CIA to use        

   firearms within the United States to protect only certain categories of 

   individuals limited to Agency personnel, defectors, and the families of 

   defectors, and other persons in the United States under Agency auspices.

   This provision does not limit or amend any aspect of this authority.    



      Protection may sometimes be appropriate for former Agency personnel  

   because the distinction between former and current CIA personnel will be

   of little consequence to terrorists seeking to harm CIA. In addition,   

   prudence dictates that if former or current CIA personnel are threatened

   with harm, the protection provided to them should, in appropriate       

   circumstances, be extended to their immediate families as well. The     

   committee intends that the authority provided by this amendment will be 

   used only when the Director determines that there are specific and      

   credible threats to the protectees while in the United States and that  

   those threats arise from the protectee's affiliation with the CIA. The  

   committee expects that the Director will advise the intelligence        

   committees when this authority is exercised.                            

      Similarly, the committee believes the Agency must advise the Attorney

   General when such specific and credible threats against a protected     

   individual occurs. In this way, the United States government's          

   prosecutorial rights that could result from such criminal activity will 

   be protected.                                                           

      The committee does not anticipate that the authority provided by     

   section 402 will be used to provide protectees with armed security      

   protection when threatened with harm that arises for reasons unrelated  

   to an individual's current or former affiliation with CIA (e.g.,        

   domestic violence or general threat of criminal violence in the area of 

   a CIA employee's residence in the United States).                       

      In the wake of the 1993 assassination of CIA employees, the CIA      

   discussed the protection issue with local jurisdictions. These local law

   enforcement agencies indicated that they did not have the resources,    

   training, or charter to provide such protection. More recently during   

   and after the trial of Mir Aimal Kasi, the need for this enhanced       

   authority was established. The immediate families of those killed or    

   injured provided a target for threats, causing additional anguish for   

   them.                                                                   

      The committee notes that this additional grant of protective         

   authority is not without precedent. The United States Marshals Service  

   (USMS) provides protection to the families of certain personnel under   

   certain circumstances. The USMS has the authority to provide protection 

   to any USMS employee, officer, or witness or anyone involved in judicial

   process who is deemed by the USMS Director to be under threat. Such     

   examples include federal judges, prosecutors, witnesses, jurors, and any

   of their family members against whom a threat has been directed.        

      The committee understands that the CIA is a target or recipient of a 

   large volume of unsolicited calls, letters, and visits by potentially   

   hostile individuals. Many of these contacts are the work of disturbed   

   individuals, some of whom make threats and then ``close the gap'',      

   actually appearing at the CIA Headquarters compound (or other Agency    

   facilities). Implicit in this kind of potential threat is the chance    

   that hostile or aggressive behavior may be directed against the families

   of CIA personnel.                                                       

      The amendment made by section 402 would not extend or expand, in any 

   way, the carefully limited law enforcement authority and jurisdiction   

   provided to the Agency in section 15 of the CIA Act. Simply put, it     

   authorizes the Agency to protect Agency employees, current and former,  

   and their families, in the United States, in the same manner as they are

   authorized to protect defectors in the United States.                   

            Section 403--Technical corrections                                      



      Section 403 makes technical corrections to section 5(a)(1) and       

   section 6 of the Central Intelligence Agency (CIA) Act of 1949 and      

   section 201(c) of the CIA Retirement Act. The cross-reference in section

   5(a)(1) of the CIA Act to subparagraphs (B) and (C) of section 102(a)(2)

   of the National Security Act is no longer current or accurate, and      

   should cite instead to subsections (a)(2) and (a)(3) of section 102.    

   Section 805(a) of the Intelligence Authorization Act for Fiscal Year    

   1997 (P.L. No. 104 293) changed what had been sections 102(a)(2) (B) and

   (C) of the National Security Act to sections 102(a)(2) and (a)(3) of    

   that Act. Similarly, the cross-references in section 5(a)(1) and section

   6 of the CIA Act to ``subsection (c)(5) of section 103'' and to         

   ``section 103(c)(5) of the National Security Act of 1947 (50 U.S.C. 403 

   3(c)(5))'', respectively, are no longer current or accurate. The        

   cross-reference in section 201(c) of the CIA Retirement Act to that same

   provision of the National Security Act is also outdated. Section        

   807(a)(2) of the Intelligence Authorization Act for Fiscal Year 1997    

   changed what had been section 103(c)(5) of the National Security Act (50

   U.S.C. 403 3(c)(5)) to section 103(c)(6) (50 U.S.C. 403 3(c)(6)).       

   Section 401 of the present legislation simply updates the               

   cross-references in section 5(a)(1) and section 6 of the CIA Act and    

   section 201(c) of the CIA Retirement Act to the pertinent provision of  

   the National Security Act.                                              

           Title V: Department of Defense                                          



                        Section 501-- Extension of authority to engage in commercial

            activities as security for intelligence collection activities           

      Section 501 amends section 431(a) of title 10 to continue current    

   Department of Defense authority to engage in commercial activities as   

   security for intelligence collection activities beyond December 31,     

   1999, which is the date on which the current statutory authorization    

   expires. The Committee has extended this provision for an additional    

   three years through and until December 31, 2002.                        



                                     COMMITTEE POSITION                           



      On April 29, 1998, in open session, a quorum being present, the      

   Permanent Select Committee on Intelligence, by a recorded vote of 12    

   ayes to 0 noes, approved the bill, H.R. 3694, as amended by an amendment

   in the nature of a substitute. By that vote, the committee ordered the  

   bill, as amended, reported favorably to the House. On that vote, the    

   Members present recorded their votes as follows:                        

      Mr. Goss (Chairman)--aye; Mr. Shuster--aye; Mr. McCollum--aye; Mr.   

   Castle--aye; Mr. Boehlert--aye; Mr. Bass--aye; Mr. Gibbons--aye; Mr.    

   Dicks--aye; Mr. Skaggs--aye; Ms. Harman--aye; Mr. Skelton--aye; Mr.     

   Bishop--aye.                                                            

          FINDINGS AND RECOMMENDATIONS OF THE COMMITTEE ON GOVERNMENT REFORM AND  

                                    OVERSIGHT                                     

      With respect to clause 2(l)(3)(A) of rule XI of the House of         

   Representatives, the committee has not received a report from the       

   Committee on Government Reform and Oversight pertaining to the subject  

   of this bill.                                                           

                                     OVERSIGHT FINDINGS                           



      With respect to clause 2(l)(3)(A) of rule XI of the Rules of the     

   House of Representatives, the committee held seven full-committee       

   hearings, as well as six full-committee briefings, on the classified    

   budgetary issues raised by H.R. 3694. Testimony was taken from the      

   Director of Central Intelligence, the Director of the National Security 

   Agency, the Director of the Defense Intelligence Agency, the Deputy     

   Director of Central Intelligence, the Deputy Directors for Operations   

   and Intelligence, numerous program managers, and various other          

   knowledgeable witnesses on the activities and plans of the intelligence 

   community covered by the provisions and authorizations, both classified 

   and unclassified, of the Intelligence Authorization Act for Fiscal Year 

   1999. The bill, as reported by the committee, reflects conclusions      

   reached by the committee in light of that oversight activity.           

                                FISCAL YEAR COST PROJECTIONS                      



      The committee has attempted, pursuant to clause 7(a) of rule XIII of 

   the Rules of the House of Representatives, to ascertain the outlays that

   will occur in fiscal year 1999 and the five years following if the      

   amounts authorized are appropriated. These estimates are contained in   

   the classified annex and are in accordance with those of the executive  

   branch.                                                                 

                           CONGRESSIONAL BUDGET OFFICE ESTIMATES                  



      In compliance with clause 2(l)(3)(B) and (C) of rule XI of the Rules 

   of the House of Representatives, and pursuant to sections 308 and 403 of

   the Congressional Budget Act of 1974, the committee submits the         

   following estimate prepared by the Congressional Budget Office:         



       U.S. Congress,                                                          



       Congressional Budget Office,                                            



       Washington, DC, May 5, 1998.                                            







          Hon.  Porter J. Goss,                Chairman, Permanent Select Committee on Intelligence,



       House of Representatives, Washington, DC.                               



       Dear Mr. Chairman: The Congressional Budget Office has prepared the 

   enclosed cost estimate for H.R. 3694, the Intelligence Authorization Act

   for Fiscal Year 1999.                                                   

      If you wish further details on this estimate, we will be pleased to  

   provide them. The CBO staff contact is Dawn Sauter.                     

   Sincerely,                                                              



         June E. O'Neill,  Director.                                            



   Enclosure.                                                              





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



      Summary: H.R. 3694 would authorize appropriations for fiscal year    

   1999 for intelligence activities of the United States government, the   

   Community Management Account, and the Central Intelligence Agency       

   Retirement and Disability System (CIARDS).                              

      This estimate addresses only the unclassified portion of the bill. On

   that limited basis, CBO estimates that enacting H.R. 3694 would result  

   in additional spending of $139 million over the 1999 2003 period,       

   assuming appropriation of the authorized amounts. CBO believes that     

   section 401 of the bill, which would extend the authority of the CIA to 

   offer incentive payments to employees who voluntarily retire or resign, 

   would increase direct spending by $1 million or more in at least one    

   year during the 2000 2003 period. However, CBO cannot give a precise    

   estimate of the increase in spending because data to support a cost     

   estimate are classified. Because the bill would raise direct spending,  

   pay-as-you-go procedures would apply.                                   

      The Unfunded Mandates Reform Act of 1995 (UMRA) excludes from        

   application of the act legislative provisions that are necessary for the

   national security. CBO has determined that all of the provisions of this

   bill either fit within that exclusion or do not contain                 

   intergovernmental or private-sector mandates as defined by UMRA.        

      Estimated cost to the Federal Government: The estimated budgetary    

   impact of the unclassified portions of H.R. 3694 is shown in the        

   following table. CBO is unable to obtain the necessary information to   

   estimate the costs for the entire bill because parts are classified at a

   level above clearances held by CBO employees. The costs of this         

   legislation fall within budget function 050 (national defense).         

      The bill would authorize appropriations of $139 million for the      

   Community Management Account. In addition, the bill would authorize $202

   million for CIARDS to cover retirement costs attributable to military   

   service and various unfunded liabilities. The payment to CIARDS is      

   considered mandatory, and the authorization under this bill would be the

   same as assumed in the CBO baseline.                                    

      CBO believes that section 401 of the bill would increase direct      

   spending by $1 million or more in at least one year during the 2000 2003

   period. Section 401 would extend the authority of the CIA to offer      

   incentive payments to employees who voluntarily retire or resign. Under 

   current law this authority expires on September 30, 1999. Section 401   

   would extend this authority starting in fiscal year 2000 until September

   30, 2001. This extension would induce some employees to retire earlier  

   than under current law, thereby increasing federal outlays for          

   retirement benefits. CBO cannot give a precise estimate of the increase 

   in spending because data to support a cost estimate are classified.     



                                      [By fiscal year, in millions of dollars]


                                                                       1998      1999      2000      2001      2002      2003  


    SPENDING SUBJECT TO APPROPRIATION                                                                                               

Spending under current law for the community management account:          94         0         0         0         0         0  

Proposed changes:                                                          0       139         0         0         0         0  

Spending under H.R. 3694 for the community management account:            94       139         0         0         0         0  

    CHANGES IN DIRECT SPENDING

Estimated budget authority                                                 0         0     (\2\)     (\2\)     (\2\)     (\2\)  

Estimated outlays                                                          0         0     (\2\)     (\2\)     (\2\)     (\2\)  


\1\The 1998 level is the amount appropriated for that year. 

\2\CBO believes that H.R. 3694 would increase direct spending by $1 million or 
more in at least one year over the 2000 2003 period. However, CBO cannot give 
a precise estimate because data to support a cost estimate are classified.  



                    For purposes of this estimate, CBO assumes that H.R. 3694 will

          be enacted by October 1, 1998, and that the full amounts authorized will

          be appropriated for fiscal year 1999. Outlays are estimated according to

          historical spending patterns for intelligence programs.                 

      Pay-as-you-go considerations: Section 401 of the bill would affect   

   direct spending, and therefore the bill would be subject to             

   pay-as-you-go procedures. The estimated pay-as-you-go impact would be $1

   million or more in at least one year over the 2000 2003 period.         

      Intergovernmental and private-sector impact: The Unfunded Mandates   

   Reform Act of 1995 (UMRA) excludes from application of the act          

   legislative provisions that are necessary for the national security. CBO

   has determined that all of the provisions of this bill either fit within

   that exclusion or do not contain intergovernmental or private-sector    

   mandates as defined by UMRA.                                            

      Estimate prepared by: Federal costs: Dawn Sauter; Impact on State,   

   local and tribal governments: Teri Gullo; Impact on the private sector: 

   Bill Thomas.                                                            

      Estimate approved by: Robert A. Sunshine, Deputy Assistant Director  

   for Budget Analysis.                                                    

                                  COMMITTEE COST ESTIMATES                        



      The committee agrees with the estimate of the Congressional Budget   

   Office.                                                                 

           SPECIFIC CONSTITUTIONAL AUTHORITY FOR CONGRESSIONAL ENACTMENT OF THIS  

                                   LEGISLATION                                    

      The intelligence and intelligence-related activities of the United   

   States government are carried out to support the national security      

   interests of the United States, to support and assist the armed forces  

   of the United States, and to support the President in the execution of  

   the foreign policy of the United States. Article I, section 8, of the   

   Constitution of the United States provides, in pertinent part, that     

   ``Congress shall have power * * * to pay the debts and provide for the  

   common defence and general welfare of the United States; * * * ``; ``to 

   raise and support Armies, * * * ``; ``to provide and maintain a Navy; * 

   * * `` and ``to make all laws which shall be necessary and proper for   

   carrying into execution * * * all other powers vested by this           

   Constitution in the Government of the United States, or in any          

   Department or Officer thereof.'' Therefore, pursuant to such authority, 

   Congress is empowered to enact this legislation.                        



                   CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED          



     In compliance with clause 3 of rule XIII of the Rules of the House of

  Representatives, changes in existing law made by the bill, as reported, 

  are shown as follows (existing law proposed to be omitted is enclosed in

  black brackets, new matter is printed in italic, existing law in which  

  no change is proposed is shown in roman):                               

                          SECTION 905 NATIONAL SECURITY ACT OF 1947               



                               APPLICATION                               



     Sec. 905. This title shall cease to be effective on January 6, 1999  

  January 6, 2000 .                                                       

                                                                                 



           SECTION 2 OF THE CENTRAL INTELLIGENCE AGENCY VOLUNTARY SEPARATION PAY  

                                       ACT                                        

          SEC. 2. SEPARATION PAY.                                                 



   (a) * * *                                                              



         * * * * * * *                                                           



     (f) Termination.--No amount shall be payable under this section based

  on any separation occurring after September 30, 1999 September 30, 2001 

  .                                                                       

         * * * * * * *                                                           



                                                                                 



                           CENTRAL INTELLIGENCE AGENCY ACT OF 1949                



         * * * * * * *                                                           



                                    GENERAL AUTHORITIES                           



     Sec. 5. (a) In the performance of its functions, the Central         

  Intelligence Agency is authorized to--                                  

       (1) Transfer to and receive from other Government agencies such sums

   as may be approved by the Office of Management and Budget, for the      

   performance of any of the functions or activities authorized under      

   subparagraphs (B) and (C) of section 102(a)(2) paragraphs (2) and (3) of

   section 102(a) , subsections (c)(5) (c)(6) and (d) of section 103,      

   subsections (a) and (g) of section 104, and section 303 of the National 

   Security Act of 1947 (50 U.S.C. 403(a)(2), (3), 403 3 (c)(6), (d) , 403 

   4 (a), (g) , and 405), and any other Government agency is authorized to 

   transfer to or receive from the Agency such sums without regard to any  

   provisions of law limiting or prohibiting transfers between             

   appropriations. Sums transferred to the Agency in accordance with this  

   paragraph may be expended for the purposes and under the authority of   

   this Act                                                                



          without regard to limitations of appropriations from which transferred; 



         * * * * * * *                                                           



       (4) Authorize personnel designated by the Director to carry firearms

   to the extent necessary for the performance of the Agency's authorized  

   functions, except that, within the United States, such authority shall  

   be limited to the purposes of protection of classified materials and    

   information, the training of Agency personnel and other authorized      

   persons in the use of firearms, the protection of Agency installations  

   and property, and the protection of Agency personnel and of defectors,  

   their families and the protection of current and former Agency personnel

   and their immediate families, and defectors and their immediate families

   , and other persons in the United States under Agency auspices;         

         * * * * * * *                                                           



     Sec. 6. In the interests of the security of the foreign intelligence 

  activities of the United States and in order further to implement       

  section 103(c)(5) (c)(6) of the National Security Act of 1947 (50 U.S.C.

  403 3(c)(5) (c)(6) ) that the Director of Central Intelligence shall be 

  responsible for protecting intelligence sources and methods from        

  unauthorized disclosure, the Agency shall be exempted from the          

  provisions of sections 1 and 2, chapter 795 of the Act of August 28,    

  1935 (49 Stat. 956, 957; 5 U.S.C. 654), and the provisions of any other 

  laws which require the publication or disclosure of the organization,   

  functions, names, official titles, salaries, or numbers of personnel    

  employed by the Agency: Provided, That in furtherance of this section,  

  the Director of the Office of Management and Budget shall make no       

  reports to the Congress in connection with the Agency under section 607,

  title VI, chapter 212 of the Act of June 30, 1945, as amended (5 U.S.C. 

  947(b)).                                                                

         * * * * * * *                                                           



                                                                                 



                SECTION 201 OF THE CENTRAL INTELLIGENCE AGENCY RETIREMENT ACT     



          SEC. 201. THE CIARDS SYSTEM.                                            



   (a) * * *                                                              



         * * * * * * *                                                           



     (c) Finality of Decisions of DCI. --In the interests of the security 

  of the foreign intelligence activities of the United States and in order

  further to implement section 103(c)(5) (c)(6) of the National Security  

  Act of 1947 (50 U.S.C. 403 3(c)(5) (c)(6) ) that the Director of Central

  Intelligence shall be responsible for protecting intelligence sources   

  and methods from unauthorized disclosure, and notwithstanding the       

  provisions of chapter 7 of title 5, United States Code, or any other    

  provision of law (except section 305(b) of this Act), any determination 

  by the Director authorized by this Act shall be final and conclusive and

  shall not be subject to review by any court.                            

                                                                                 



                         SECTION 413 OF TITLE 10, UNITED STATES CODE              



                    431. Authority to engage in commercial activities as security 

          for intelligence collection activities                                  

     (a) Authority.-- The Secretary of Defense, subject to the provisions 

  of this subchapter, may authorize the conduct of those commercial       

  activities necessary to provide security for authorized intelligence    

  collection activities abroad undertaken by the Department of Defense. No

  commercial activity may be initiated pursuant to this subchapter after  

  December 31, 1998 December 31, 2001 .                                   

         * * * * * * *