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108th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    108-381

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          INTELLIGENCE AUTHORIZATION ACT FOR FISCAL YEAR 2004

                                _______
                                

               November 19, 2003.--Ordered to be printed

                                _______
                                

  Mr. Goss, from the committee of conference, submitted the following

                           CONFERENCE REPORT

                        [To accompany H.R. 2417]

      The committee of conference on the disagreeing votes of 
the two Houses on the amendment of the Senate to the bill (H.R. 
2417), to authorize appropriations for fiscal year 2004 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 met, after full and free 
conference, have agreed to recommend and do recommend to their 
respective Houses as follows:
      That the House recede from its disagreement to the 
amendment of the Senate and agree to the same with an amendment 
as follows:
      In lieu of the matter proposed to be inserted by the 
Senate amendment, insert the following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the 
``Intelligence Authorization Act for Fiscal Year 2004''.
    (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. Intelligence Community Management Account.
Sec. 105. Office of Intelligence and Analysis of the Department of the 
          Treasury.
Sec. 106. Incorporation of reporting requirements.
Sec. 107. Preparation and submittal of reports, reviews, studies, and 
          plans relating to intelligence activities of Department of 
          Defense or Department of Energy.

 TITLE II--CENTRAL INTELLIGENCE AGENCY RETIREMENT AND DISABILITY SYSTEM

Sec. 201. Authorization of appropriations.

                      TITLE III--GENERAL PROVISIONS

                Subtitle A--Recurring General Provisions

Sec. 301. Increase in employee compensation and benefits authorized by 
          law.
Sec. 302. Restriction on conduct of intelligence activities.

                        Subtitle B--Intelligence

Sec. 311. Authority of Federal Bureau of Investigation to award personal 
          services contracts.
Sec. 312. Budget treatment of costs of acquisition of major systems by 
          the intelligence community.
Sec. 313. Modification of sunset of application of sanctions laws to 
          intelligence activities.
Sec. 314. Modification of notice and wait requirements on projects to 
          construct or improve intelligence community facilities.
Sec. 315. Extension of deadline for final report of the National 
          Commission for the Review of the Research and Development 
          Programs of the United States Intelligence Community.
Sec. 316. Improvement of information sharing among Federal, State, and 
          local government officials.
Sec. 317. Pilot program on analysis of signals and other intelligence by 
          intelligence analysts of various elements of the intelligence 
          community.
Sec. 318. Pilot program on recruitment and training of intelligence 
          analysts.
Sec. 319. Improvement of equality of employment opportunities in the 
          intelligence community.
Sec. 320. Sense of Congress on recruitment as intelligence community 
          personnel of members of the Armed Forces on their discharge or 
          release from duty.
Sec. 321. External Collection Capabilities and Requirements Review 
          Panel.

                     Subtitle C--Counterintelligence

Sec. 341. Counterintelligence initiatives for the intelligence 
          community.

                           Subtitle D--Reports

Sec. 351. Report on cleared insider threat to classified computer 
          networks.
Sec. 352. Report on security background investigations and security 
          clearance procedures of the Federal Government.
Sec. 353. Report on detail of civilian intelligence personnel among 
          elements of the intelligence community and the Department of 
          Defense.
Sec. 354. Report on modifications of policy and law on classified 
          information to facilitate sharing of information for national 
          security purposes.
Sec. 355. Report on strategic planning.
Sec. 356. Report on United States dependence on computer hardware and 
          software manufactured overseas.
Sec. 357. Report on lessons learned from military operations in Iraq.
Sec. 358. Reports on conventional weapons and ammunition obtained by 
          Iraq in violation of certain United Nations Security Council 
          resolutions.
Sec. 359. Report on operations of Directorate of Information Analysis 
          and Infrastructure Protection and Terrorist Threat Integration 
          Center.
Sec. 360. Report on Terrorist Screening Center.
Sec. 361. Repeal and modification of report requirements relating to 
          intelligence activities.

                        Subtitle E--Other Matters

Sec. 371. Extension of suspension of reorganization of Diplomatic 
          Telecommunications Service Program Office.
Sec. 372. Modifications of authorities on explosive materials.
Sec. 373. Modification of prohibition on the naturalization of certain 
          persons.
Sec. 374. Modification to definition of financial institution in Right 
          to Financial Privacy Act.
Sec. 375. Coordination of Federal Government research on security 
          evaluations.
Sec. 376. Treatment of classified information in money laundering cases.
Sec. 377. Technical amendments.

                  TITLE IV--CENTRAL INTELLIGENCE AGENCY

Sec. 401. Amendment to certain Central Intelligence Agency Act of 1949 
          notification requirements.
Sec. 402. Protection of certain Central Intelligence Agency personnel 
          from tort liability.
Sec. 403. Repeal of obsolete limitation on use of funds in central 
          services working capital fund.
Sec. 404. Purchases by Central Intelligence Agency of products of 
          Federal Prison Industries.
Sec. 405. Postponement of Central Intelligence Agency compensation 
          reform and other matters.

           TITLE V--DEPARTMENT OF DEFENSE INTELLIGENCE MATTERS

Sec. 501. Protection of certain National Security Agency personnel from 
          tort liability.
Sec. 502. Use of funds for counterdrug and counterterrorism activities 
          for Colombia.
Sec. 503. Scene visualization technologies.
Sec. 504. Measurement and signatures intelligence research program.
Sec. 505. Availability of funds of National Security Agency for national 
          security scholarships.

                    TITLE I--INTELLIGENCE ACTIVITIES

SEC. 101. AUTHORIZATION OF APPROPRIATIONS.

    Funds are hereby authorized to be appropriated for fiscal 
year 2004 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 Department of Justice.
            (10) The Federal Bureau of Investigation.
            (11) The National Reconnaissance Office.
            (12) The National Geospatial-Intelligence Agency.
            (13) The Coast Guard.
            (14) The Department of Homeland Security.

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, 2004, 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 conference report on the bill H.R. 2417 of the 
One Hundred Eighth 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 
2004 under section 102 when the Director of Central 
Intelligence determines that such action is necessary to the 
performance of important intelligence functions, except that 
the number of personnel employed in excess of the number 
authorized under such section may not, for any element of the 
intelligence community, exceed 2 percent of the number of 
civilian personnel authorized under such section for such 
element.
    (b) Notice to Intelligence Committees.--The Director of 
Central Intelligence shall promptly notify the Select Committee 
on Intelligence of the Senate and the Permanent Select 
Committee on Intelligence of the House of Representatives 
whenever the Director exercises the authority granted by this 
section.

SEC. 104. INTELLIGENCE COMMUNITY MANAGEMENT ACCOUNT.

    (a) Authorization of Appropriations.--There is authorized 
to be appropriated for the Intelligence Community Management 
Account of the Director of Central Intelligence for fiscal year 
2004 the sum of $221,513,000. Within such amount, funds 
identified in the classified Schedule of Authorizations 
referred to in section 102(a) for advanced research and 
development shall remain available until September 30, 2005.
    (b) Authorized Personnel Levels.--The elements within the 
Intelligence Community Management Account of the Director of 
Central Intelligence are authorized 310 full-time personnel as 
of September 30, 2004. Personnel serving in such elements may 
be permanent employees of the Intelligence Community Management 
Account or personnel detailed from other elements of the United 
States Government.
    (c) Classified Authorizations.--
            (1) Authorization of appropriations.--In addition 
        to amounts authorized to be appropriated for the 
        Intelligence Community Management Account by subsection 
        (a), there are also authorized to be appropriated for 
        the Intelligence Community Management Account for 
        fiscal year 2004 such additional amounts as are 
        specified in the classified Schedule of Authorizations 
        referred to in section 102(a). Such additional amounts 
        for research and development shall remain available 
        until September 30, 2005.
            (2) Authorization of personnel.--In addition to the 
        personnel authorized by subsection (b) for elements of 
        the Intelligence Community Management Account as of 
        September 30, 2004, there are also authorized such 
        additional personnel for such elements as of that date 
        as are specified in the classified Schedule of 
        Authorizations.
    (d) Reimbursement.--Except as provided in section 113 of 
the National Security Act of 1947 (50 U.S.C. 404h), during 
fiscal year 2004 any officer or employee of the United States 
or a member of the Armed Forces who is detailed to the staff of 
the Intelligence Community Management Account from another 
element of the United States Government shall be detailed on a 
reimbursable basis, except that any such officer, employee, or 
member may be detailed on a nonreimbursable basis for a period 
of less than one year for the performance of temporary 
functions as required by the Director of Central Intelligence.
    (e) National Drug Intelligence Center.--
            (1) In general.--Of the amount authorized to be 
        appropriated in subsection (a), $47,142,000 shall be 
        available for the National Drug Intelligence Center. 
        Within such amount, funds provided for research, 
        development, testing, and evaluation purposes shall 
        remain available until September 30, 2005, and funds 
        provided for procurement purposes shall remain 
        available until September 30, 2006.
            (2) Transfer of funds.--The Director of Central 
        Intelligence shall transfer to the Attorney General 
        funds available for the National Drug Intelligence 
        Center under paragraph (1). The Attorney General shall 
        utilize funds so transferred for the activities of the 
        National Drug Intelligence Center.
            (3) Limitation.--Amounts available for the National 
        Drug Intelligence Center may not be used in 
        contravention of the provisions of section 103(d)(1) of 
        the National Security Act of 1947 (50 U.S.C. 403-
        3(d)(1)).
            (4) Authority.--Notwithstanding any other provision 
        of law, the Attorney General shall retain full 
        authority over the operations of the National Drug 
        Intelligence Center.

SEC. 105. OFFICE OF INTELLIGENCE AND ANALYSIS OF THE DEPARTMENT OF THE 
                    TREASURY.

    (a) Establishment of Office.--(1) Chapter 3 of subtitle I 
of title 31, United States Code, is amended--
            (A) by redesignating section 311 as section 312; 
        and
            (B) by inserting after section 310 the following:

``Sec. 311. Office of Intelligence and Analysis

    ``(a) Establishment.--There is established within the 
Department of the Treasury, the Office of Intelligence and 
Analysis (in this section referred to as the `Office'), which 
shall--
            ``(1) be responsible for the receipt, analysis, 
        collation, and dissemination of foreign intelligence 
        and foreign counterintelligence information (within the 
        meaning of section 3 of the National Security Act of 
        1947 (50 U.S.C. 401a)) related to the operation and 
        responsibilities of the Department of the Treasury; and
            ``(2) have such other related duties and 
        authorities as may be assigned to it by the Secretary, 
        subject to the authority, direction, and control of the 
        Secretary.
    ``(b) Assistant Secretary for Intelligence and Analysis.--
The Office shall be headed by an Assistant Secretary, who shall 
be appointed by the President, by and with the advice and 
consent of the Senate. The Assistant Secretary shall report 
directly to the Undersecretary of the Treasury for 
Enforcement.''.
    (2) The table of sections at the beginning of chapter 3 of 
such title is amended by striking the item relating to section 
311 and inserting the following new items:

``311. Office of Intelligence and Analysis.
``312. Continuing in office.''.

    (b) Construction of Authority.--Nothing in section 311 of 
title 31, United States Code (as amended by subsection (a)), 
shall be construed to alter the authorities and 
responsibilities of the Director of Central Intelligence with 
respect to the Office of Intelligence and Analysis of the 
Department of the Treasury as an element of the intelligence 
community.
    (c) Consultation with DCI in Appointment of Assistant 
Secretary.--Section 106(b)(2) of the National Security Act of 
1947 (50 U.S.C. 403-6(b)(2)) is amended by adding at the end 
the following:
                    ``(E) The Assistant Secretary for 
                Intelligence and Analysis of the Department of 
                the Treasury.''.
    (d) Conforming Amendments.--
            (1) National security act.--Section 3(4) of the 
        National Security Act of 1947 (50 U.S.C. 401a(4)) is 
        amended--
                    (A) in subparagraph (H), by striking ``the 
                Department of the Treasury,'';
                    (B) by redesignating subparagraphs (J) and 
                (K) as subparagraphs (K) and (L), respectively; 
                and
                    (C) by inserting after subparagraph (I) the 
                following new subparagraph (J):
                    ``(J) the Office of Intelligence and 
                Analysis of the Department of the Treasury;''.
            (2) Title 31.--Section 301(e) of title 31, United 
        States Code, is amended by striking ``7'' and inserting 
        ``8''.
            (3) Title 5.--Section 5315 of title 5, United 
        States Code, is amended in the item relating to 
        Assistant Secretaries of the Treasury by striking 
        ``(7)'' and inserting ``(8)''.

SEC. 106. INCORPORATION OF REPORTING REQUIREMENTS.

    (a) In General.--Each requirement to submit a report to the 
congressional intelligence committees that is included in the 
joint explanatory statement to accompany the conference report 
on the bill H.R. 2417 of the One Hundred Eighth Congress, or in 
the classified annex to this Act, is hereby incorporated into 
this Act, and is hereby made a requirement in law.
    (b) Congressional Intelligence Committees Defined.--In this 
section, the term ``congressional intelligence committees'' 
means--
            (1) the Select Committee on Intelligence of the 
        Senate; and
            (2) the Permanent Select Committee on Intelligence 
        of the House of Representatives.

SEC. 107. PREPARATION AND SUBMITTAL OF REPORTS, REVIEWS, STUDIES, AND 
                    PLANS RELATING TO INTELLIGENCE ACTIVITIES OF 
                    DEPARTMENT OF DEFENSE OR DEPARTMENT OF ENERGY.

    (a) Consultation in Preparation.--(1) The Director of 
Central Intelligence shall ensure that any report, review, 
study, or plan required to be prepared or conducted by a 
provision of this Act, including a provision of the classified 
Schedule of Authorizations referred to in section 102(a) or the 
classified annex to this Act, that involves the intelligence or 
intelligence-related activities of the Department of Defense or 
the Department of Energy is prepared or conducted in 
consultation with the Secretary of Defense or the Secretary of 
Energy, as appropriate.
    (2) The Secretary of Defense or the Secretary of Energy may 
carry out any consultation required by this subsection through 
an official of the Department of Defense or the Department of 
Energy, as the case may be, designated by such Secretary for 
that purpose.
    (b) Submittal.--Any report, review, study, or plan referred 
to in subsection (a) shall be submitted, in addition to any 
other committee of Congress specified for submittal in the 
provision concerned, to the following committees of Congress:
            (1) The Committees on Armed Services and 
        Appropriations and the Select Committee on Intelligence 
        of the Senate.
            (2) The Committees on Armed Services and 
        Appropriations and the Permanent Select Committee on 
        Intelligence of the House of Representatives.

 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 2004 the sum of $226,400,000.

                     TITLE III--GENERAL PROVISIONS

                Subtitle A--Recurring 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.

                        Subtitle B--Intelligence

SEC. 311. AUTHORITY OF FEDERAL BUREAU OF INVESTIGATION TO AWARD 
                    PERSONAL SERVICES CONTRACTS.

    (a) Authority.--(1) Title III of the National Security Act 
of 1947 is amended by inserting after section 301 (50 U.S.C. 
409a) the following new section:

   ``AUTHORITY OF FEDERAL BUREAU OF INVESTIGATION TO AWARD PERSONAL 
                           SERVICES CONTRACTS

    ``Sec. 302. (a) In General.--The Director of the Federal 
Bureau of Investigation may enter into personal services 
contracts if the personal services to be provided under such 
contracts directly support the intelligence or 
counterintelligence missions of the Federal Bureau of 
Investigation.
    ``(b) Inapplicability of Certain Requirements.--Contracts 
under subsection (a) shall not be subject to the annuity offset 
requirements of sections 8344 and 8468 of title 5, United 
States Code, the requirements of section 3109 of title 5, 
United States Code, or any law or regulation requiring 
competitive contracting.
    ``(c) Contract To Be Appropriate Means of Securing 
Services.--The Chief Contracting Officer of the Federal Bureau 
of Investigation shall ensure that each personal services 
contract entered into by the Director under this section is the 
appropriate means of securing the services to be provided under 
such contract.''.
    (2) The table of contents for that Act is amended by 
inserting after the item relating to section 301 the following 
new item:

``Sec. 302. Authority of Federal Bureau of Investigation to award 
          personal services contracts.''.

    (b) Reports on Exercise of Authority.--(1) Not later than 
one year after the date of the enactment of this Act, and 
annually thereafter, the Director of the Federal Bureau of 
Investigation shall submit to the appropriate committees of 
Congress a report on the exercise of the authority in section 
302 of the National Security Act of 1947, as added by 
subsection (a).
    (2) Each report under this subsection shall include, for 
the one-year period ending on the date of such report, the 
following:
            (A) The number of contracts entered into during the 
        period.
            (B) The cost of each such contract.
            (C) The length of each such contract.
            (D) The types of services to be provided under each 
        such contract.
            (E) The availability, if any, of United States 
        Government personnel to perform functions similar to 
        the services to be provided under each such contract.
            (F) The efforts of the Federal Bureau of 
        Investigation to fill available personnel vacancies, or 
        request additional personnel positions, in areas 
        relating to the intelligence or counterintelligence 
        mission of the Bureau.
    (3) Each report under this subsection shall be submitted in 
unclassified form, but may include a classified annex.
    (4) In this subsection--
            (A) for purposes of the submittal of the classified 
        annex to any report under this subsection, the term 
        ``appropriate committees of Congress'' means--
                    (i) the Select Committee on Intelligence of 
                the Senate; and
                    (ii) the Permanent Select Committee on 
                Intelligence of the House of Representatives; 
                and
            (B) for purposes of the submittal of the 
        unclassified portion of any report under this 
        subsection, the term ``appropriate committees of 
        Congress'' means--
                    (i) the committees specified in 
                subparagraph (A);
                    (ii) the Committees on Appropriations, 
                Governmental Affairs, and the Judiciary of the 
                Senate; and
                    (iii) the Committees on Appropriations, 
                Government Reform and Oversight, and the 
                Judiciary of the House of Representatives.

SEC. 312. BUDGET TREATMENT OF COSTS OF ACQUISITION OF MAJOR SYSTEMS BY 
                    THE INTELLIGENCE COMMUNITY.

    (a) Findings.--Congress makes the following findings:
            (1) Funds within the National Foreign Intelligence 
        Program often must be shifted from program to program 
        and from fiscal year to fiscal year to address funding 
        shortfalls caused by significant increases in the costs 
        of acquisition of major systems by the intelligence 
        community.
            (2) While some increases in the costs of 
        acquisition of major systems by the intelligence 
        community are unavoidable, the magnitude of growth in 
        the costs of acquisition of many major systems 
        indicates a systemic bias within the intelligence 
        community to underestimate the costs of such 
        acquisition, particularly in the preliminary stages of 
        development and production.
            (3) Decisions by Congress to fund the acquisition 
        of major systems by the intelligence community rely 
        significantly upon initial estimates of the 
        affordability of acquiring such major systems and occur 
        within a context in which funds can be allocated for a 
        variety of alternative programs. Thus, substantial 
        increases in costs of acquisition of major systems 
        place significant burdens on the availability of funds 
        for other programs and new proposals within the 
        National Foreign Intelligence Program.
            (4) Independent cost estimates, prepared by 
        independent offices, have historically represented a 
        more accurate projection of the costs of acquisition of 
        major systems.
            (5) Recognizing the benefits associated with 
        independent cost estimates for the acquisition of major 
        systems, the Secretary of Defense has built upon the 
        statutory requirement in section 2434 of title 10, 
        United States Code, to develop and consider independent 
        cost estimates for the acquisition of such systems by 
        mandating the use of such estimates in budget requests 
        of the Department of Defense.
            (6) The mandatory use throughout the intelligence 
        community of independent cost estimates for the 
        acquisition of major systems will assist the President 
        and Congress in the development and funding of budgets 
        which more accurately reflect the requirements and 
        priorities of the United States Government for 
        intelligence and intelligence-related activities.
    (b) Budget Treatment of Costs of Acquisition of Major 
Systems.--(1) Title V of the National Security Act of 1947 (50 
U.S.C. 413 et seq.) is amended by inserting after section 506 
the following new section:

  ``BUDGET TREATMENT OF COSTS OF ACQUISITION OF MAJOR SYSTEMS BY THE 
                         INTELLIGENCE COMMUNITY

    ``Sec. 506A. (a) Independent Cost Estimates.--(1) The 
Director of Central Intelligence shall, in consultation with 
the head of each element of the intelligence community 
concerned, prepare an independent cost estimate of the full 
life-cycle cost of development, procurement, and operation of 
each major system to be acquired by the intelligence community.
    ``(2) Each independent cost estimate for a major system 
shall, to the maximum extent practicable, specify the amount 
required to be appropriated and obligated to develop, procure, 
and operate the major system in each fiscal year of the 
proposed period of development, procurement, and operation of 
the major system.
    ``(3)(A) In the case of a program of the intelligence 
community that qualifies as a major system, an independent cost 
estimate shall be prepared before the submission to Congress of 
the budget of the President for the first fiscal year in which 
appropriated funds are anticipated to be obligated for the 
development or procurement of such major system.
    ``(B) In the case of a program of the intelligence 
community for which an independent cost estimate was not 
previously required to be prepared under this section, 
including a program for which development or procurement 
commenced before the date of the enactment of the Intelligence 
Authorization Act for Fiscal Year 2004, if the aggregate future 
costs of development or procurement (or any combination of such 
activities) of the program will exceed $500,000,000 (in current 
fiscal year dollars), the program shall qualify as a major 
system for purposes of this section, and an independent cost 
estimate for such major system shall be prepared before the 
submission to Congress of the budget of the President for the 
first fiscal year thereafter in which appropriated funds are 
anticipated to be obligated for such major system.
    ``(4) The independent cost estimate for a major system 
shall be updated upon--
            ``(A) the completion of any preliminary design 
        review associated with the major system;
            ``(B) any significant modification to the 
        anticipated design of the major system; or
            ``(C) any change in circumstances that renders the 
        current independent cost estimate for the major system 
        inaccurate.
    ``(5) Any update of an independent cost estimate for a 
major system under paragraph (4) shall meet all requirements 
for independent cost estimates under this section, and shall be 
treated as the most current independent cost estimate for the 
major system until further updated under that paragraph.
    ``(b) Preparation of Independent Cost Estimates.--(1) The 
Director shall establish within the Office of the Deputy 
Director of Central Intelligence for Community Management an 
office which shall be responsible for preparing independent 
cost estimates, and any updates thereof, under subsection (a), 
unless a designation is made under paragraph (2).
    ``(2) In the case of the acquisition of a major system for 
an element of the intelligence community within the Department 
of Defense, the Director and the Secretary of Defense shall 
provide that the independent cost estimate, and any updates 
thereof, under subsection (a) be prepared by an entity jointly 
designated by the Director and the Secretary in accordance with 
section 2434(b)(1)(A) of title 10, United States Code.
    ``(c) Utilization in Budgets of President.--(1) If the 
budget of the President requests appropriations for any fiscal 
year for the development or procurement of a major system by 
the intelligence community, the President shall, subject to 
paragraph (2), request in such budget an amount of 
appropriations for the development or procurement, as the case 
may be, of the major system that is equivalent to the amount of 
appropriations identified in the most current independent cost 
estimate for the major system for obligation for each fiscal 
year for which appropriations are requested for the major 
system in such budget.
    ``(2) If the amount of appropriations requested in the 
budget of the President for the development or procurement of a 
major system is less than the amount of appropriations 
identified in the most current independent cost estimate for 
the major system for obligation for each fiscal year for which 
appropriations are requested for the major system in such 
budget, the President shall include in the budget justification 
materials submitted to Congress in support of such budget--
            ``(A) an explanation for the difference between the 
        amount of appropriations requested and the amount of 
        appropriations identified in the most current 
        independent cost estimate;
            ``(B) a description of the importance of the major 
        system to the national security;
            ``(C) an assessment of the consequences for the 
        funding of all programs of the National Foreign 
        Intelligence Program in future fiscal years if the most 
        current independent cost estimate for the major system 
        is accurate and additional appropriations are required 
        in future fiscal years to ensure the continued 
        development or procurement of the major system, 
        including the consequences of such funding shortfalls 
        on the major system and all other programs of the 
        National Foreign Intelligence Program; and
            ``(D) such other information on the funding of the 
        major system as the President considers appropriate.
    ``(d) Inclusion of Estimates in Budget Justification 
Materials.--The budget justification materials submitted to 
Congress in support of the budget of the President shall 
include the most current independent cost estimate under this 
section for each major system for which appropriations are 
requested in such budget for any fiscal year.
    ``(e) Definitions.--In this section:
            ``(1) The term `budget of the President' means the 
        budget of the President for a fiscal year as submitted 
        to Congress under section 1105(a) of title 31, United 
        States Code.
            ``(2) The term `independent cost estimate' means a 
        pragmatic and neutral analysis, assessment, and 
        quantification of all costs and risks associated with 
        the acquisition of a major system, which shall be based 
        on programmatic and technical specifications provided 
        by the office within the element of the intelligence 
        community with primary responsibility for the 
        development, procurement, or operation of the major 
        system.
            ``(3) The term `major system' means any significant 
        program of an element of the intelligence community 
        with projected total development and procurement costs 
        exceeding $500,000,000 (in current fiscal year 
        dollars), which costs shall include all end-to-end 
        program costs, including costs associated with the 
        development and procurement of the program and any 
        other costs associated with the development and 
        procurement of systems required to support or utilize 
        the program.''.
    (2) The table of contents for the National Security Act of 
1947 is amended by inserting after the item relating to section 
506 the following new item:

``Sec. 506A. Budget treatment of costs of acquisition of major systems 
          by the intelligence community.''.

    (c) Effective Date.--The amendments made by subsection (b) 
shall take effect on the date of the enactment of this Act.
    (d) Limitations.--(1)(A) For each major system for which 
funds have been authorized for a fiscal year before fiscal year 
2005, or for which funds are sought in the budget of the 
President for fiscal year 2005, as submitted to Congress 
pursuant to section 1105(a) of title 31, United States Code, 
and for which no independent cost estimate has been provided to 
Congress, no contract, or option to contract, for the 
procurement or acquisition of such major system may be entered 
into, or option to contract be exercised, before the date of 
the enactment of an Act to authorize appropriations for fiscal 
year 2005 for intelligence and intelligence-related activities 
of the United States Government.
    (B) Subparagraph (A) shall not affect any contract for 
procurement or acquisition that was entered into before the 
date of the enactment of this Act.
    (2) Commencing as of the date of the submittal to Congress 
of the budget of the President for fiscal year 2006 pursuant to 
section 1105(a) of title 31, United States Code, no funds may 
be obligated or expended for the development or procurement of 
a major system until the President has complied with the 
requirements of section 506A of the National Security Act of 
1947 (as added by subsection (b)) with respect to such major 
system.
    (3) In this subsection, the terms ``independent cost 
estimate'' and ``major system'' have the meaning given such 
terms in subsection (e) of section 506A of the National 
Security Act of 1947 (as so added).

SEC. 313. MODIFICATION OF SUNSET OF APPLICATION OF SANCTIONS LAWS TO 
                    INTELLIGENCE ACTIVITIES.

    (a) Modification.--Section 905 of the National Security Act 
of 1947 (50 U.S.C. 441d) is repealed.
    (b) Clerical Amendment.--The table of contents for that Act 
is amended by striking the item relating to section 905.

SEC. 314. MODIFICATION OF NOTICE AND WAIT REQUIREMENTS ON PROJECTS TO 
                    CONSTRUCT OR IMPROVE INTELLIGENCE COMMUNITY 
                    FACILITIES.

    (a) Increase of Thresholds for Notice.--Subsection (a) of 
section 602 of the Intelligence Authorization Act for Fiscal 
Year 1995 (Public Law 103-359; 108 Stat. 3432; 50 U.S.C. 403-
2b(a)) is amended--
            (1) by striking ``$750,000'' each place it appears 
        and inserting ``$5,000,000''; and
            (2) by striking ``$500,000'' each place it appears 
        and inserting ``$1,000,000''.
    (b) Notice and Wait Requirements for Emergency Projects.--
Subsection (b)(2) of that section is amended--
            (1) by redesignating subparagraphs (A), (B), and 
        (C) as clauses (i), (ii), and (iii), respectively;
            (2) by inserting ``(A)'' after ``(2) Report.--'';
            (3) by striking ``21-day period'' and inserting 
        ``7-day period''; and
            (4) by adding at the end the following new 
        subparagraph:
            ``(B) Notwithstanding subparagraph (A), a project 
        referred to in paragraph (1) may begin on the date the 
        notification is received by the appropriate committees 
        of Congress under that paragraph if the Director of 
        Central Intelligence and the Secretary of Defense 
        jointly determine that--
                    ``(i) an emergency exists with respect to 
                the national security or the protection of 
                health, safety, or environmental quality; and
                    ``(ii) any delay in the commencement of the 
                project would harm any or all of those 
                interests.''.

SEC. 315. EXTENSION OF DEADLINE FOR FINAL REPORT OF THE NATIONAL 
                    COMMISSION FOR THE REVIEW OF THE RESEARCH AND 
                    DEVELOPMENT PROGRAMS OF THE UNITED STATES 
                    INTELLIGENCE COMMUNITY.

    (a) In General.--Subsection (a) of section 1007 of the 
Intelligence Authorization Act for Fiscal Year 2003 (Public Law 
107-306; 50 U.S.C. 401 note; 116 Stat. 2442) is amended by 
striking ``September 1, 2003'' and inserting ``September 1, 
2004''.
    (b) Effective Date.--The amendment made by subsection (a) 
shall take effect as if included in the enactment of section 
1007 of the Intelligence Authorization Act for Fiscal Year 
2003.

SEC. 316. IMPROVEMENT OF INFORMATION SHARING AMONG FEDERAL, STATE, AND 
                    LOCAL GOVERNMENT OFFICIALS.

    (a) Training Program for State and Local Officials.--
Section 892(c) of the Homeland Security Act of 2002 (Public Law 
107-296; 6 U.S.C. 482) is amended by adding at the end the 
following new paragraph:
            ``(3)(A) The Secretary shall establish a program to 
        provide appropriate training to officials described in 
        subparagraph (B) in order to assist such officials in--
                    ``(i) identifying sources of potential 
                terrorist threats through such methods as the 
                Secretary determines appropriate;
                    ``(ii) reporting information relating to 
                such potential terrorist threats to the 
                appropriate Federal agencies in the appropriate 
                form and manner;
                    ``(iii) assuring that all reported 
                information is systematically submitted to and 
                passed on by the Department for use by 
                appropriate Federal agencies; and
                    ``(iv) understanding the mission and roles 
                of the intelligence community to promote more 
                effective information sharing among Federal, 
                State, and local officials and representatives 
                of the private sector to prevent terrorist 
                attacks against the United States.
            ``(B) The officials referred to in subparagraph (A) 
        are officials of State and local government agencies 
        and representatives of private sector entities with 
        responsibilities relating to the oversight and 
        management of first responders, counterterrorism 
        activities, or critical infrastructure.
            ``(C) The Secretary shall consult with the Attorney 
        General to ensure that the training program established 
        in subparagraph (A) does not duplicate the training 
        program established in section 908 of the USA PATRIOT 
        Act (Public Law 107-56; 28 U.S.C. 509 note).
            ``(D) The Secretary shall carry out this paragraph 
        in consultation with the Director of Central 
        Intelligence and the Attorney General.''.
    (b) Report.--Not later than 60 days after the date of the 
enactment of this Act, the Secretary of Homeland Security shall 
submit to Congress a report that describes the Secretary's plan 
for implementing section 892 of the Homeland Security Act of 
2002 and includes an estimated date of completion of the 
implementation.

SEC. 317. PILOT PROGRAM ON ANALYSIS OF SIGNALS AND OTHER INTELLIGENCE 
                    BY INTELLIGENCE ANALYSTS OF VARIOUS ELEMENTS OF THE 
                    INTELLIGENCE COMMUNITY.

    (a) In General.--The Director of Central Intelligence 
shall, in coordination with the Secretary of Defense, carry out 
a pilot program to assess the feasibility and advisability of 
permitting intelligence analysts of various elements of the 
intelligence community to access and analyze intelligence from 
the databases of other elements of the intelligence community 
in order to achieve the objectives set forth in subsection (c).
    (b) Covered Intelligence.--The intelligence to be analyzed 
under the pilot program under subsection (a) shall include the 
following:
            (1) Signals intelligence of the National Security 
        Agency.
            (2) Such intelligence of other elements of the 
        intelligence community as the Director shall select for 
        purposes of the pilot program.
    (c) Objectives.--The objectives set forth in this 
subsection are as follows:
            (1) To enhance the capacity of the intelligence 
        community to undertake ``all source fusion'' analysis 
        in support of the intelligence and intelligence-related 
        missions of the intelligence community.
            (2) To reduce, to the extent possible, the amount 
        of intelligence collected by the intelligence community 
        that is not assessed, or reviewed, by intelligence 
        analysts.
            (3) To reduce the burdens imposed on analytical 
        personnel of the elements of the intelligence community 
        by current practices regarding the sharing of 
        intelligence among elements of the intelligence 
        community.
    (d) Commencement.--The Director shall commence the pilot 
program under subsection (a) not later than December 31, 2003.
    (e) Various Mechanisms Required.--In carrying out the pilot 
program under subsection (a), the Director shall develop and 
utilize various mechanisms to facilitate the access to, and the 
analysis of, intelligence in the databases of the intelligence 
community by intelligence analysts of other elements of the 
intelligence community, including the use of so-called 
``detailees in place''.
    (f) Security.--(1) In carrying out the pilot program under 
subsection (a), the Director shall take appropriate actions to 
protect against the disclosure and unauthorized use of 
intelligence in the databases of the elements of the 
intelligence community which may endanger sources and methods 
which (as determined by the Director) warrant protection.
    (2) The actions taken under paragraph (1) shall include the 
provision of training on the accessing and handling of 
information in the databases of various elements of the 
intelligence community and the establishment of limitations on 
access to information in such databases regarding United States 
persons.
    (g) Assessment.--Not later than February 1, 2004, after the 
commencement under subsection (d) of the pilot program under 
subsection (a), the Under Secretary of Defense for Intelligence 
and the Assistant Director of Central Intelligence for Analysis 
and Production shall jointly carry out an assessment of the 
progress of the pilot program in meeting the objectives set 
forth in subsection (c).
    (h) Report.--(1) The Director of Central Intelligence 
shall, in coordination with the Secretary of Defense, submit to 
the appropriate committees of Congress a report on the 
assessment carried out under subsection (g).
    (2) The report shall include--
            (A) a description of the pilot program under 
        subsection (a);
            (B) the findings of the Under Secretary and 
        Assistant Director as a result of the assessment;
            (C) any recommendations regarding the pilot program 
        that the Under Secretary and the Assistant Director 
        jointly consider appropriate in light of the 
        assessment; and
            (D) any recommendations that the Director and 
        Secretary consider appropriate for purposes of the 
        report.
    (i) Appropriate Committees of Congress Defined.--In this 
section, the term ``appropriate committees of Congress'' 
means--
            (1) the Select Committee on Intelligence, the 
        Committee on Armed Services, and the Committee on 
        Appropriations of the Senate; and
            (2) the Permanent Select Committee on Intelligence, 
        the Committee on Armed Services, and the Committee on 
        Appropriations of the House of Representatives.

SEC. 318. PILOT PROGRAM ON RECRUITMENT AND TRAINING OF INTELLIGENCE 
                    ANALYSTS.

    (a) Pilot Program.--(1) The Director of Central 
Intelligence shall carry out a pilot program to ensure that 
selected students or former students are provided funds to 
continue academic training, or are reimbursed for academic 
training previously obtained, in areas of specialization that 
the Director, in consultation with the other heads of the 
elements of the intelligence community, identifies as areas in 
which the current analytic capabilities of the intelligence 
community are deficient or in which future analytic 
capabilities of the intelligence community are likely to be 
deficient.
    (2) A student or former student selected for participation 
in the pilot program shall commit to employment with an element 
of the intelligence community, following completion of 
appropriate academic training, under such terms and conditions 
as the Director considers appropriate.
    (3) The pilot program shall be known as the Pat Roberts 
Intelligence Scholars Program.
    (b) Elements.--In carrying out the pilot program under 
subsection (a), the Director shall--
            (1) establish such requirements relating to the 
        academic training of participants as the Director 
        considers appropriate to ensure that participants are 
        prepared for employment as intelligence analysts; and
            (2) periodically review the areas of specialization 
        of the elements of the intelligence community to 
        determine the areas in which such elements are, or are 
        likely to be, deficient in analytic capabilities.
    (c) Duration.--The Director shall carry out the pilot 
program under subsection (a) during fiscal years 2004 through 
2006.
    (d) Limitation on Number of Members During Fiscal Year 
2004.--The total number of individuals participating in the 
pilot program under subsection (a) during fiscal year 2004 may 
not exceed 150 students.
    (e) Responsibility.--The Director shall carry out the pilot 
program under subsection (a) through the Assistant Director of 
Central Intelligence for Analysis and Production.
    (f) Reports.--(1) Not later than 120 days after the date of 
the enactment of this Act, the Director shall submit to 
Congress a preliminary report on the pilot program under 
subsection (a), including a description of the pilot program 
and the authorities to be utilized in carrying out the pilot 
program.
    (2) Not later than one year after the commencement of the 
pilot program, the Director shall submit to Congress a report 
on the pilot program. The report shall include--
            (A) a description of the activities under the pilot 
        program, including the number of individuals who 
        participated in the pilot program and the training 
        provided such individuals under the pilot program;
            (B) an assessment of the effectiveness of the pilot 
        program in meeting the purpose of the pilot program; 
        and
            (C) any recommendations for additional legislative 
        or administrative action that the Director considers 
        appropriate in light of the pilot program.
    (g) Funding.--Of the amounts authorized to be appropriated 
by this Act, $4,000,000 shall be available until expended to 
carry out this section.

SEC. 319. IMPROVEMENT OF EQUALITY OF EMPLOYMENT OPPORTUNITIES IN THE 
                    INTELLIGENCE COMMUNITY.

    (a) Findings.--Congress makes the following findings:
            (1) It is the recommendation of the Joint Inquiry 
        of the Senate Select Committee on Intelligence and the 
        House Permanent Select Committee on Intelligence into 
        Intelligence Community Activities Before and After the 
        Terrorist Attacks of September 11, 2001, that the 
        Intelligence Community should enhance recruitment of a 
        more ethnically and culturally diverse workforce and 
        devise a strategy to capitalize upon the unique 
        cultural and linguistic capabilities of first 
        generation Americans.
            (2) The Intelligence Community could greatly 
        benefit from an increased number of employees who are 
        proficient in foreign languages and knowledgeable of 
        world cultures, especially in foreign languages that 
        are critical to the national security interests of the 
        United States. Particular emphasis should be given to 
        the recruitment of United States citizens whose 
        linguistic capabilities are acutely required for the 
        improvement of the overall intelligence collection and 
        analysis effort of the United States Government.
            (3) The Intelligence Community has a significantly 
        lower percentage of women and minorities than the total 
        workforce of the Federal government and the total 
        civilian labor force.
            (4) Women and minorities continue to be under-
        represented in senior grade levels, and in core mission 
        areas, of the intelligence community.
    (b) Pilot Project To Promote Equality of Employment 
Opportunities for Women and Minorities Throughout the 
Intelligence Community Using Innovative Methodologies.--The 
Director of Central Intelligence shall carry out a pilot 
project under this section to test and evaluate alternative, 
innovative methods to promote equality of employment 
opportunities in the intelligence community for women, 
minorities, and individuals with diverse ethnic and cultural 
backgrounds, skills, language proficiency, and expertise.
    (c) Methods.--In carrying out the pilot project, the 
Director shall employ methods to increase diversity of officers 
and employees in the intelligence community.
    (d) Duration of Project.--The Director shall carry out the 
project under this section for a 3-year period.
    (e) Report.--Not later than 2 years after the date the 
Director implements the pilot project under this section, the 
Director shall submit to Congress a report on the project. The 
report shall include--
            (1) an assessment of the effectiveness of the 
        project; and
            (2) recommendations on the continuation of the 
        project, as well as recommendations for improving the 
        effectiveness of the project in meeting the goals of 
        promoting equality of employment opportunities in the 
        intelligence community for women, minorities, and 
        individuals with diverse ethnic and cultural 
        backgrounds, skills, language proficiency, and 
        expertise.
    (f) Diversity Plan.--(1) Not later than February 15, 2004, 
the Director of Central Intelligence shall submit to Congress a 
report which describes the plan of the Director, entitled the 
``DCI Diversity Strategic Plan'', and any subsequent revision 
to that plan, to increase diversity of officers and employees 
in the intelligence community, including the short- and long-
term goals of the plan. The report shall also provide a 
detailed description of the progress that has been made by each 
element of the intelligence community in implementing the plan.
    (2) In implementing the plan, the Director shall 
incorporate innovative methods for recruitment and hiring that 
the Director has determined to be effective from the pilot 
project carried out under this section.
    (g) Intelligence Community Defined.--In this section, the 
term ``intelligence community'' has the meaning given that term 
in section 3(4) of the National Security Act of 1947 (50 U.S.C. 
401(4)).

SEC. 320. SENSE OF CONGRESS ON RECRUITMENT AS INTELLIGENCE COMMUNITY 
                    PERSONNEL OF MEMBERS OF THE ARMED FORCES ON THEIR 
                    DISCHARGE OR RELEASE FROM DUTY.

    It is the sense of Congress that the elements of the 
intelligence community should, in the course of their civilian 
recruitment efforts in the United States, endeavor to recruit 
as personnel of the intelligence community citizens and, as 
appropriate, nationals of the United States who are members of 
the Armed Forces who participated in Operation Enduring 
Freedom, Operation Iraqi Freedom, and other campaigns 
undertaken abroad upon the separation, discharge, or release of 
such individuals from the Armed Forces.

SEC. 321. EXTERNAL COLLECTION CAPABILITIES AND REQUIREMENTS REVIEW 
                    PANEL.

    The President may establish an External Collection 
Capabilities and Requirements Review Panel as specified in the 
classified annex to this Act.

                    Subtitle C--Counterintelligence

SEC. 341. COUNTERINTELLIGENCE INITIATIVES FOR THE INTELLIGENCE 
                    COMMUNITY.

    (a) In General.--(1) Title XI of the National Security Act 
of 1947 (50 U.S.C. 401 et seq.) is amended by adding at the end 
the following new section:

                   ``COUNTERINTELLIGENCE INITIATIVES

    ``Sec. 1102. (a) Inspection Process.--(1) In order to 
protect intelligence sources and methods from unauthorized 
disclosure, the Director of Central Intelligence shall 
establish and implement an inspection process for all agencies 
and departments of the United States that handle classified 
information relating to the national security of the United 
States intended to assure that those agencies and departments 
maintain effective operational security practices and programs 
directed against counterintelligence activities.
    ``(2) The Director shall carry out the process through the 
Office of the National Counterintelligence Executive.
    ``(b) Annual Review of Dissemination Lists.--(1) The 
Director of Central Intelligence shall establish and implement 
a process for all elements of the intelligence community to 
review, on an annual basis, individuals included on 
distribution lists for access to classified information. Such 
process shall ensure that only individuals who have a 
particularized `need to know' (as determined by the Director) 
are continued on such distribution lists.
    ``(2) Not later than October 15 of each year, the Director 
shall certify to the congressional intelligence committees that 
the review required under paragraph (1) has been conducted in 
all elements of the intelligence community during the preceding 
fiscal year.
    ``(c) Completion of Financial Disclosure Statements 
Required for Access to Certain Classified Information.--(1) The 
Director of Central Intelligence shall establish and implement 
a process by which each head of an element of the intelligence 
community directs that all employees of that element, in order 
to be granted access to classified information referred to in 
subsection (a) of section 1.3 of Executive Order No. 12968 
(August 2, 1995; 60 F.R. 40245; 50 U.S.C. 435 note), submit 
financial disclosure forms as required under subsection (b) of 
such section.
    ``(2) The Director shall carry out paragraph (1) through 
the Office of the National Counterintelligence Executive.
    ``(d) Arrangements To Handle Sensitive Information.--The 
Director of Central Intelligence shall establish, for all 
elements of the intelligence community, programs and procedures 
by which sensitive classified information relating to human 
intelligence is safeguarded against unauthorized disclosure by 
employees of those elements.''.
    (2) The table of contents contained in the first section of 
such Act is amended in the items relating to title XI by adding 
at the end the following new item:

``Sec. 1102. Counterintelligence initiatives.''.

    (b) Intelligence and National Security Aspects of Espionage 
Prosecutions.--The Attorney General, acting through the Office 
of Intelligence Policy and Review of the Department of Justice, 
and in consultation with the Director of Central Intelligence, 
acting through the Office of the National Counterintelligence 
Executive, shall establish policies and procedures to assist 
the Attorney General in the consideration of intelligence and 
national security-related equities in the development of 
charging documents and related pleadings in espionage 
prosecutions.

                          Subtitle D--Reports

SEC. 351. REPORT ON CLEARED INSIDER THREAT TO CLASSIFIED COMPUTER 
                    NETWORKS.

    (a) Report Required.--The Director of Central Intelligence 
and the Secretary of Defense shall jointly submit to the 
appropriate committees of Congress a report on the risks to the 
national security of the United States of the current computer 
security practices of the elements of the intelligence 
community and of the Department of Defense.
    (b) Assessments.--The report under subsection (a) shall 
include an assessment of the following:
            (1) The vulnerability of the computers and computer 
        systems of the elements of the intelligence community, 
        and of the Department of Defense, to various threats 
        from foreign governments, international terrorist 
        organizations, and organized crime, including 
        information warfare (IW), Information Operations (IO), 
        Computer Network Exploitation (CNE), and Computer 
        Network Attack (CNA).
            (2) The risks of providing users of local area 
        networks (LANs) or wide-area networks (WANs) of 
        computers that include classified information with 
        capabilities for electronic mail, upload and download, 
        or removable storage media without also deploying 
        comprehensive computer firewalls, accountability 
        procedures, or other appropriate security controls.
            (3) Any other matters that the Director and the 
        Secretary jointly consider appropriate for purposes of 
        the report.
    (c) Information on Access to Networks.--The report under 
subsection (a) shall also include information as follows:
            (1) An estimate of the number of access points on 
        each classified computer or computer system of an 
        element of the intelligence community or the Department 
        of Defense that permit unsupervised uploading or 
        downloading of classified information, set forth by 
        level of classification.
            (2) An estimate of the number of individuals 
        utilizing such computers or computer systems who have 
        access to input-output devices on such computers or 
        computer systems.
            (3) A description of the policies and procedures 
        governing the security of the access points referred to 
        in paragraph (1), and an assessment of the adequacy of 
        such policies and procedures.
            (4) An assessment of the viability of utilizing 
        other technologies (including so-called ``thin client 
        servers'') to achieve enhanced security of such 
        computers and computer systems through more rigorous 
        control of access to such computers and computer 
        systems.
    (d) Recommendations.--The report under subsection (a) shall 
also include such recommendations for modifications or 
improvements of the current computer security practices of the 
elements of the intelligence community, and of the Department 
of Defense, as the Director and the Secretary jointly consider 
appropriate as a result of the assessments under subsection (b) 
and the information under subsection (c).
    (e) Submittal Date.--The report under subsection (a) shall 
be submitted not later than February 15, 2004.
    (f) Form.--The report under subsection (a) may be submitted 
in classified or unclassified form, at the election of the 
Director.
    (g) Definitions.--In this section:
            (1) The term ``appropriate committees of Congress'' 
        means--
                    (A) the Select Committee on Intelligence 
                and the Committee on Armed Services of the 
                Senate; and
                    (B) the Permanent Select Committee on 
                Intelligence and the Committee on Armed 
                Services of the House of Representatives.
            (2) The term ``elements of the intelligence 
        community'' means the elements of the intelligence 
        community set forth in or designated under section 3(4) 
        of the National Security Act of 1947 (50 U.S.C. 
        401a(4)).

SEC. 352. REPORT ON SECURITY BACKGROUND INVESTIGATIONS AND SECURITY 
                    CLEARANCE PROCEDURES OF THE FEDERAL GOVERNMENT.

    (a) Report Required.--The Director of Central Intelligence, 
the Secretary of Defense, the Attorney General, the Director of 
the Office of Personnel Management, and the heads of other 
appropriate Federal departments and agencies (as determined by 
the President) shall jointly submit to the appropriate 
committees of Congress a report on the utility and 
effectiveness of the current security background investigations 
and security clearance procedures of the Federal Government in 
meeting the purposes of such investigations and procedures.
    (b) Particular Report Matters.--The report shall address in 
particular the following:
            (1) A comparison of the costs and benefits of 
        conducting background investigations for Secret 
        clearance with the costs and benefits of conducting 
        full field background investigations.
            (2) The standards governing the revocation of 
        security clearances.
    (c) Recommendations.--The report under subsection (a) shall 
include such recommendations for modifications or improvements 
of the current security background investigations or security 
clearance procedures of the Federal Government as are 
considered appropriate as a result of the preparation of the 
report under that subsection.
    (d) Submittal Date.--The report under subsection (a) shall 
be submitted not later than February 15, 2004.
    (e) Appropriate Committees of Congress Defined.--In this 
section, the term ``appropriate committees of Congress'' 
means--
            (1) the Select Committee on Intelligence and the 
        Committees on Armed Services and the Judiciary of the 
        Senate; and
            (2) the Permanent Select Committee on Intelligence 
        and the Committees on Armed Services and the Judiciary 
        of the House of Representatives.

SEC. 353. REPORT ON DETAIL OF CIVILIAN INTELLIGENCE PERSONNEL AMONG 
                    ELEMENTS OF THE INTELLIGENCE COMMUNITY AND THE 
                    DEPARTMENT OF DEFENSE.

    (a) Report Required.--The Director of Central Intelligence 
shall, in consultation with the heads of the elements of the 
intelligence community, submit to the appropriate committees of 
Congress a report on means of improving the detail or transfer 
of civilian intelligence personnel between and among the 
various elements of the intelligence community for the purpose 
of enhancing the flexibility and effectiveness of the 
intelligence community in responding to changes in requirements 
for the collection, analysis, and dissemination of 
intelligence.
    (b) Report Elements.--The report under subsection (a) 
shall--
            (1) set forth a variety of proposals on means of 
        improving the detail or transfer of civilian 
        intelligence personnel as described in that subsection;
            (2) identify the proposal or proposals determined 
        by the heads of the elements of the intelligence 
        community most likely to meet the purpose described in 
        that subsection; and
            (3) include such recommendations for such 
        legislative or administrative action as the heads of 
        the elements of the intelligence community consider 
        appropriate to implement the proposal or proposals 
        identified under paragraph (2).
    (c) Submittal Date.--The report under subsection (a) shall 
be submitted not later than February 15, 2004.
    (d) Definitions.--In this section:
            (1) The term ``appropriate committees of Congress'' 
        means--
                    (A) the Select Committee on Intelligence 
                and the Committees on Armed Services, 
                Governmental Affairs, and the Judiciary of the 
                Senate; and
                    (B) the Permanent Select Committee on 
                Intelligence and the Committees on Armed 
                Services, Government Reform, and the Judiciary 
                of the House of Representatives.
            (2) The term ``elements of the intelligence 
        community'' means the elements of the intelligence 
        community set forth in or designated under section 3(4) 
        of the National Security Act of 1947 (50 U.S.C. 
        401a(4)).
            (3) The term ``heads of the elements of the 
        intelligence community'' includes the Secretary of 
        Defense with respect to each element of the 
        intelligence community within the Department of Defense 
        or the military departments.

SEC. 354. REPORT ON MODIFICATIONS OF POLICY AND LAW ON CLASSIFIED 
                    INFORMATION TO FACILITATE SHARING OF INFORMATION 
                    FOR NATIONAL SECURITY PURPOSES.

    (a) Report.--Not later than four months after the date of 
the enactment of this Act, the President shall submit to the 
appropriate committees of Congress a report that--
            (1) identifies impediments in current policy and 
        regulations to the sharing of classified information 
        horizontally across and among Federal departments and 
        agencies, and vertically between the Federal Government 
        and agencies of State and local governments and the 
        private sector, for national security purposes, 
        including homeland security; and
            (2) proposes appropriate modifications of policy, 
        law, and regulations to eliminate such impediments in 
        order to facilitate such sharing of classified 
        information for national security purposes, including 
        homeland security.
    (b) Considerations.--In preparing the report under 
subsection (a), the President shall--
            (1) consider the extent to which the reliance on a 
        document-based approach to the protection of classified 
        information impedes the sharing of classified 
        information; and
            (2) consider the extent to which the utilization of 
        a database-based approach, or other electronic 
        approach, to the protection of classified information 
        might facilitate the sharing of classified information.
    (c) Coordination With Other Information Sharing 
Activities.--In preparing the report under subsection (a), the 
President shall, to the maximum extent practicable, take into 
account actions being undertaken under the Homeland Security 
Information Sharing Act (subtitle I of title VIII of Public Law 
107-296; 116 Stat. 2252; 6 U.S.C. 481 et seq.).
    (d) Appropriate Committees of Congress Defined.--In this 
section, the term ``appropriate committees of Congress'' 
means--
            (1) the Select Committee on Intelligence and the 
        Committees on Armed Services, Governmental Affairs, and 
        the Judiciary of the Senate; and
            (2) the Permanent Select Committee on Intelligence, 
        the Select Committee on Homeland Security, and the 
        Committees on Armed Services and the Judiciary of the 
        House of Representatives.

SEC. 355. REPORT ON STRATEGIC PLANNING.

    (a) Report.--Not later than February 15, 2004, the 
Secretary of Defense and the Director of Central Intelligence 
shall jointly submit to the appropriate committees of Congress 
a report that assesses progress in the following:
            (1) The development by the Department of Defense 
        and the intelligence community of a comprehensive and 
        uniform analytical capability to assess the utility and 
        advisability of various sensor and platform 
        architectures and capabilities for the collection of 
        intelligence.
            (2) The improvement of coordination between the 
        Department and the intelligence community on strategic 
        and budgetary planning.
    (b) Form.--The report under subsection (a) may be submitted 
in classified form.
    (c) Appropriate Committees of Congress Defined.--In this 
section, the term ``appropriate committees of Congress'' 
means--
            (1) the Select Committee on Intelligence and the 
        Committee on Armed Services of the Senate; and
            (2) the Permanent Select Committee on Intelligence 
        and the Committee on Armed Services of the House of 
        Representatives.

SEC. 356. REPORT ON UNITED STATES DEPENDENCE ON COMPUTER HARDWARE AND 
                    SOFTWARE MANUFACTURED OVERSEAS.

    (a) Report.--Not later than February 15, 2004, the Director 
of Central Intelligence shall submit to the appropriate 
committees of Congress a report on the extent of United States 
dependence on computer hardware or software that is 
manufactured overseas.
    (b) Elements.--The report under subsection (a) shall 
address the following:
            (1) The extent to which the United States currently 
        depends on computer hardware or software that is 
        manufactured overseas.
            (2) The extent to which United States dependence, 
        if any, on such computer hardware or software is 
        increasing.
            (3) The vulnerabilities of the national security 
        and economy of the United States as a result of United 
        States dependence, if any, on such computer hardware or 
        software.
            (4) Any other matters relating to United States 
        dependence, if any, on such computer hardware or 
        software that the Director considers appropriate.
    (c) Consultation With Private Sector.--(1) In preparing the 
report under subsection (a), the Director may consult, and is 
encouraged to consult, with appropriate persons and entities in 
the computer hardware or software industry and with other 
appropriate persons and entities in the private sector.
    (2) Consultations of the Director with persons or entities 
under paragraph (1) shall not be treated as the activities of 
an advisory committee for purposes of the Federal Advisory 
Committee Act (5 U.S.C. App.).
    (d) Form.--(1) The report under subsection (a) shall be 
submitted in unclassified form, but may include a classified 
annex.
    (2) The report may be in the form of a National 
Intelligence Estimate.
    (e) Appropriate Committees of Congress Defined.--In this 
section, the term ``appropriate committees of Congress'' 
means--
            (1) the Select Committee on Intelligence and the 
        Committee on Armed Services of the Senate; and
            (2) the Permanent Select Committee on Intelligence 
        and the Committee on Armed Services of the House of 
        Representatives.

SEC. 357. REPORT ON LESSONS LEARNED FROM MILITARY OPERATIONS IN IRAQ.

    (a) Report.--As soon as possible, but not later than one 
year after the date of the enactment of this Act, the Director 
of Central Intelligence shall submit to the appropriate 
committees of Congress a report on the intelligence lessons 
learned as a result of Operation Iraqi Freedom, including 
lessons relating to the following:
            (1) The tasking, collection, processing, 
        exploitation, analysis, and dissemination of 
        intelligence.
            (2) The accuracy, timeliness, and objectivity of 
        intelligence analysis.
            (3) The intelligence support available to 
        policymakers and members of the Armed Forces in combat.
            (4) The coordination of intelligence activities and 
        operations with military operations.
            (5) The strengths and limitations of intelligence 
        systems and equipment.
            (6) Such other matters as the Director considers 
        appropriate.
    (b) Recommendations.--The report under subsection (a) shall 
include such recommendations on improvement in the matters 
described in subsection (a) as the Director considers 
appropriate.
    (c) Appropriate Committees of Congress Defined.--In this 
section, the term ``appropriate committees of Congress'' 
means--
            (1) the Permanent Select Committee on Intelligence 
        and the Committee on Armed Services of the House of 
        Representatives; and
            (2) the Select Committee on Intelligence and the 
        Committee on Armed Services of the Senate.

SEC. 358. REPORTS ON CONVENTIONAL WEAPONS AND AMMUNITION OBTAINED BY 
                    IRAQ IN VIOLATION OF CERTAIN UNITED NATIONS 
                    SECURITY COUNCIL RESOLUTIONS.

    (a) Preliminary Report.--Not later than 90 days after the 
date of the enactment of this Act, the Director of the Defense 
Intelligence Agency shall, after such consultation with the 
Secretary of State and the Attorney General as the Director 
considers appropriate, submit to the appropriate committees of 
Congress a preliminary report on all information obtained by 
the Department of Defense and the intelligence community on the 
conventional weapons and ammunition obtained by Iraq in 
violation of applicable resolutions of the United Nations 
Security Council adopted since the invasion of Kuwait by Iraq 
in August 1990.
    (b) Final Report.--(1) Not later than one year after the 
date of the enactment of this Act, the Director shall submit to 
the appropriate committees of Congress a final report on the 
information described in subsection (a).
    (2) The final report under paragraph (1) shall include such 
updates of the preliminary report under subsection (a) as the 
Director considers appropriate.
    (c) Elements.--Each report under this section shall set 
forth, to the extent practicable, with respect to each shipment 
of weapons or ammunition addressed in such report the 
following:
            (1) The country of origin.
            (2) Any country of transshipment.
    (d) Form.--Each report under this section shall be 
submitted in unclassified form, but may include a classified 
annex.
    (e) Appropriate Committees of Congress Defined.--In this 
section, the term ``appropriate committees of Congress'' 
means--
            (1) the Select Committee on Intelligence and the 
        Committees on Armed Services and Foreign Relations of 
        the Senate; and
            (2) the Permanent Select Committee on Intelligence 
        and the Committees on Armed Services and International 
        Relations of the House of Representatives.

SEC. 359. REPORT ON OPERATIONS OF DIRECTORATE OF INFORMATION ANALYSIS 
                    AND INFRASTRUCTURE PROTECTION AND TERRORIST THREAT 
                    INTEGRATION CENTER.

    (a) Report Required.--The President shall submit to the 
appropriate committees of Congress a report on the operations 
of the Directorate of Information Analysis and Infrastructure 
Protection of the Department of Homeland Security and the 
Terrorist Threat Integration Center. The report shall include 
the following:
            (1) An assessment of the operations of the 
        Directorate and the Center, including the capabilities 
        of each--
                    (A) to meet personnel requirements, 
                including requirements to employ qualified 
                analysts, and the status of efforts to employ 
                qualified analysts;
                    (B) to share intelligence information with 
                the other elements of the intelligence 
                community, including the sharing of 
                intelligence information through secure 
                information technology connections between the 
                Directorate, the Center, and the other elements 
                of the intelligence community;
                    (C) to disseminate intelligence 
                information, or analyses of intelligence 
                information, to other departments and agencies 
                of the Federal Government and, as appropriate, 
                to State and local governments;
                    (D) to coordinate with State and local 
                counterterrorism and law enforcement officials;
                    (E) to receive information from Federal, 
                State, and local officials, and private sector 
                entities, relating to the respective 
                responsibilities and authorities of the 
                Directorate and the Center; and
                    (F) to access information, including 
                intelligence and law enforcement information, 
                from the departments and agencies of the 
                Federal Government, including the ability of 
                the Directorate to access, in a timely and 
                efficient manner, all information authorized by 
                section 202 of the Homeland Security Act of 
                2002 (Public Law 107-296; 6 U.S.C. 122).
            (2) An assessment of the ability of the Center to 
        fulfill the responsibilities assigned to it by the 
        President given its structure, authorities, current 
        assets, and capabilities.
            (3) An assessment of the ability of the Directorate 
        to fulfill the responsibilities set forth in section 
        201 of the Homeland Security Act of 2002 (6 U.S.C. 121) 
        given its current assets and capabilities.
            (4) A plan of action (including appropriate 
        milestones, funding, and sources of funding) for 
        bringing the Center to its full operational capacity as 
        called for in the Information on the State of the Union 
        given by the President to Congress under section 3 of 
        Article II of the Constitution of the United States in 
        2003.
            (5) A delineation of the responsibilities and 
        duties of the Directorate and of the responsibilities 
        and duties of the Center.
            (6) A delineation and summary of the areas in which 
        the responsibilities and duties of the Directorate, the 
        Center, and other elements of the Federal Government 
        overlap.
            (7) An assessment of whether the areas of overlap, 
        if any, delineated under paragraph (6) represent an 
        inefficient utilization of resources.
            (8) A description of the policies and procedures to 
        ensure that the Directorate and the Center comply with 
        the Constitution and applicable statutes, Executive 
        orders, and regulations of the United States.
            (9) The practical impact, if any, of the operations 
        of the Center on individual liberties and privacy.
            (10) Such information as the President considers 
        appropriate to explain the basis for the establishment 
        and operation of the Center as a ``joint venture'' of 
        participating agencies rather than as an element of the 
        Directorate reporting directly to the Secretary of 
        Homeland Security through the Under Secretary of 
        Homeland Security for Information Analysis and 
        Infrastructure Protection.
    (b) Submittal Date.--The report required by this section 
shall be submitted not later than May 1, 2004.
    (c) Form.--The report required by this section shall be 
submitted in unclassified form, but may include a classified 
annex.
    (d) Appropriate Committees of Congress Defined.--In this 
section, the term ``appropriate committees of Congress'' 
means--
            (1) the Select Committee on Intelligence and the 
        Committees on Governmental Affairs, the Judiciary, and 
        Appropriations of the Senate; and
            (2) the Permanent Select Committee on Intelligence, 
        the Select Committee on Homeland Security, and the 
        Committees on the Judiciary and Appropriations of the 
        House of Representatives.

SEC. 360. REPORT ON TERRORIST SCREENING CENTER.

    (a) Report.--Not later than September 16, 2004, the 
President shall submit to Congress a report on the 
establishment and operation of the Terrorist Screening Center, 
established on September 16, 2003, by Homeland Security 
Presidential Directive 6, including the matters described in 
subsection (b).
    (b) Covered Matters.--The matters referred to in subsection 
(a) are the following:
            (1) An analysis of the operations of the Terrorist 
        Screening Center to ensure that the Terrorist Screening 
        Center does not violate the Constitution, or any 
        statute, Executive Order, or regulation of the United 
        States.
            (2) A description of the architecture of the 
        database system of the Terrorist Screening Center, 
        including the number of databases maintained, operated, 
        or administered by the Terrorist Screening Center, and 
        the extent to which these databases have been 
        integrated.
            (3) A determination of whether data from all watch 
        lists detailed in the April 2003 report of the 
        Comptroller General of the United States, entitled 
        ``Information Technology: Terrorist Watch Lists should 
        be Consolidated to promote Better Integration and 
        Sharing,'' have been incorporated into the Terrorist 
        Screening Center database system.
            (4) A determination of whether there remain any 
        relevant databases that are not yet part of the 
        Terrorist Screening Center database system.
            (5) A schedule that specifies the dates on which 
        each Federal watch list database identified in the 
        report referred to in paragraph (3), or determined 
        under paragraph (4) to be not yet part of the Terrorist 
        Screening Center database system, were, or will be, 
        integrated into the Terrorist Screening Center database 
        system.
            (6) A description of the protocols in effect to 
        ensure the protection of classified and sensitive 
        information contained in the Terrorist Screening Center 
        database system.
            (7) A description of--
                    (A) the process by which databases in the 
                Terrorist Screening Center database system are 
                reviewed for accuracy and timeliness of data 
                and the frequency of updates of such reviews; 
                and
                    (B) the mechanism used to ensure that data 
                within a particular database is synchronized 
                and replicated throughout the database system 
                of the Terrorist Screening Center.
            (8) A description of the extent to which the 
        Terrorist Screening Center makes information available 
        to the private sector and critical infrastructure 
        components, and the criteria for determining which 
        private sector and critical infrastructure components 
        receive that information.
            (9) The number of individuals listed in the 
        Terrorist Screening Center database system.
            (10) The estimated operating budget of, and sources 
        of funding for, the Terrorist Screening Center for each 
        of fiscal years 2004, 2005, and 2006.
            (11) An assessment of the impact of the Terrorist 
        Screening Center on current law enforcement systems.
            (12) The practical impact, if any, of the 
        operations of the Terrorist Screening Center on 
        individual liberties and privacy.
            (13) Such recommendations as the President 
        considers appropriate for modifications of law or 
        policy to ensure the continuing operation of the 
        Terrorist Screening Center.
    (c) Form of Report.--The report required by subsection (a) 
shall be submitted in unclassified form, but may include a 
classified annex.

SEC. 361. REPEAL AND MODIFICATION OF REPORT REQUIREMENTS RELATING TO 
                    INTELLIGENCE ACTIVITIES.

    (a) Annual Evaluation of Performance and Responsiveness of 
Intelligence Community.--Section 105 of the National Security 
Act of 1947 (50 U.S.C. 403-5) is amended by striking subsection 
(d).
    (b) Periodic Reports on Disclosure of Intelligence 
Information to United Nations.--Section 112(b) of the National 
Security Act of 1947 (50 U.S.C. 404g(b)(1)) is amended--
            (1) in the subsection caption, by striking 
        ``Periodic'' and inserting ``Annual'';
            (2) in paragraph (1), by striking ``semiannually'' 
        and inserting ``annually''; and
            (3) in paragraph (3), by striking ``periodic'' and 
        inserting ``the annual''.
    (c) Annual Report on Intelligence Community Cooperation 
With Counterdrug Activities.--Section 114 of the National 
Security Act of 1947 (50 U.S.C. 404i) is amended--
            (1) by striking subsection (a); and
            (2) by redesignating subsections (b) through (f) as 
        subsections (a) through (e), respectively.
    (d) Annual Report on Covert Leases.--Section 114 of the 
National Security Act of 1947, as amended by this section, is 
further amended--
            (1) by striking subsection (d); and
            (2) by redesignating subsection (e) as subsection 
        (d).
    (e) Annual Report on Certain Foreign Companies Involved in 
Proliferation of Weapons of Mass Destruction.--Section 827 of 
the Intelligence Authorization Act for Fiscal Year 2003 (Public 
Law 107-306; 116 Stat. 2430; 50 U.S.C. 404n-3) is repealed.
    (f) Annual Report on Intelligence Activities of People's 
Republic of China.--Section 308 of the Intelligence 
Authorization Act for Fiscal Year 1998 (Public Law 105-107; 111 
Stat. 2253; 50 U.S.C. 402a note) is repealed.
    (g) Annual Report on Coordination of Counterintelligence 
Matters With FBI.--Section 811(c) of the Counterintelligence 
and Security Enhancements Act of 1994 (title VIII of Public Law 
103-359; 50 U.S.C. 402a(c)) is amended--
            (1) by striking paragraph (6); and
            (2) by redesignating paragraphs (7) and (8) as 
        paragraphs (6) and (7), respectively.
    (h) Annual Report on Postemployment Assistance for 
Terminated Intelligence Employees.--Section 1611 of title 10, 
United States Code, is amended by striking subsection (e).
    (i) Annual Report on Activities of FBI Personnel Outside 
the United States.--Section 540C of title 28, United States 
Code, is repealed.
    (j) Annual Report on Exceptions to Consumer Disclosure 
Requirements for National Security Investigations.--Section 
604(b)(4) of the Fair Credit Reporting Act (15 U.S.C. 
1681b(b)(4)) is amended--
            (1) by striking subparagraphs (D) and (E); and
            (2) by redesignating subparagraph (F) as 
        subparagraph (D).
    (k) Reports on Acquisition of Technology Relating to 
Weapons of Mass Destruction and Advanced Conventional 
Munitions.--Subsection (b)(1) of section 721 of the 
Intelligence Authorization Act for Fiscal Year 1997 (Public Law 
104-293; 50 U.S.C. 2366) is amended by striking ``a 
semiannual'' and inserting ``an annual''.
    (l) Conforming Amendments.--Section 507 of the National 
Security Act of 1947 (50 U.S.C. 415b) is amended--
            (1) in subsection (a)--
                    (A) in paragraph (1)--
                            (i) by striking subparagraphs (A), 
                        (C), (G), (I), (J), and (L);
                            (ii) by redesignating subparagraphs 
                        (B), (D), (E), (H), (K), (M), and (N) 
                        as subparagraphs (A), (C), (D), (G), 
                        (H), and (I), respectively;
                            (iii) by inserting after 
                        subparagraph (A), as so redesignated, 
                        the following new subparagraph (B):
            ``(B) The annual report on intelligence provided to 
        the United Nations required by section 112(b)(1).''; 
        and
                            (iv) by inserting after 
                        subparagraph (D), as so redesignated, 
                        the following new subparagraph (E):
            ``(E) The annual report on the acquisition of 
        technology relating to weapons of mass destruction and 
        advanced conventional munitions required by section 721 
        of the Intelligence Authorization Act for Fiscal Year 
        1997 (Public Law 104-293; 50 U.S.C. 2366).''; and
                    (B) in paragraph (2)--
                            (i) in subparagraph (A), by 
                        striking ``section 114(b)'' and 
                        inserting ``section 114(a)'';
                            (ii) in subparagraph (B), by 
                        striking ``section 114(d)'' and 
                        inserting ``section 114(c)'';
                            (iii) by striking subparagraphs 
                        (C), (E), and (F); and
                            (iv) by redesignating subparagraphs 
                        (D) and (G) as subparagraphs (C) and 
                        (D), respectively; and
            (2) in subsection (b)--
                    (A) by striking paragraphs (1) and (4); and
                    (B) by redesignating paragraphs (2), (3), 
                (5), (6), (7), and (8) as paragraphs (1), (2), 
                (3), (4), (5), and (6), respectively.
    (m) Clerical Amendments.--
            (1) National security act of 1947.--The table of 
        contents for the National Security Act of 1947 is 
        amended by striking the item relating to section 603.
            (2) Title 28, united states code.--The table of 
        sections at the beginning of chapter 33 of title 28, 
        United States Code, is amended by striking the item 
        relating to section 540C.
    (n) Effective Date.--The amendments made by this section 
shall take effect on December 31, 2003.

                       Subtitle E--Other Matters

SEC. 371. EXTENSION OF SUSPENSION OF REORGANIZATION OF DIPLOMATIC 
                    TELECOMMUNICATIONS SERVICE PROGRAM OFFICE.

    Section 311 of the Intelligence Authorization Act for 
Fiscal Year 2002 (Public Law 107-108; 22 U.S.C. 7301 note) is 
amended--
            (1) in the heading, by striking ``TWO-YEAR'' before 
        ``SUSPENSION OF REORGANIZATION''; and
            (2) in the text, by striking ``ending on October 1, 
        2003'' and inserting ``ending on the date that is 60 
        days after the appropriate congressional committees of 
        jurisdiction (as defined in section 324(d) of that Act 
        (22 U.S.C. 7304(d)) are notified jointly by the 
        Secretary of State (or the Secretary's designee) and 
        the Director of the Office of Management and Budget (or 
        the Director's designee) that the operational framework 
        for the office has been terminated''.

SEC. 372. MODIFICATIONS OF AUTHORITIES ON EXPLOSIVE MATERIALS.

    (a) Clarification of Aliens Authorized To Distribute 
Explosive Materials.--Section 842(d)(7) of title 18, United 
States Code, is amended--
            (1) in subparagraph (A), by striking ``or'' at the 
        end;
            (2) in subparagraph (B)--
                    (A) by inserting ``or'' at the end of 
                clause (i); and
                    (B) by striking clauses (iii) and (iv); and
            (3) by adding the following new subparagraphs:
                    ``(C) is a member of a North Atlantic 
                Treaty Organization (NATO) or other friendly 
                foreign military force, as determined by the 
                Attorney General in consultation with the 
                Secretary of Defense, who is present in the 
                United States under military orders for 
                training or other military purpose authorized 
                by the United States and the shipping, 
                transporting, possession, or receipt of 
                explosive materials is in furtherance of the 
                authorized military purpose; or
                    ``(D) is lawfully present in the United 
                States in cooperation with the Director of 
                Central Intelligence, and the shipment, 
                transportation, receipt, or possession of the 
                explosive materials is in furtherance of such 
                cooperation;''.
    (b) Clarification of Aliens Authorized To Possess or 
Receive Explosive Materials.--Section 842(i)(5) of title 18, 
United States Code, is amended--
            (1) in subparagraph (A), by striking ``or'' at the 
        end;
            (2) in subparagraph (B)--
                    (A) by inserting ``or'' at the end of 
                clause (i); and
                    (B) by striking clauses (iii) and (iv); and
            (3) by adding the following new subparagraphs:
                    ``(C) is a member of a North Atlantic 
                Treaty Organization (NATO) or other friendly 
                foreign military force, as determined by the 
                Attorney General in consultation with the 
                Secretary of Defense, who is present in the 
                United States under military orders for 
                training or other military purpose authorized 
                by the United States and the shipping, 
                transporting, possession, or receipt of 
                explosive materials is in furtherance of the 
                authorized military purpose; or
                    ``(D) is lawfully present in the United 
                States in cooperation with the Director of 
                Central Intelligence, and the shipment, 
                transportation, receipt, or possession of the 
                explosive materials is in furtherance of such 
                cooperation;''.

SEC. 373. MODIFICATION OF PROHIBITION ON THE NATURALIZATION OF CERTAIN 
                    PERSONS.

    Section 313(e)(4) of the Immigration and Nationality Act (8 
U.S.C. 1424(e)(4)) is amended--
            (1) by inserting ``when Department of Defense 
        activities are relevant to the determination'' after 
        ``Secretary of Defense''; and
            (2) by inserting ``and the Secretary of Homeland 
        Security'' after ``Attorney General''.

SEC. 374. MODIFICATION TO DEFINITION OF FINANCIAL INSTITUTION IN RIGHT 
                    TO FINANCIAL PRIVACY ACT.

    (a) Modification of Definition.--Section 1114 of the Right 
to Financial Privacy Act of 1978 (12 U.S.C. 3414) is amended by 
adding at the end the following:
    ``(d) For purposes of this section, and sections 1115 and 
1117 insofar as they relate to the operation of this section, 
the term `financial institution' has the same meaning as in 
subsections (a)(2) and (c)(1) of section 5312 of title 31, 
United States Code, except that, for purposes of this section, 
such term shall include only such a financial institution any 
part of which is located inside any State or territory of the 
United States, the District of Columbia, Puerto Rico, Guam, 
American Samoa, the Commonwealth of the Northern Mariana 
Islands, or the United States Virgin Islands.''.
    (b) Cross Reference Modification.--Section 1101(1) of such 
Act (12 U.S.C. 3401(1)) is amended by inserting ``, except as 
provided in section 1114,'' before ``means any office''.

SEC. 375. COORDINATION OF FEDERAL GOVERNMENT RESEARCH ON SECURITY 
                    EVALUATIONS.

    (a) Workshops for Coordination of Research.--The National 
Science Foundation and the Office of Science and Technology 
Policy shall jointly sponsor not less than two workshops on the 
coordination of Federal Government research on the use of 
behavioral, psychological, and physiological assessments of 
individuals in the conduct of security evaluations.
    (b) Deadline for Completion of Activities.--The activities 
of the workshops sponsored under subsection (a) shall be 
completed not later than March 1, 2004.
    (c) Purposes.--The purposes of the workshops sponsored 
under subsection (a) are as follows:
            (1) To provide a forum for cataloging and 
        coordinating federally funded research activities 
        relating to the development of new techniques in the 
        behavioral, psychological, or physiological assessment 
        of individuals to be used in security evaluations.
            (2) To develop a research agenda for the Federal 
        Government on behavioral, psychological, and 
        physiological assessments of individuals, including an 
        identification of the research most likely to advance 
        the understanding of the use of such assessments of 
        individuals in security evaluations.
            (3) To distinguish between short-term and long-term 
        areas of research on behavioral, psychological, and 
        physiological assessments of individuals in order to 
        maximize the utility of short-term and long-term 
        research on such assessments.
            (4) To identify the Federal agencies best suited to 
        support research on behavioral, psychological, and 
        physiological assessments of individuals.
            (5) To develop recommendations for coordinating 
        future federally funded research for the development, 
        improvement, or enhancement of security evaluations.
    (d) Advisory Group.--(1) In order to assist the National 
Science Foundation and the Office of Science and Technology 
Policy in carrying out the activities of the workshops 
sponsored under subsection (a), there is hereby established an 
interagency advisory group with respect to such workshops.
    (2) The advisory group shall be composed of the following:
            (A) A representative of the Social, Behavioral, and 
        Economic Directorate of the National Science 
        Foundation.
            (B) A representative of the Office of Science and 
        Technology Policy.
            (C) The Secretary of Defense, or a designee of the 
        Secretary.
            (D) The Secretary of State, or a designee of the 
        Secretary.
            (E) The Attorney General, or a designee of the 
        Attorney General.
            (F) The Secretary of Energy, or a designee of the 
        Secretary.
            (G) The Secretary of Homeland Security, or a 
        designee of the Secretary.
            (H) The Director of Central Intelligence, or a 
        designee of the Director.
            (I) The Director of the Federal Bureau of 
        Investigation, or a designee of the Director.
            (J) The National Counterintelligence Executive, or 
        a designee of the National Counterintelligence 
        Executive.
            (K) Any other official assigned to the advisory 
        group by the President for purposes of this section.
    (3) The members of the advisory group under subparagraphs 
(A) and (B) of paragraph (2) shall jointly head the advisory 
group.
    (4) The advisory group shall provide the Foundation and the 
Office such information, advice, and assistance with respect to 
the workshops sponsored under subsection (a) as the advisory 
group considers appropriate.
    (5) The advisory group shall not be treated as an advisory 
committee for purposes of the Federal Advisory Committee Act (5 
U.S.C. App.).
    (e) FOIA Exemption.--All files of the National Science 
Foundation and the Office of Science and Technology Policy for 
purposes of administering this section, including any files of 
a Federal, State, or local department or agency or of a private 
sector entity provided to or utilized by a workshop or advisory 
group under this section, shall be exempt from the provisions 
of section 552 of title 5, United States Code, that require 
publication, disclosure, search, or review in connection 
therewith.
    (f) Report.--Not later than March 1, 2004, the National 
Science Foundation and the Office of Science and Technology 
Policy shall jointly submit to Congress a report on the results 
of activities of the workshops sponsored under subsection (a), 
including the findings and recommendations of the Foundation 
and the Office as a result of such activities.
    (g) Funding.--(1) Of the amount authorized to be 
appropriated for the Intelligence Community Management Account 
by section 104(a), $500,000 shall be available to the National 
Science Foundation and the Office of Science and Technology 
Policy to carry out this section.
    (2) The amount authorized to be appropriated by paragraph 
(1) shall remain available until expended.

SEC. 376. TREATMENT OF CLASSIFIED INFORMATION IN MONEY LAUNDERING 
                    CASES.

    Section 5318A of title 31, United States Code, is amended 
by adding at the end the following:
    ``(f) Classified Information.--In any judicial review of a 
finding of the existence of a primary money laundering concern, 
or of the requirement for 1 or more special measures with 
respect to a primary money laundering concern, made under this 
section, if the designation or imposition, or both, were based 
on classified information (as defined in section 1(a) of the 
Classified Information Procedures Act (18 U.S.C. App.), such 
information may be submitted by the Secretary to the reviewing 
court ex parte and in camera. This subsection does not confer 
or imply any right to judicial review of any finding made or 
any requirement imposed under this section.''.

SEC. 377. TECHNICAL AMENDMENTS.

    (a) National Security Act of 1947.--Section 112(d)(1) of 
the National Security Act of 1947 (50 U.S.C. 404g(d)(1)) is 
amended by striking ``section 103(c)(6)'' and inserting 
``section 103(c)(7)''.
    (b) 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 by striking ``(c)(6)'' each place 
it appears and inserting ``(c)(7)''.
    (2) Section 6 of that Act (50 U.S.C. 403g) is amended by 
striking ``section 103(c)(6) of the National Security Act of 
1947 (50 U.S.C. 403-3(c)(6))'' and inserting ``section 
103(c)(7) of the National Security Act of 1947 (50 U.S.C. 403-
3(c)(7))''.
    (3) Section 15 of that Act (50 U.S.C. 403o) is amended--
            (A) in subsection (a)(1), by striking ``special 
        policemen of the General Services Administration 
        perform under the first section of the Act entitled `An 
        Act to authorize the Federal Works Administrator or 
        officials of the Federal Works Agency duly authorized 
        by him to appoint special policemen for duty upon 
        Federal property under the jurisdiction of the Federal 
        Works Agency, and for other purposes' (40 U.S.C. 
        318),'' and inserting ``officers and agents of the 
        Department of Homeland Security, as provided in section 
        1315(b)(2) of title 40, United States Code,''; and
            (B) in subsection (b), by striking ``the fourth 
        section of the Act referred to in subsection (a) of 
        this section (40 U.S.C. 318c)'' and inserting ``section 
        1315(c)(2) of title 40, United States Code''.
    (c) National Security Agency Act of  1959.--Section 11 of 
the National Security Agency Act of 1959 (50 U.S.C. 402 note) 
is amended--
            (1) in subsection (a)(1), by striking ``special 
        policemen of the General Services Administration 
        perform under the first section of the Act entitled `An 
        Act to authorize the Federal Works Administrator or 
        officials of the Federal Works Agency duly authorized 
        by him to appoint special policeman for duty upon 
        Federal property under the jurisdiction of the Federal 
        Works Agency, and for other purposes' (40 U.S.C. 318)'' 
        and inserting ``officers and agents of the Department 
        of Homeland Security, as provided in section 1315(b)(2) 
        of title 40, United States Code,''; and
            (2) in subsection (b), by striking ``the fourth 
        section of the Act referred to in subsection (a) (40 
        U.S.C. 318c)'' and inserting ``section 1315(c)(2) of 
        title 40, United States Code''.
    (d) Intelligence Authorization Act for Fiscal Year 2003.--
Section 343 of the Intelligence Authorization Act for Fiscal 
Year 2003 (Public Law 107-306; 116 Stat. 2399; 50 U.S.C. 404n-
2) is amended--
            (1) in subsection (c), by striking ``section 
        103(c)(6) of the National Security Act of 1947 (50 
        U.S.C. 403-3(c)(6))'' and inserting ``section 103(c)(7) 
        of the National Security Act of 1947 (50 U.S.C. 403-
        3(c)(7))''; and
            (2) in subsection (e)(2), by striking ``section 
        103(c)(6)'' and inserting ``section 103(c)(7)''.
    (e) Federal Information Security Management Act of 2002.--
Section 3535(b)(1) of title 44, United States Code, as added by 
section 1001(b)(1) of the Homeland Security Act of 2002 (Public 
Law 107-296), and section 3545(b)(1) of title 44, United States 
Code, as added by section 301(b)(1) of the E-Government Act of 
2002 (Public Law 107-347), are each amended by inserting ``or 
any other law'' after ``1978''.
    (f) Public Law 107-173.--Section 201(c)(3)(F) of the 
Enhanced Border Security and Visa Entry Reform Act of 2002 
(Public Law 107-173; 116 Stat. 548; 8 U.S.C. 1721(c)(3)(F)) is 
amended by striking ``section 103(c)(6) of the National 
Security Act of 1947 (50 U.S.C. 403-3(c)(6))'' and inserting 
``section 103(c)(7) of the National Security Act of 1947 (50 
U.S.C. 403-3(c)(7))''.

                 TITLE IV--CENTRAL INTELLIGENCE AGENCY

SEC. 401. AMENDMENT TO CERTAIN CENTRAL INTELLIGENCE AGENCY ACT OF 1949 
                    NOTIFICATION REQUIREMENTS.

    Section 4(b)(5) of the Central Intelligence Agency Act of 
1949 (50 U.S.C. 403e(b)(5)) is amended by inserting ``, other 
than regulations under paragraph (1),'' after ``Regulations''.

SEC. 402. PROTECTION OF CERTAIN CENTRAL INTELLIGENCE AGENCY PERSONNEL 
                    FROM TORT LIABILITY.

    Section 15 of the Central Intelligence Agency Act of 1949 
(50 U.S.C. 403o) is amended by adding at the end the following 
new subsection:
    ``(d)(1) Notwithstanding any other provision of law, any 
Agency personnel designated by the Director under subsection 
(a), or designated by the Director under section 5(a)(4) to 
carry firearms for the protection of current or former Agency 
personnel and their immediate families, defectors and their 
immediate families, and other persons in the United States 
under Agency auspices, shall be considered for purposes of 
chapter 171 of title 28, United States Code, or any other 
provision of law relating to tort liability, to be acting 
within the scope of their office or employment when such Agency 
personnel take reasonable action, which may include the use of 
force, to--
            ``(A) protect an individual in the presence of such 
        Agency personnel from a crime of violence;
            ``(B) provide immediate assistance to an individual 
        who has suffered or who is threatened with bodily harm; 
        or
            ``(C) prevent the escape of any individual whom 
        such Agency personnel reasonably believe to have 
        committed a crime of violence in the presence of such 
        Agency personnel.
    ``(2) Paragraph (1) shall not affect the authorities of the 
Attorney General under section 2679 of title 28, United States 
Code.
    ``(3) In this subsection, the term `crime of violence' has 
the meaning given that term in section 16 of title 18, United 
States Code.''.

SEC. 403. REPEAL OF OBSOLETE LIMITATION ON USE OF FUNDS IN CENTRAL 
                    SERVICES WORKING CAPITAL FUND.

    Section 21(f)(2) of the Central Intelligence Agency Act of 
1949 (50 U.S.C. 403u(f)(2)) is amended--
            (1) in subparagraph (A), by striking ``(A) Subject 
        to subparagraph (B), the Director'' and inserting ``The 
        Director''; and
            (2) by striking subparagraph (B).

SEC. 404. PURCHASES BY CENTRAL INTELLIGENCE AGENCY OF PRODUCTS OF 
                    FEDERAL PRISON INDUSTRIES.

    Notwithstanding section 4124 of title 18, United States 
Code, purchases by the Central Intelligence Agency from Federal 
Prison Industries shall be made only if the Director of Central 
Intelligence determines that the product or service to be 
purchased from Federal Prison Industries best meets the needs 
of the Agency.

SEC. 405. POSTPONEMENT OF CENTRAL INTELLIGENCE AGENCY COMPENSATION 
                    REFORM AND OTHER MATTERS.

    (a) Postponement of Compensation Reform Plan.--Section 
402(a)(2) of the Intelligence Authorization Act for Fiscal Year 
2003 (Public Law 107-306; 116 Stat. 2403; 50 U.S.C. 403-4 note) 
is amended by striking ``February 1, 2004,'' and all that 
follows through the end and inserting ``the date of the 
enactment of the Intelligence Authorization Act for Fiscal Year 
2005.''.
    (b) Contribution by CIA Employees of Certain Bonus Pay to 
Thrift Savings Plan.--
            (1) Civil service retirement system participants.--
        Section 8351(d) of title 5, United States Code, is 
        amended--
                    (A) by inserting ``(1)'' after ``(d)''; and
                    (B) by adding at the end the following new 
                paragraph:
    ``(2)(A) Only those employees of the Central Intelligence 
Agency participating in the pilot project required by section 
402(b) of the Intelligence Authorization Act for Fiscal Year 
2003 (Public Law 107-306; 50 U.S.C. 403-4 note) and making 
contributions to the Thrift Savings Fund out of basic pay may 
also contribute (by direct transfer to the Fund) any part of 
bonus pay received by the employee as part of the pilot 
project.
    ``(B) Contributions under this paragraph are subject to 
section 8432(d) of this title.''.
            (2) Federal employees' retirement system 
        participants.--Section 8432 of title 5, United States 
        Code, is amended by adding at the end the following new 
        subsection:
    ``(k)(1) Only those employees of the Central Intelligence 
Agency participating in the pilot project required by section 
402(b) of the Intelligence Authorization Act for Fiscal Year 
2003 (Public Law 107-306; 50 U.S.C. 403-4 note) and making 
contributions to the Thrift Savings Fund out of basic pay may 
also contribute (by direct transfer to the Fund) any part of 
bonus pay received by the employee as part of the pilot 
project.
    ``(2) Contributions under this subsection are subject to 
subsection (d).
    ``(3) For purposes of subsection (c), basic pay of an 
employee of the Central Intelligence Agency participating in 
the pilot project referred to in paragraph (1) shall include 
bonus pay received by the employee as part of the pilot 
project.''.
    (c) Report.--(1) The Director of Central Intelligence shall 
submit to the congressional intelligence committees a report on 
the amount of compensation (including basic pay, bonuses, and 
employer contributions to the Thrift Savings Plan) of each 
employee of the Central Intelligence Agency participating in 
the pilot project required by section 402(b) of the 
Intelligence Authorization Act for Fiscal Year 2003 (Public Law 
107-306; 116 Stat. 2403; 50 U.S.C. 403-4 note), and on the 
amount that each such employee would have received had such 
employee received compensation under the existing system of 
compensation used by the Agency.
    (2) The report required by paragraph (1) shall be submitted 
together with the report required by paragraph (3) of such 
section 402(b).
    (3) In this subsection, the term ``congressional 
intelligence committees'' has the meaning given that term in 
section 402(d) of the Intelligence Authorization Act for Fiscal 
Year 2003.

          TITLE V--DEPARTMENT OF DEFENSE INTELLIGENCE MATTERS

SEC. 501. PROTECTION OF CERTAIN NATIONAL SECURITY AGENCY PERSONNEL FROM 
                    TORT LIABILITY.

    Section 11 of the National Security Agency Act of 1959 (50 
U.S.C. 402 note) is amended by adding at the end the following 
new subsection:
    ``(d)(1) Notwithstanding any other provision of law, agency 
personnel designated by the Director of the National Security 
Agency under subsection (a) shall be considered for purposes of 
chapter 171 of title 28, United States Code, or any other 
provision of law relating to tort liability, to be acting 
within the scope of their office or employment when such agency 
personnel take reasonable action, which may include the use of 
force, to--
            ``(A) protect an individual in the presence of such 
        agency personnel from a crime of violence;
            ``(B) provide immediate assistance to an individual 
        who has suffered or who is threatened with bodily harm; 
        or
            ``(C) prevent the escape of any individual whom 
        such agency personnel reasonably believe to have 
        committed a crime of violence in the presence of such 
        agency personnel.
    ``(2) Paragraph (1) shall not affect the authorities of the 
Attorney General under section 2679 of title 28, United States 
Code.
    ``(3) In this subsection, the term `crime of violence' has 
the meaning given that term in section 16 of title 18, United 
States Code.''.

SEC. 502. USE OF FUNDS FOR COUNTERDRUG AND COUNTERTERRORISM ACTIVITIES 
                    FOR COLOMBIA.

    (a) Authority.--Funds designated for intelligence or 
intelligence-related purposes for assistance to the Government 
of Colombia for counterdrug activities for fiscal year 2004, 
and any unobligated funds available to any element of the 
intelligence community for such activities for a prior fiscal 
year, shall be available--
            (1) to support a unified campaign by the Government 
        of Colombia against narcotics trafficking and against 
        activities by organizations designated as terrorist 
        organizations (such as the Revolutionary Armed Forces 
        of Colombia (FARC), the National Liberation Army (ELN), 
        and the United Self-Defense Forces of Colombia (AUC)); 
        and
            (2) to take actions to protect human health and 
        welfare in emergency circumstances, including 
        undertaking rescue operations.
    (b) Applicability of Certain Laws and Limitations.--The use 
of funds pursuant to the authority in subsection (a) shall be 
subject to the following:
            (1) Sections 556, 567, and 568 of the Foreign 
        Operations, Export Financing, and Related Programs 
        Appropriations Act, 2002 (Public Law 107-115; 115 Stat. 
        2160, 2165, and 2166).
            (2) Section 8077 of the Department of Defense 
        Appropriations Act, 2004 (Public Law 108-87; 117 Stat. 
        1090).
            (3) The numerical limitations on the number of 
        United States military personnel and United States 
        individual civilian contractors in section 3204(b)(1) 
        of the Emergency Supplemental Act, 2000 (division B of 
        Public Law 106-246; 114 Stat. 575), as amended by the 
        Foreign Operations, Export Financing, and Related 
        Programs Appropriations Act, 2002 (115 Stat. 2131).
    (c) Limitation on Participation of United States 
Personnel.--No United States Armed Forces personnel or United 
States civilian contractor employed by the United States Armed 
Forces will participate in any combat operation in connection 
with assistance made available under this section, except for 
the purpose of acting in self defense or during the course of 
search and rescue operations for United States citizens.

SEC. 503. SCENE VISUALIZATION TECHNOLOGIES.

    Of the amount authorized to be appropriated by this Act, 
$2,500,000 shall be available for the National Geospatial-
Intelligence Agency (NGA) for scene visualization technologies.

SEC. 504. MEASUREMENT AND SIGNATURES INTELLIGENCE RESEARCH PROGRAM.

    (a) Research Program.--(1) The Secretary of Defense and the 
Director of Central Intelligence shall jointly carry out a 
program to incorporate the results of basic research on sensors 
into the measurement and signatures intelligence systems of the 
United States, to the extent the results of such research are 
applicable to such systems.
    (2) In carrying out paragraph (1), the Secretary of Defense 
and the Director of Central Intelligence shall act through the 
Director of the Defense Intelligence Agency's Directorate for 
MASINT and Technical Collection (hereinafter in this section 
referred to as the ``Director'').
    (b) Program Components.--The program under subsection (a) 
shall review and assess basic research on sensors and 
technologies conducted both by the United States Government and 
by non-governmental entities. In carrying out the program, the 
Director shall protect intellectual property rights, maintain 
organizational flexibility, and establish research projects, 
funding levels, and potential benefits in an equitable manner 
through the Directorate.
    (c) Advisory Panel.--(1) The Director shall establish an 
advisory panel to assist the Director in carrying out the 
program under subsection (a).
    (2) The advisory panel shall be headed by the Director who 
shall determine the selection, review, and assessment of the 
research projects under the program.
    (3)(A) The Director shall appoint as members of the 
advisory panel representatives of each entity of the MASINT 
community, and may appoint as such members representatives of 
national laboratories, universities, and private sector 
entities.
    (B) For purposes of this subsection the term ``MASINT 
community'' means academic, professional, industrial, and 
government entities that are committed towards the advancement 
of the sciences in measurement and signatures intelligence.
    (C) The term for a member of the advisory panel shall be 
established by the Director, but may not exceed a period of 5 
consecutive years.
    (D) Members of the advisory panel may not receive 
additional pay, allowances, or benefits by reason of their 
service on the advisory panel, but may receive per diem in lieu 
of subsistence, in accordance with applicable provisions under 
subchapter I of chapter 57 of title 5, United States Code.
    (4) The Director may accept contributions from non-
governmental participants on the advisory panel to defray the 
expenses of the advisory panel.
    (5) The Federal Advisory Committee Act (5 U.S.C. App.) 
shall not apply to the activities of the advisory panel 
established under this subsection.
    (d) FOIA Exemption.--All files in the possession of the 
Defense Intelligence Agency for purposes of administering the 
program under this section, including any files of a Federal, 
State, or local department or agency or of a private sector 
entity provided to or utilized by the program, shall be exempt 
from the provisions of section 552 of title 5, United States 
Code, that require publication, disclosure, search, or review 
in connection therewith.

SEC. 505. AVAILABILITY OF FUNDS OF NATIONAL SECURITY AGENCY FOR 
                    NATIONAL SECURITY SCHOLARSHIPS.

    (a) Availability of Funds.--Any funds authorized to be 
appropriated for the National Security Agency for a fiscal year 
after fiscal year 2003 may be made available to the Independent 
College Fund of Maryland (also known as the ``I-Fund'') for the 
purpose of the establishment and provision of national security 
scholarships to the extent such funds are specifically 
authorized for that purpose.
    (b) Mechanisms of Availability.--Funds may be made 
available to the Independent College Fund of Maryland under 
subsection (a) by grant, contract, cooperative agreement, or 
such other appropriate mechanisms as the Director of the 
National Security Agency considers appropriate.

    And the Senate agree to the same.

      From the Permanent Select Committee on Intelligence, for 
consideration of the House bill and the Senate amendment, and 
modifications committed to conference:
                                   Porter J. Goss,
                                   Doug Bereuter,
                                   Sherwood Boehlert,
                                   Jim Gibbons,
                                   Ray LaHood,
                                   Randy ``Duke'' Cunningham,
                                   Pete Hoekstra,
                                   Richard Burr,
                                   Terry Everett,
                                   Elton Gallegly,
                                   Mac Collins,
                                   Jane Harman,
                                   Alcee L. Hastings,
                                   Silvestre Reyes,
                                   Leonard L. Boswell,
                                   Collin C. Peterson,
                                   Bud Cramer,
                                   Anna G. Eshoo,
                                   Rush Holt,
                                   C.A. Dutch Ruppersberger.
                From the Committee on Armed Services, for 
                consideration of defense tactical intelligence 
                and related activities:
                                   Duncan Hunter,
                                   Curt Weldon,
                                 Managers on the Part of the House.

                From the Select Committee on Intelligence:
                                   Pat Roberts,
                                   Orrin Hatch,
                                   Mike DeWine,
                                   Christopher S. Bond,
                                   Trent Lott,
                                   Olympia Snowe,
                                   Chuck Hagel,
                                   Saxby Chambliss,
                                   John Warner,
                                   Jay Rockefeller,
                                   Carl Levin,
                                   Dianne Feinstein,
                                   Ron Wyden,
                                   Dick Durbin,
                                   Evan Bayh,
                                   John Edwards,
                                   Barbara A. Mikulski.
                From the Committee on Armed Services:
                                   Wayne Allard,
                                   Bill Nelson.
                                Managers on the Part of the Senate.
       JOINT EXPLANATORY STATEMENT OF THE COMMITTEE OF CONFERENCE

      The managers on the part of the Senate and House at the 
conference on the disagreeing votes of the two Houses on the 
amendment of the Senate to the bill (H.R. 2417), to authorize 
appropriations for fiscal year 2004 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, submit the following joint statement to the 
Senate and House in explanation of the effect of the action 
agreed upon by the managers and recommended in the accompanying 
conference report.
      The managers agree that the congressionally directed 
actions described in the House bill, the Senate amendment, the 
respective committee reports, and classified annexes 
accompanying H.R. 2417 and S. 1025, should be undertaken to the 
extent that such congressionally directed actions are not 
amended, altered, substituted, or otherwise specifically 
addressed in either this joint Explanatory Statement or in the 
classified annex to the conference report on the bill H.R. 
2417.
      The Senate amendment struck all of the House bill after 
the enacting clause and inserted a substitute text.
      The House recedes from its disagreement to the amendment 
of the Senate with an amendment that is a substitute for the 
House bill and the Senate amendment. The differences between 
the House bill, the Senate amendment, and the substitute agreed 
to in conference are noted below, except for clerical 
corrections, conforming changes made necessary by agreements 
reached by the Conferees, and minor drafting and clarifying 
changes.

                    TITLE I--INTELLIGENCE ACTIVITIES

Sec. 101. Authorization of appropriations
      Section 101 of the conference report lists the 
departments, agencies, and other elements of the United States 
Government for whose intelligence and intelligence-related 
activities the Act authorizes appropriations for fiscal year 
2004. The list illustrates the oversight and legislative 
jurisdiction exercised by the Intelligence Committees in both 
Houses. It also reflects the primary jurisdiction of the Senate 
Select Committee on Intelligence over all presidential 
nominations within the intelligence elements of all 
departments, agencies, and other entities of the United States 
Government. The managers note that this conference report marks 
the first appearance of the Department of Homeland Security in 
an intelligence authorization bill. This reflects the 
jurisdiction of the Intelligence Committees in both Houses over 
the intelligence activities and components of that Department 
as established by Congress in the ``Homeland Security Act of 
2002'' (P.L. 107-296), and as designated by the President in 
Executive Order 13284 (January 23, 2003). The Conferees have 
also included the Department of Justice (DoJ) in this section 
to better reflect the fact that Intelligence Committee 
jurisdiction of both Houses extends to the intelligence 
activities and components of DoJ, including, particularly, the 
Office of Intelligence Policy and Review, which directly 
supports numerous National Foreign Intelligence Program (NFIP) 
activities across the Intelligence Community. Section 101 is 
identical to Section 101 of the House bill.
Sec. 102. Classified schedule of authorizations
      Section 102 of the conference report makes clear that the 
details of the amounts authorized to be appropriated for 
intelligence and intelligence-related activities and applicable 
personnel ceilings covered under this Title for fiscal year 
2004 are contained in a classified Schedule of Authorizations. 
The classified Schedule of Authorizations is incorporated into 
the Act by this section. 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 
classified annex provides details of the Schedule. Section 102 
is identical to Section 102 of the House bill.
Sec. 103. Personnel ceiling adjustments
      Section 103 of the conference report authorizes the 
Director of Central Intelligence (DCI), with the approval of 
the Director of the Office of Management and Budget, in fiscal 
year 2004, to authorize employment of civilian personnel in 
excess of the personnel ceilings applicable to the components 
of the Intelligence Community under Section 102 by an amount 
not to exceed two percent of the total of the ceilings 
applicable under Section 102. The DCI may exercise this 
authority only if necessary to the performance of important 
intelligence functions. Any exercise of this authority must be 
reported to the Intelligence Committees of the Congress.
      The Conferees emphasize that the authority conferred by 
Section 103 is not intended to permit wholesale increases in 
personnel strength in any intelligence component. Rather, the 
section provides the DCI with flexibility to adjust personnel 
levels temporarily for contingencies and for overages caused by 
an imbalance between hiring new employees and attrition of 
current employees. The Conferees do not expect the DCI 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 bill. In no case 
is this authority to be used to provide for positions denied by 
this bill. Section 103 of the House bill and Section 103 of the 
Senate amendment are identical.
Sec. 104. Intelligence Community Management Account
      Section 104 of the conference report authorizes 
appropriations for the Intelligence Community Management 
Account (CMA) of the DCI and sets the personnel end-strength 
for the Intelligence Community Management Staff for fiscal year 
2004.
      Subsection (a) authorizes appropriations of $221,513,000 
for fiscal year 2004 for the activities of the CMA of the DCI.
      Subsection (b) authorizes 310 full-time personnel for the 
Intelligence Community Management Staff for fiscal year 2004 
and provides that such personnel may be permanent employees of 
the Staff or detailed from various elements of the United 
States Government.
      Subsection (c) authorizes additional appropriations and 
personnel for the CMA as specified in the classified Schedule 
of Authorizations and permits additional amounts to remain 
available for research and development through September 30, 
2005. Subsection (c) of the House bill provided only for one-
year research and development funds. The House recedes to the 
Senate.
      Subsection (d) requires that, except as provided in 
Section 113 of the National Security Act of 1947, during fiscal 
year 2004, personnel from another element of the United States 
Government be detailed to an element of the CMA on a 
reimbursable basis, or for temporary situations of less than 
one year on a non-reimbursable basis.
      Subsection (e) authorizes $47,142,000 of the amount 
authorized in subsection (a) to be made available for the 
National Drug Intelligence Center (NDIC). Subsection (e) 
requires the DCI to transfer these funds to the Attorney 
General 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.
      Although a DoJ organization, the NDIC is authorized and 
funded entirely through NFIP funds. The Conferees expect NDIC 
to be better integrated into the Intelligence Community, 
particularly with respect to counter-narcotics activities and 
strategic planning.
Sec. 105. Office of Intelligence and Analysis of the Department of the 
        Treasury
      Section 105 is similar to Section 105 of the House bill. 
The Senate amendment had no similar provision. The Senate 
recedes with slight modifications. Section 105 authorizes the 
establishment of an Office of Intelligence and Analysis within 
the Department of the Treasury (Treasury) to be headed by a 
presidentially appointed and Senate-confirmed Assistant 
Secretary. Subsection (c) requires that the Secretary of the 
Treasury consult with the DCI before recommending to the 
President an individual to be nominated to the position.
      As a result of the findings of the ``Joint Inquiry into 
Intelligence Community Activities Before and After the 
Terrorist Attacks of September 11, 2001'' (Joint Inquiry), the 
Conferees seek to ensure that there is full, appropriate, and 
timely sharing of information and analysis within the U.S. 
Government concerning financial networks associated with 
international terrorism. Since the September 11, 2001, 
terrorist attacks, the U.S. Government has blocked the assets 
of over 260 individuals and groups supporting terrorist causes. 
It has also frozen approximately $120 million in terrorist-
related assets.
      Currently, there is no single Executive Branch office 
tasked by statute with ensuring that all elements of the 
intelligence and law enforcement communities cooperate and 
coordinate in the identification and the targeting of terrorist 
financial assets. Moreover, coordination on terrorist financing 
issues within Treasury, and between Treasury and the 
Intelligence Community, while improving, is currently uneven 
and disjointed. The Conferees are convinced that Treasury must 
be more effective in articulating the counterterrorist 
financing mission. Treasury must also implement the mission 
requirements from an intelligence sharing and operational 
perspective more effectively.
      The managers recognize that the staffs of the Office of 
Foreign Assets Control (OFAC) and the Financial Crimes 
Enforcement Network (FinCEN) possess unique analytical 
capabilities regarding terrorist financial targets and that 
this resource should be leveraged across the Intelligence 
Community. Treasury's access to Intelligence Community 
information, however, must be enhanced if it is to fulfill this 
mission. Treasury's analytical products need to be more 
effectively coordinated with, and disseminated throughout, the 
Intelligence Community. The Conferees note that the Chairman of 
the House Committee on Financial Services has provided valuable 
input on the language of Section 105.
      The Conferees seek to establish a new office to 
accomplish this requirement within Treasury. The Conferees are 
hopeful that the creation of this new office will streamline 
and centralize the U.S. Government's capabilities to track 
terrorist financing networks across the globe. The Conferees 
further expect that the new office will be treated as a full 
partner in the Intelligence Community, receiving all 
intelligence, law enforcement, and other information necessary 
for it to carry out its important task.
      The Conferees also insist that the requirements of the 
``Intelligence Authorization Act for Fiscal Year 2003'' (FY 03 
Act) (P.L. 107-306) are met. Section 341 of the FY 03 Act 
requires that the DCI establish a Foreign Terrorist Asset 
Tracking Center (FTAT-C) within the Central Intelligence Agency 
(CIA). Establishment of a Treasury Bureau of Intelligence and 
Analysis should markedly strengthen FTAT-C's analytic capacity. 
Section 342 of the FY 03 Act also directed that the Secretary 
of the Treasury submit semiannual reports concerning U.S. 
Government operations against terrorist financial networks. The 
first Section 342 report was due on February 1, 2003, but was 
not completed until May 12, 2003. The Conferees expect that the 
establishment of the Office of Intelligence and Analysis within 
Treasury will make future Section 342 reports more timely and 
informative with respect to U.S. Government progress against 
terrorist-related financial targets.
Sec. 106. Incorporation of reporting requirements
      Section 106 is similar to Section 105 of the Senate 
amendment. The House bill had no similar provision. The House 
recedes to the Senate position. Section 106 incorporates into 
the Act by reference each requirement to submit a report 
contained in the joint explanatory statement to accompany the 
conference report or in the associated classified annex to this 
Conference Report.
Sec. 107. Preparation and submittal of reports, reviews, studies, and 
        plans relating to intelligence activities of Department of 
        Defense or Department of Energy
      Section 107 is identical to Section 106 of the Senate 
amendment. The House bill had no similar provision. The House 
recedes.

 TITLE II--CENTRAL INTELLIGENCE AGENCY RETIREMENT AND DISABILITY SYSTEM

Sec. 201. Authorization of appropriations
      Section 201 authorizes appropriations of $226,400,000 for 
the Central Intelligence Agency Retirement and Disability Fund. 
Section 201 of the House bill and Section 201 of the Senate 
amendment are identical.

                     TITLE III--GENERAL PROVISIONS

                Subtitle A--Recurring General Provisions

Sec. 301. Increase in employee compensation and benefits authorized by 
        law
      Section 301 is identical to Section 301 of the Senate 
amendment and Section 301 of the House bill.
Sec. 302. Restriction on conduct of intelligence activities
      Section 302 is identical to Section 302 of the Senate 
amendment and Section 302 of the House bill.

                        Subtitle B--Intelligence

Sec. 311. Authority of Federal Bureau of Investigation to award 
        personal services contracts
      Section 311 would grant the Federal Bureau of 
Investigation (FBI) specific statutory authority to enter into 
personal services contracts for the procurement of services 
that are only in direct support of an intelligence or 
counterintelligence mission. The Conferees expect that such 
services will be used, among other things, to provide the FBI 
with needed expertise in asset validation, counterterrorism 
investigations, counterespionage activities, 
counterintelligence damage assessments, counterintelligence 
training, and related technical support. The Conferees 
anticipate that this authority will be used as a contracting 
mechanism when other contracting mechanisms are insufficient to 
meet the national security requirements of the FBI. The 
Conferees also note that this provision does not modify 
existing restrictions on the use of contractors to perform 
``inherently governmental functions.'' This authority should 
not be used by the FBI to avoid or forestall the currently 
aggressive efforts to recruit and hire qualified staff 
employees to fill personnel vacancies.
      The Conferees believe that this authority is consistent 
with the public's desire that the FBI operate with greater 
flexibility with respect to its national security mission 
following the September 11th attacks. The Conferees believe, 
however, that the FBI should use the increased flexibility 
afforded under this section carefully. The FBI should implement 
this section in a manner that strictly reflects the unique 
nature of the authorization. The Conferees require that before 
a contract can be entered into, the Chief Contracting Officer 
must determine that a personal service contract is ``the 
appropriate means of securing'' the needed services. 
Additionally, the Conferees expect that the Director of the FBI 
will ensure that the authority granted by this section is 
exercised in a prudent manner and with appropriate oversight.
      Neither the House bill nor the Senate amendment contained 
a similar provision. This provision is similar to the authority 
afforded to certain Department of Defense elements in Section 
841 of the Conference Report accompanying the ``Defense 
Authorization Act for Fiscal Year 2004.'' The Conferees agreed 
to include this section, however, after learning that the 
increased pace and amount of work in the post-September 11th 
environment has created a need for this authority for the FBI. 
The Conferees believe there exists an operational imperative 
for the FBI to enter into personal services contracts to 
support its counterterrorism, counterespionage, and 
counterintelligence missions.
      The Conferees note that the Chairman of the House 
Committee on the Judiciary has indicated that although he would 
prefer that this provision be carried in the ``Department of 
Justice Appropriations Authorization Act, Fiscal Years 2004-
2006'' (H.R. 3036), he has ``no substantive objection'' to the 
provision. Additionally, the Chairman of the House Committee on 
Government Reform has submitted a letter in support of 
including this provision in this Conference Report.
      Congress, through the statutory annual reporting 
requirement contained in this section, and through its general 
oversight authority, will monitor the FBI's use of this 
authority closely and will not hesitate to revise the authority 
if exercised irresponsibly or otherwise abused.
      The Conferees expect that the unclassified report to all 
specified congressional committees will be substantially the 
same, except that intelligence source and methods information 
should be included only in a classified annex provided to the 
Intelligence Committees.
Sec. 312. Budget treatment of costs of acquisition of major systems by 
        the intelligence community
      Section 312 was added to the Senate amendment on the 
Senate floor. As amended by the Conferees, the House recedes to 
this provision.
      The Conferees are concerned about the cost growth of 
major Intelligence Community acquisitions, which result in a 
reshuffling of the NFIP on an almost annual basis to address 
consequential budget shortfalls.
      Funding requests submitted in the President's budget 
generally reflect an estimate that has been prepared by the 
same Intelligence Community component that is responsible for 
the acquisition and operation of the system. The magnitude and 
consistency of the growth of recent acquisitions indicates a 
systemic bias on the part of Intelligence Community components 
to underestimate the funding required for major acquisitions. 
Because of ``perceived affordability,'' more acquisitions are 
started, and as a result, the NFIP is burdened with more 
content than available resources can support.
      In contrast, the Secretary of Defense has implemented a 
successful program requiring the development of independent 
cost estimates for major acquisitions. The Secretary has 
mandated the use of such estimates in the Department of Defense 
budget requests. Section 2434 of Title 10, United States Code, 
provides that ``The Secretary of Defense may not approve the 
system development and demonstration, or production and 
deployment, of a major defense acquisition program unless an 
independent estimate of the full life-cycle cost of the program 
and a manpower estimate for the program [has] been considered 
by the Secretary.'' Further, Title 10 requires that the 
independent estimate be prepared ``by an office or other entity 
that is not under the supervision, direction, or control of the 
military department, Defense Agency, or other component of the 
Department of Defense that is directly responsible for carrying 
out the development or acquisition of the program. * * *''
      The Conferees note, with approval, that the DCI has 
already established an organization within the Office of the 
Deputy Director of Central Intelligence for Community 
Management to provide an independent cost analysis capability. 
This is a significant development because, historically, 
independent cost estimates have represented a much more 
accurate projection of the costs of major acquisitions. The 
budget submitted to Congress, however, has typically reflected 
the Intelligence Community operational component's cost 
estimate, which in general has been significantly lower than a 
corresponding independent estimate.
      Section 312 formalizes the process for developing 
independent cost estimates for major Intelligence Community 
acquisitions.
      The Conferees have included at subsection (d) a 
restriction on the use of appropriated funds with respect to 
major acquisitions for which independent cost estimates have 
not been prepared, or for which the requirements of Section 312 
have not been followed.
      DoJ raised an objection to a subsection in the Senate-
passed bill requiring that the President's budget request for 
the development or procurement of a major intelligence system 
must be an amount equivalent to the most current independent 
cost estimate. DoJ noted that such a requirement would violate 
the Recommendations Clause of the Constitution (Article II, 
Section 3), which provides that the President shall recommend 
to Congress such legislative measures as he deems necessary.
      To address DoJ's Recommendations Clause objection, the 
Conferees modified the provision. The provision included in 
this Conference Report now only requires that the President 
provide additional information to the Congress if the budget 
request is less than the amount set forth in the most current 
independent cost estimate for the program. This additional 
information, which is required to be included in the budget 
justification materials submitted to Congress, would (1) 
explain the difference between the amount requested and the 
independent cost estimate; (2) describe the importance of the 
system to national security; (3) provide an assessment of the 
impact on funding intelligence programs if the independent cost 
estimate is accurate; and (4) provide any other information the 
President considers appropriate.
      The Intelligence Committees received a DoJ letter 
regarding the modified provision on the eve of conference. The 
letter expresses DoJ's judgment that, as modified, the 
provision does not present any Recommendations Clause concern. 
DoJ, however, maintains a reservation with respect to the 
requirement in the modified provision that the budget 
justification explain the difference between the President's 
budget request and the independent cost estimate. The Conferees 
have considered DoJ's position and are satisfied that Section 
312, as modified, represents an appropriate accommodation of 
the interests at stake. The provision respects the President's 
authority given by the Recommendations Clause and is consistent 
with Congress's powers and authority under Article I of the 
Constitution to obtain information from the Executive Branch 
necessary for the consideration of legislation, particularly 
legislation regarding budgetary matters.
Sec. 313. Modification of sunset of application of sanctions laws to 
        intelligence activities
      Neither the House bill nor the Senate amendment included 
a similar provision. The Conferees have included, at Section 
313, a provision to strike Section 905 of the National Security 
Act of 1947 (50 U.S.C. 441d). This action revives Title IX of 
the National Security Act, which has been dormant since January 
6, 2000.
Sec. 314. Modification of notice and wait requirements on projects to 
        construct or improve intelligence community facilities
      Section 314 was similar to versions passed as House 
Section 311 and Senate amendment Section 312. The House recedes 
with minor amendments.
      Section 314 amends congressional notification 
requirements for certain unprogrammed construction and 
improvement projects based on the cost of the project. These 
adjustments take into account higher construction costs.
      Section 314 would also allow the DCI and the Secretary of 
Defense together, or the DCI alone with respect to a project 
primarily for the CIA, to initiate certain unprogrammed 
construction and improvement projects seven days after 
notifying Congress. Currently there is a 21-day notification 
period. In emergencies, these projects can be commenced without 
prior notice. Use of this emergency authority is expected to be 
rare.
Sec. 315. Extension of deadline for final report of the National 
        Commission for the Review of the Research and Development 
        Programs of the United States Intelligence Community
      The House bill and the Senate amendment contained similar 
provisions. The House recedes with minor amendments.
Sec. 316. Improvement of information sharing among Federal, State, and 
        local government officials
      The House bill contained a similar provision. The Senate 
amendment had no such provision. The Senate recedes with 
amendments.
      Section 316 authorizes the Secretary of Homeland 
Security, in consultation with the DCI and the Attorney 
General, to implement a program to improve the sharing of 
intelligence collected by the Federal government with State and 
local officials. This program is intended to complement 
implementation of the ``Homeland Security Information Sharing 
Act'' (P.L. 107-296, Title VIII, Subtitle I).
      The program should be designed to encourage State and 
local officials, and certain private sector representatives, to 
share with each other and with appropriate Federal officials 
lawfully collected information vital to the prevention of 
terrorist attacks against the United States. The training 
provided to officials and representatives should help these 
individuals to identify sources of potential threats, to report 
information related to potential threats to the appropriate 
agencies in the appropriate form and manner, and to assure that 
reported information is systematically submitted to the 
Department of Homeland Security and disseminated to all 
appropriate Federal departments and agencies. A report on the 
status of implementation of Section 892 of the ``Homeland 
Security Act of 2002'' (Public Law 107-296) is also required 
under this section. The project grants no new authorities to 
any department or agency for the collection of information.
Sec. 317. Pilot program on analysis of signals and other intelligence 
        by intelligence analysts of various elements of the 
        intelligence community
      This Section is similar to Section 313 of the Senate 
amendment. The House bill had no such provision. The House 
recedes with minor amendments.
Sec. 318. Pilot program on recruitment and training of intelligence 
        analysts
      This section is similar to Section 314 of the Senate 
amendment. The House recedes with amendments. Upon enactment, 
the pilot program will be known as the Pat Roberts Intelligence 
Scholars Program.
Sec. 319. Improvement of equality of employment opportunities in the 
        intelligence community
      Section 319 is similar to Section 337 of the House bill. 
The Senate amendment had no similar provision. The Senate 
recedes with minor amendments. The provision is intended to 
develop programs that will enhance ethnic and cultural 
diversity throughout the Intelligence Community through the 
recruitment of individuals with diverse ethnic and cultural 
backgrounds, skill sets, and language proficiency.
Sec. 320. Sense of Congress on recruitment as intelligence community 
        personnel of members of the Armed Forces on their discharge or 
        release from duty
      Section 320 was added by the Conferees. Neither the House 
bill nor the Senate amendment contained a similar provision. 
With Section 320, the Conferees encourage the Intelligence 
Community to recruit among American armed forces veterans of 
Operation Enduring Freedom, Operation Iraqi Freedom, and other 
military service to take advantage of the unique national 
security, military, and technical experience of such personnel, 
and to try to keep the experience from being lost to the U.S. 
Government upon their discharge or release from active duty.
Sec. 321. External Collection Capabilities and Requirements Review 
        Panel
      Section 321 was added by the Conferees. The provision 
permits the President to establish an External Capabilities and 
Requirements Review Panel as specified in the Classified Annex.

                    Subtitle C--Counterintelligence

Sec. 341. Counterintelligence initiatives for the intelligence 
        community
      Section 341 contains several counterintelligence reforms 
included in Section 321 of the House-passed bill. The Senate 
amendment contained no such provision. The Senate recedes with 
amendments.
      In addition to the statutory requirements added by 
Section 341, the Conferees direct the National 
Counterintelligence Executive (NCIX) to consult with all 
components of the Intelligence Community on the status of 
current policies and procedures for conducting investigative 
reviews of production, marking, handling, storage, and 
communication of classified information, as well as training on 
related security matters to protect intelligence sources and 
methods. Not later than April 1, 2004, NCIX shall provide a 
written report to the intelligence committees with an 
assessment of the adequacy of Intelligence Community 
components' investigation of their handling of classified 
information and the adequacy of training on related security 
matters. In this report, NCIX shall include proposed uniform 
policies and procedures for all Intelligence Community 
components to conduct annual inspections of each agency's 
handling of classified information, to include, as appropriate, 
prohibitions on employees' bringing items such as cameras, 
document scanners, and personal electronic devices into 
Intelligence Community facilities. After NCIX has reported to 
Congress uniform policies and procedures for the conduct of 
annual inspections of the handling of classified information, 
NCIX may carry out its responsibility to implement an 
inspection process by delegating to Intelligence Community 
components the task of carrying out the inspections. NCIX shall 
closely monitor, and report to the intelligence committees on, 
the performance of those inspections.
      As passed by the House, the counterintelligence reforms 
required by this section would have required the Attorney 
General, acting through the FBI Director, to establish an FBI 
Office of Counterintelligence to investigate potential 
espionage activities within the FBI. The Conferees understand 
that the FBI has recently established such an office. Because 
of this development, the Conferees agreed to drop the statutory 
requirement for such an office. The Conferees reaffirm their 
commitment to a fully empowered Office of Counterintelligence 
and expect to be provided periodic reports on the resource 
needs and operations of the office.
      Subsection (b) of Section 341 of the conference report 
would require the Attorney General, acting through DoJ's Office 
of Intelligence Policy and Review, in consultation with the 
DCI, acting through the Office of the NCIX, to establish 
written policies and procedures to assist the Attorney 
General's consideration of intelligence and national security 
equities in the development of indictments and related 
pleadings in espionage prosecutions. The Conferees note, 
however, that DoJ should and does consult closely with the 
Intelligence Community on all aspects of espionage 
investigations, not just in the development of indictments and 
related pleadings.
      The Conferees also note that although the decision as to 
whether and whom to prosecute is ultimately and properly left 
to the discretion of the Attorney General there are significant 
and strategic intelligence equities at stake in these types of 
cases. The Conferees believe it is unwise for operational and 
prosecutorial decisions to proceed without close consultation 
at every stage. The Conferees are cognizant of the coordination 
that already occurs with respect to the disclosure of 
classified information in the presentation of such cases. DoJ 
and the other elements of the Intelligence Community are 
commended for this.
      The Conferees believe, however, that the Attorney General 
should have the benefit of the perspective of 
counterintelligence professionals before making his decision on 
how much previously classified or sensitive information should 
be included in a charging document or in other pleadings. The 
Conferees note that the United States could lose its ability to 
learn more about the extent to which a spy has given away our 
national security secrets because so much information is 
contained in these types of documents. The Conferees highlight 
the Robert Hanssen case as an example. The Conferees recognize 
that there may be tactical or legal requirements for including 
some such information. The Conferees are concerned that some 
charging documents or pleadings include information that goes 
beyond that required by either criteria. The Conferees do not 
seek to vitiate any prerogatives of the Attorney General in 
determining whom to charge criminally, or how a matter should 
be charged. The NCIX is not required to concur in the Attorney 
General's decisions in these matters. The Conferees simply seek 
to improve the process by which the Attorney General makes 
these decisions when it involves a counterintelligence or an 
espionage matter. When the Attorney General makes a decision to 
include information beyond that meeting the minimum 
requirements of the Constitution for purposes of charging an 
individual, the Conferees merely seek to provide the Attorney 
General with as much insight as possible on the effects of 
those decisions on national security.
      In addition to the statutory modifications in Section 
341, the Conferees recommend that the Executive Branch move 
expeditiously to implement further counterintelligence reforms. 
In particular, the Conferees have serious concerns with several 
aspects of the handling of the Hanssen espionage case and other 
investigations.
      The NCIX damage assessment in the Hanssen matter also 
included a reference to the effect of Section 8318 of Title 5, 
United States Code, with respect to a spy's cooperation with 
the U.S. Government. The Conferees are interested whether an 
amendment to this section should be made so that both the 
spouse and the individual whose action caused the forfeiture of 
an annuity, or retired pay, under 5 U.S.C. 8312 and 8313 must 
cooperate fully with the U.S. Government in any lawful 
investigation or damage assessment in order to maintain the 
spouse's eligibility for benefits. The Conferees direct the DCI 
and the Attorney General, jointly, to provide to the House and 
Senate Intelligence Committees, no later than February 1, 2004, 
a written assessment of their views on this particular question 
and how such an amendment would assist their respective 
organizations.

                          Subtitle D--Reports

Sec. 351. Report on cleared insider threat to classified computer 
        networks
      Section 351 is similar to Section 331 of the Senate 
amendment. The House bill had no similar provision. The House 
recedes, with minor amendments.
Sec. 352. Report on security background investigations and security 
        clearance procedures of the Federal Government
      Section 352 is similar to Section 332 of the Senate 
amendment. The House bill had no similar provision. The House 
recedes with amendments.
Sec. 353. Report on detail of civilian intelligence personnel among 
        elements of the intelligence community and the Department of 
        Defense
      Section 353 is similar to Section 333 of the Senate 
amendment. The House bill had no similar provision. The House 
recedes.
Sec. 354. Report on modifications of policy and law on classified 
        information to facilitate sharing of information for national 
        security purposes
      Section 354 is similar to Section 334 of the Senate 
amendment. The House bill had no similar provision. The House 
recedes with minor amendments.
Sec. 355. Report on strategic planning
      Section 355 is similar to Section 335 of the Senate 
amendment. The House bill had no similar provision. The House 
recedes with minor amendments.
Sec. 356. Report on United States dependence on computer hardware and 
        software manufactured overseas
      Section 356 is similar to Section 336 of the Senate 
amendment. The House bill had no similar provision. The House 
recedes with minor amendments.
Sec. 357. Report on lessons learned from military operations in Iraq
      Section 357 represents a combination of Section 337 of 
the Senate amendment and Section 344 of the House bill. The 
Senate recedes with minor amendments. The Conferees also expect 
that the House and Senate Intelligence Committees will receive 
in writing from the DCI in a timely fashion any and all status 
reports and updates concerning the activities of the Iraq 
Survey Group on a regular, periodic basis.
Sec. 358. Reports on conventional weapons and ammunition obtained by 
        Iraq in violation of certain United Nations Security Council 
        resolutions
      Section 358 is similar to Section 338 of the Senate 
amendment. The House had no similar provision. The House 
recedes with minor amendments.
Sec. 359. Report on operations of Directorate of Information Analysis 
        and Infrastructure Protection and Terrorist Threat Integration 
        Center
      Section 359 is similar to Section 340 of the Senate 
amendment. The House bill had no similar provision. The House 
recedes with amendments.
Sec. 360. Report on Terrorist Screening Center
      Section 360 is similar to Section 345 of the House bill. 
The Senate amendment had no similar provision. The Senate 
recedes with amendments.
Sec. 361. Repeal and modification of report requirements relating to 
        intelligence activities
      Section 361 is similar to both Section 339 of the Senate 
amendment and Section 342 of the House bill. Each House recedes 
in part, with minor amendments.

                       Subtitle E--Other Matters

Sec. 371. Extension of suspension of reorganization of Diplomatic 
        Telecommunications Service Program Office
      Section 371 is identical to Section 351 of the Senate 
amendment and Section 331 of the House bill.
Sec. 372. Modifications of authorities on explosive materials
      Section 372 is identical to Section 352 of the Senate 
amendment. It is similar to Section 332 of the House bill. The 
House recedes.
Sec. 373. Modification of prohibition of the naturalization of certain 
        persons
      Section 373 is identical to Section 353 of the Senate 
amendment and to Section 333 of the House bill.
Sec. 374. Modification to definition of financial institution in Right 
        to Financial Privacy Act
      Section 374 is similar to both Section 354 of the Senate 
amendment and to Section 334 of the House bill. Section 374 of 
the Conference Report expands the definition of ``financial 
institution'' for purposes of section 1114 of the Right to 
Financial Privacy Act (12 U.S.C. 3414 (RFPA)). It provides 
enhanced authority for authorized Intelligence Community 
collection activities designed to prevent, deter, and disrupt 
terrorism and espionage directed against the U.S. and to 
enhance foreign intelligence efforts.
      The Conferees believe this new definition is necessary 
for effective counterintelligence, foreign intelligence, and 
international terrorism operations of the United States. 
Section 1114 currently permits U.S. Government authorities 
engaged in counterintelligence or foreign intelligence 
activities to use ``National Security Letters,'' approved by a 
senior government official, to obtain certain financial records 
from defined ``financial institutions.'' The definition of 
``financial institution'' in the RFPA has been essentially 
unmodified since the RFPA became law in 1978. This amendment 
updates the definition to include those entities that today 
provide financial services to individuals, but would not be 
covered by the current definition. Financial records maintained 
by these entities are not currently covered by the RFPA and, 
thus, are not accessible by intelligence elements of the United 
States Government using this authority. In order to expand the 
definition of ``financial institution'' for purposes only of 
section 1114, this subsection adopts, in part, the definition 
of ``financial institution'' found in section 5312(a)(2) of 
Title 31, United States Code. It is important to highlight that 
this definition also is consistent with the definition used in 
section 804(5) of the Counterintelligence and Security 
Enhancements Act of 1994 (50 U.S.C. 438).
      The Conferees intend that this authority be used for 
accessing records and information from financial institutions 
for counterintelligence, foreign intelligence, and 
international terrorism investigations. The Conferees note, 
with approval, the significant actions of the U.S. Government 
in tracking terrorist finances. The Conferees believe that the 
authority granted by this section will enhance the Government's 
efforts in this regard. This provision allows the U.S. 
Government to have, through use of ``National Security 
Letters,'' greater access to a larger universe of information 
that goes beyond traditional financial records, but is 
nonetheless crucial in tracking terrorist finances or espionage 
activities. The Conferees understand that this authority should 
be used for accessing records and information for the purposes 
of identifying an individual's financial relationship with the 
specified financial institutions.
      Section 3414(a)(5)(C) of the RFPA requires the Attorney 
General to ``fully inform'' the Congressional Intelligence 
Committees semiannually concerning all requests made pursuant 
to the provision. To date, the Attorney General has limited 
these reports to statistical information. The Conferees 
accordingly request that the Attorney General, pursuant to his 
responsibility to ``fully inform'' the House and Senate 
Intelligence Committees, include in his next semiannual report 
to these particular committees information about the process 
and standards for approving National Security Letters. The 
Conferees also request that the next semiannual report include 
a description of issues (if any) concerning the scope of such 
letters, or financial institution compliance with such letters, 
that have arisen in Federal and State judicial, administrative, 
and regulatory settings, or otherwise.
      The Conferees have amended the provision that appeared in 
both the House bill and Senate amendment to ensure that all 
financial institutions covered by the amended National Security 
Letters provision are also protected by the cost reimbursement 
and immunity provisions of the Act (12 U.S.C. 3415, 3417). With 
those amendments, the House recedes.
Sec. 375. Coordination of Federal Government research on security 
        evaluations
      Section 375 is similar to Section 355 of the Senate 
amendment. The House bill had no similar provision. The House 
recedes with amendments to ensure that classified information 
considered during the research initiative is protected from 
unauthorized disclosure.
Sec. 376. Treatment of classified information in money laundering cases
      Section 376 is identical to Section 357 of the Senate 
amendment. The House bill had no similar provision. The House 
recedes.
      Section 376 amends section 5318A of title 31, United 
States Code. That section, which was added in Section 311 of 
P.L. 107-56 (Oct. 26, 2001), permits the Secretary of the 
Treasury to take targeted action against countries, 
institutions, transactions, or types of accounts the Secretary 
of the Treasury finds to be of ``primary money-laundering 
concern.'' The new amendment will permit the Secretary of the 
Treasury, in a judicial review proceeding, to submit any 
classified information on which such a finding, or related 
action, is based to the court ex parte and in camera. This 
permission parallels the authority granted to the Secretary to 
submit classified information to a reviewing court in 
connection with any proceedings under the International 
Emergency Economic Powers Act. In administering a proceeding in 
which classified information is submitted to a court under this 
provision, the Conferees intend that a court will fashion 
procedures, necessary to assure a moving party due process of 
law, that resemble those already required in similar situations 
in which the government, or another party, seeks to base a 
claim or defense on classified information.
Sec. 377. Technical amendments
      Section 377 is similar to Section 356 of the Senate 
amendment and to Section 343 of the House bill. The Senate 
recedes with amendments, including the addition of a technical 
amendment to the ``Federal Information Security Management Act 
of 2002'' (P.L. 107-296 and P.L. 107-347) which was included in 
the Senate amendment as Section 404.

                 TITLE IV--CENTRAL INTELLIGENCE AGENCY

Sec. 401. Amendment to certain Central Intelligence Agency Act of 1949 
        notification requirements
      Section 401 is identical to Section 401 of the Senate 
amendment. The House had no similar provision. The House 
recedes.
Sec. 402. Protection of certain Central Intelligence Agency personnel 
        from tort liability
      Section 402 is similar to Section 402 of the Senate 
amendment and Section 401 of the House bill. The House recedes 
with minor amendments. The Conferees note that this protection 
against tort liability extends only to officials of the Central 
Intelligence Agency who are Agency personnel designated by the 
Director under Section 15(a) of the ``Central Intelligence 
Agency Act of 1949'' (CIA Act) (50 U.S.C. 403o), or designated 
by the Director under Section 5(a)(4) of the CIA Act (50 U.S.C. 
403f) to carry firearms for the protection of current or former 
Agency personnel and their immediate families, defectors, and 
their immediate families, and other persons in the United 
States under Agency auspices.
Sec. 403. Repeal of obsolete limitation on use of funds in central 
        services working capital fund
      Section 403 is identical to Section 403 of the Senate 
amendment and to Section 402 of the House bill.
Sec. 404. Purchases by the Central Intelligence Agency of products of 
        Federal Prison Industries
      Section 404 is an amended version of Section 335 
contained in the House bill. The Conferees modified the 
provision to better reflect actual Central Intelligence Agency 
procurement practices, which already conform to the goals 
envisioned by Section 335 of the House bill. The Senate 
amendment had no similar provision. The Senate recedes, with 
amendments as noted.
Sec. 405. Postponement of Central Intelligence Agency compensation 
        reform and other matters
      Section 405 contains language that is similar to Section 
405 of the Senate amendment. The House bill had no similar 
provision. Section 405 includes certain statutory limitations 
and reporting requirements designed to address misgivings 
regarding the Central Intelligence Agency Compensation Reform 
program. The Conferees have concerns regarding the efforts of 
the DCI to revise and reform the compensation structure of the 
Central Intelligence Agency. The DCI's Compensation Reform 
program also has engendered anxiety among employees due to the 
perceived impact the system may have on retirement benefits and 
compensation, in general.
      Subsection (b) of Section 405 addresses the potential for 
decreases in employee retirement benefits. The provision 
permits those CIA employees designated by the DCI for 
participation in the congressionally-directed Compensation 
Reform pilot program to contribute to Thrift Savings Plan 
accounts any part of their pay which they receive from bonus 
monies under the program.
      Generally, under current law, Federal employees can only 
contribute ``basic pay'' to their Thrift Savings Plans, not 
bonus monies. As a result, the Conferees note that pilot 
program participants have not been contributing bonus monies to 
their Thrift Savings Plans. Under the CIA's Compensation Reform 
pilot program, however, participating employees will likely 
receive a higher percentage of their yearly compensation as 
performance bonuses. Treating these performance bonuses as 
``basic pay'' will permit these employees to take full 
advantage of their ability to contribute to their Thrift 
Savings Plans, consistent with existing limitations on the 
amount of contributions to certain retirement accounts. The 
Conferees acknowledge that while this provision will not 
compensate employees for the potential reduction in their 
Federal annuities due to possible decreases in basic pay under 
the Compensation Reform pilot program, it will encourage 
increased utilization of Thrift Savings Plans and, thus, 
partially offset any retirement annuity reductions.
      The Conferees are cognizant of, and generally supportive 
of, the desire of the Administration to move to a compensation 
structure across government that rewards top performers (i.e., 
``pay-for-performance''). The Conferees are encouraged by the 
fact that the CIA has sought input and guidance from the Office 
of Personnel Management and Office of Management and Budget 
with respect to any restructuring of CIA's compensation system. 
Prior to any Agency-wide implementation of Compensation Reform, 
the pilot program must first be completed, and the Conferees 
direct that the results of the pilot be provided to the 
Intelligence Committees in a written report within 45 days of 
the conclusion of the pilot program, as required by Section 
402(b)(3) of the FY 03 Act. The House and Senate Intelligence 
Committees will scrutinize closely the written report on the 
pilot program. The Committees must have an opportunity to weigh 
fully the costs and benefits associated with this particular 
Compensation Reform plan.
      To ensure that the Intelligence Committees have a full 
opportunity to conduct this important review and carefully 
consider the results of the pilot program, the Conferees have 
included a provision that delays implementation of Compensation 
Reform across the Agency until after enactment of the 
``Intelligence Authorization Act for Fiscal Year 2005.'' 
Implementation of the program before the Intelligence 
Committees have rigorously reviewed the results of the pilot, 
would frustrate the intent of Congress in establishing the 
pilot program and requiring a report on its results. The 
Conferees note that this provision restricts implementation of 
the program across the CIA until the specified date. This is 
anticipated to be a delay of a little less than a year, at the 
most.
      The Conferees note, however, that ultimate acceptance (or 
specific statutory restrictions on implementation) of this 
Compensation Reform proposal certainly remains an open 
question. The answer to this question will very much depend on 
the information provided to the Intelligence Committees during 
the interim period, as well as the willingness of the DCI and 
Senior CIA managers to constructively and cooperatively engage 
in discussions with the Intelligence Committees on this 
Compensation Reform proposal. The Conferees note with approval 
the DCI's continued expression of his willingness to consult 
and cooperate with Congress in its ongoing review of this 
proposal. The Conferees take him at his word. As noted, the 
Conferees support generally the concept that the CIA 
compensation system needs to be reformed. The question is 
whether this is the right system to be adopted.
      The Conferees also have added two additional reporting 
requirements to ensure the House and Senate Intelligence 
Committees are fully advised of the effects that Compensation 
Reform will have on employees.
      The first report will compare amounts that each employee 
participating in the pilot program would have earned under the 
pre-existing compensation structure at the CIA with amounts 
actually earned under the pilot program.
      Second, the Conferees direct the DCI to conduct a blind 
survey utilizing an independent, external human resource or 
personnel consulting organization. This survey shall be 
completed not later than March 31, 2004. The purpose for the 
survey is (1) to gauge the level of concern among all CIA 
employees (both within the pilot program and throughout the 
CIA) with the Compensation Reform program as currently proposed 
and (2) to ascertain how many employees currently under the 
pilot program, having the benefit of their participation in 
such program, would choose to ``opt out'' of the program if 
they were to be given that option. The Conferees direct that 
all of the questions to be presented in the survey shall be 
provided in full, and in writing, to the Committees before the 
survey is taken. Moreover, the Conferees direct that the 
results of the survey shall be provided in full, and in 
writing, to the Intelligence Committees within 30 days of the 
survey's completion.
      The Conferees further note that the DCI has indicated his 
intention to keep employees currently assigned to the pilot 
program within that program until such time as Compensation 
Reform is permitted to be implemented across the CIA or its 
implementation Agency-wide is otherwise restricted by Congress.
      The Conferees believe that it would be appropriate for 
the DCI to permit employees who have been compensated under the 
pilot program to ``opt out'' of the system at the end of the 
pilot program's first year, if they desire to do so. 
Additionally, the Conferees believe that it would be 
appropriate for the DCI to provide supplemental compensation or 
benefits necessary to ensure that those employees who might 
``opt out'' of the pilot program and who actually lost 
compensation, or experienced a reduction in other benefits 
because of their directed participation in the pilot program, 
are ``made whole'' by receiving an amount of compensation and 
benefits equivalent to what they would have received under 
CIA's pre-existing compensation structure.
      The Conferees have not directed by statute or otherwise 
that the DCI provide the ``opt out'' or ``make whole'' options 
to those affected employees. The Conferees do, however, believe 
these options would be a fair method of reimbursing those 
employees who may have been subjected to adverse financial 
circumstances based on their directed participation in the 
pilot program. The Conferees commit the decision to institute 
such measures solely to the DCI's discretion.

          TITLE V--DEPARTMENT OF DEFENSE INTELLIGENCE MATTERS

Sec. 501. Protection of certain National Security Agency personnel from 
        tort liability
      Section 501 is similar to Section 502 of the Senate 
amendment and to Section 504 of the House bill. The House 
recedes with amendments.
Sec. 502. Use of funds for counterdrug and counterterrorism activities 
        for Colombia
      Section 502 is similar to both Section 503 of the Senate 
amendment and to Section 501 of the House bill. The House 
recedes with amendments.
      The Conferees believe that Colombian President Alvaro 
Uribe's approach to ending Colombia's long running terrorist 
insurgency and reducing narcotics production and trafficking is 
the best chance for that country to overcome the legacy of 
violence it has endured for decades. President Uribe's 
steadfastness in pursuing these goals takes on even greater 
significance when observed in the light of the sheer brutality 
of terrorist attacks perpetrated on innocent Colombians by 
narco-terrorists. Terrorist attacks on his inauguration 
ceremonies in Bogota make manifest the fact that Uribe himself 
remains a target of terrorist violence.
      Section 502 allows funds available for intelligence and 
intelligence-related activities to be used to support a unified 
campaign against drug traffickers and terrorist organizations. 
The Administration has chosen to pursue a policy in Colombia 
that recognizes the inseparable nature of these two threats. 
The Conferees endorse this approach. This section is an 
indication of the confidence the Conferees place in President's 
Uribe's aggressive pursuit of the twin goals of ending the 
insurgency and battling drug trafficking.
Sec. 503. Scene visualization technologies
      Section 503 is identical to Section 504 of the Senate 
amendment. There was no similar provision in the House bill. 
The House recedes.
Sec. 504. Measurement and signatures intelligence research program
      Section 504 is similar to Section 505 of the House bill. 
There is no similar provision in the Senate amendment. The 
Senate recedes with amendments, including amendments to ensure 
that classified information considered during the research 
initiative is protected from unauthorized disclosure.
Sec. 505. Availability of funds of National Security Agency for 
        national security scholarships
      Section 505 has no counterpart in the Senate amendment or 
in the House bill. It is a provision adopted by the Managers 
during the conference.

                             OTHER MATTERS

Reaffirming the functional definition of covert action
      The Conferees have taken note of the text on covert 
action contained in the classified annex to S. 1025, as 
reported on May 8, 2003, by the Senate Select Committee on 
Intelligence (annex text). The Conferees intend the following 
language to substitute for the annex text:
            The Conferees attach critical importance to the 
        requirements for covert action approval and 
        notification in the National Security Act of 1947 
        (Act). In addition to the information and oversight 
        value of mandatory notification, fulfilling these 
        notification requirements fosters great confidence in 
        Executive Branch covert action programs.
            The Administration has amply and repeatedly 
        demonstrated its commitment to adhere to the approval 
        and notification requirements of the National Security 
        Act. Neither the Administration nor the Conferees have 
        sought or agreed to modify, amend, or reinterpret the 
        scope of the Act, or approval and notification 
        requirements under the Act. The Conferees expect all 
        departments and agencies of the U.S. Government to 
        continue to comply fully with the Act and its 
        legislative history.
Manned airborne reconnaissance aircraft replacement
      Recent military operations in Iraq and Afghanistan, along 
with broader requirements to support the global war on 
terrorism, and standing global reconnaissance requirements have 
placed enormous operational tempo demands on manned airborne 
reconnaissance platforms operated by the U.S. Army, Navy, and 
Air Force. The limited number of these assets and the large 
number of requirements placed on them have led to their 
designation as ``high demand/low density'' assets that have to 
be intensively managed by the Department of Defense (DOD) to 
ensure their most productive, efficient use. While many of 
these airborne reconnaissance platforms were initially 
developed for service-specific reconnaissance requirements, 
they have evolved over time into a patchwork airborne 
reconnaissance architecture that is not optimized to support 
national and combatant commanders' intelligence requirements.
      Congress established the position of Under Secretary of 
Defense for Intelligence (USD(I)) in the National Defense 
Authorization Act for Fiscal Year 2003 (P.L. 107-314). A clear 
intent of that action was to create a position and an 
organization in DOD that would better assess service and 
Defense-wide intelligence requirements and better develop, 
coordinate and integrate current and projected DOD intelligence 
capabilities in support of service, joint, and national 
intelligence collection requirements. The Conferees expect the 
USD(I) to move expeditiously to establish requirements for the 
development of a fully integrated manned and unmanned airborne 
reconnaissance architecture for the future, with adequate 
capabilities and availability to meet projected requirements, 
minimize unnecessary duplication of effort, and maximize 
operational efficiency.
      Some of these platforms, such as the Navy's EP-3E and the 
Army's RC-12 Guardrail, are nearing the end of their expected 
service lives and are in urgent need of replacement. The 
Conferees are concerned that while the need to recapitalize 
manned airborne reconnaissance platforms in a coordinated, 
integrated fashion is well known within the DOD, only the Army 
has established a formal program for replacing its legacy 
manned airborne signals intelligence reconnaissance platforms 
by the competitive development and production of the Aerial 
Common Sensor (ACS).
      The Conferees are aware that the Navy is interested in 
taking advantage of the work done by the Army on ACS, and is 
considering the adoption of an ACS-based solution for 
replacement of the EP-3E. The Conferees applaud the Navy 
efforts to establish a joint program with the Army, but are 
concerned that a thorough analysis of options has not yet been 
conducted. While the Navy did commission an initial analysis of 
options, the Conferees feel a more rigorous, thorough analysis 
is warranted for such an important program.
      The Conferees direct the Secretary of Defense to conduct 
a thorough analysis of options to replace the EP-3E mission 
capability. The analysis should be conducted as expeditiously 
as possible in order to avoid delaying an EP-3E replacement. 
The Conferees expect that the analysis should evaluate: (1) all 
reasonable alternatives, including all manned and unmanned 
replacement alternatives, such as the RC-135 Rivet Joint, 
Global Hawk unmanned aerial vehicle, and the ACS; (2) the 
consistency of the cost methodology; and, (3) a solution that 
maximizes signals intelligence capability, low life-cycle 
costs, and increases interoperability. In order to ensure the 
Navy makes a well-founded acquisition decision, the Conferees 
direct the Secretary of the Navy not to proceed with the 
acquisition of an EP-3E replacement until this analysis is 
complete and the Defense Acquisition Board approval has been 
granted. The Navy should use additional funding that may be 
available to expedite the study, analysis, and decision making 
processes.
      The Conferees are also concerned that the Air Force has 
not moved more aggressively to analyze program alternatives for 
replacing or modernizing the RC-135, which will also be 
required in future years. The Conferees believe that, when it 
is time to replace the RC-135 platform, DOD could avail itself 
of more modern platforms that use state of the art technology 
in aircraft and intelligence collection systems, emphasize 
lower operating costs, and take full advantage of robust 
communications capabilities to reduce platform size, weight, 
and operational costs.
      The Conferees direct the Secretary of Defense to conduct 
a formal Analysis of Alternatives (AOA) for replacement or 
modernization of the RC-135 mission. The AOA shall consider all 
manned and unmanned replacement alternatives, including high 
altitude, long endurance unmanned aerial vehicles, an ACS-based 
option, and more cutting edge technologies such as high 
altitude aero-bodies. The AOA should also specifically address 
the option of forming a joint program with Army, Navy, and Air 
Force participation.
      The Conferees expect these analyses will be coordinated 
with the Under Secretary of Defense for Acquisition, Technology 
and Logistics and the USD(I), and will be a consistent part of 
the comprehensive effort by the USD(I), in consultation, as 
appropriate, with the DCI, to establish requirements for the 
development of a fully integrated manned and unmanned airborne 
reconnaissance architecture that makes appropriate use of 
reach-back technology.
Development of sophisticated analytic tools
      Following the terrorist attacks of September 11, 2001, 
the Intelligence Committees have repeatedly emphasized the 
importance of developing sophisticated new analytic tools to 
ensure the rapid processing and analysis of foreign 
intelligence information, as well as increased collaboration 
among the diverse national security elements of the Federal 
government. The potential value of such tools for ``connecting 
the dots'' is clear. The Conferees recognize, however, that 
advanced analytic tools, if misused, could impact the privacy 
of U.S. persons. Efforts by the Defense Department and other 
agencies to develop these tools have come under intense 
scrutiny for this reason. To address reservations concerning 
possible encroachments on individual liberties, the Fiscal Year 
2003 and Fiscal Year 2004 Department of Defense Appropriations 
Acts (P.L. 108-7 (Division M) and P.L. 108-87, respectively) 
contained limitations on the development and use of certain 
``data-mining'' activities.
      In Section 8131 of the Department of Defense 
Appropriations Act for Fiscal Year 2004, and in its 
accompanying classified annex, the Defense Advanced Research 
Projects Agency's Terrorist Information Awareness program was 
terminated and requested funds were expressly provided to the 
National Foreign Intelligence Program (NFIP) to develop 
``[p]rocessing, analysis, and collaboration tools for 
counterterrorism foreign intelligence.'' Section 8131 
prohibited ``deployment and implementation'' of these tools 
except for
            (1) Lawful military operations of the United States 
        conducted outside the United States; or
            (2) Lawful foreign intelligence activities 
        conducted wholly overseas, or wholly against nonUnited 
        States citizens.
      The Conferees do not interpret the restriction contained 
in Section 8131 as a restriction on the development of analytic 
tools for ``processing, analysis, and collaboration tools for 
counterterrorism foreign intelligence.'' Instead, the Conferees 
recognize this language as a restriction on ``deployment and 
implementation.''
      In the Classified Annex accompanying this Act, the 
Conferees have specifically authorized the use of the funds 
appropriated to the NFIP to continue development of advanced 
processing, analysis, and collaboration tools. The Conferees 
direct that any experiments or efforts to test these tools 
should be conducted only against U.S. Government databases 
containing foreign intelligence information lawfully collected, 
analyzed, retained, or disseminated under existing statutes, 
regulations, Executive orders, or Attorney General guidelines 
governing such activities, including all applicable 
restrictions concerning the collection, analysis, retention, or 
dissemination of U.S. person information. The Conferees 
encourage active participation in these developmental efforts 
by all elements of the Intelligence Community.
      The Conferees are convinced, however, that an analysis of 
the policies and procedures necessary to safeguard individual 
liberties and privacy should occur concurrently with the 
development of these analytic tools, not as an afterthought. 
The Conferees recognize that current restrictions on the 
conduct of intelligence and law enforcement activities, as well 
as the protections afforded U.S. persons under applicable laws, 
regulations, and Executive orders, can be applied to these new 
tools. The Administration should also consider whether new 
policies and procedures are necessary to ensure privacy 
protections when these advanced information technology tools 
are utilized in intelligence and law enforcement activities. 
This examination should include diverse opinion and expertise 
and should be conducted with as much transparency as possible, 
recognizing the importance of protecting intelligence sources 
and methods.
      The Conferees direct that the Attorney General and the 
DCI jointly provide an unclassified report, with a classified 
annex, as necessary, to the Intelligence Committees regarding 
the application of the Constitution, laws, regulations, 
Executive orders, and guidelines of the United States to the 
use of these advanced analytic tools by the Intelligence 
Community. This report should specifically address existing 
protections for the collection, analysis, retention, and 
dissemination of U.S. person information. Although the 
Conferees have not authorized the development, testing, or 
deployment of these advanced analytic tools against databases 
which contain information other than foreign intelligence 
information, including private sector databases, the report 
should address the application of existing laws or policies to 
searches of such databases, whether publicly or privately held, 
as well as any proposed modifications to laws or policies that 
may be necessary in the future to ensure appropriate 
protections for U.S. persons. The report should include an 
analysis of law, regulation, and policy that takes into account 
potential technological advances that will protect privacy 
interests, such as selective revelation technologies, enhanced 
access controls and audit trails, and techniques to 
``anonymize'' U.S. person information. The Conferees believe 
that the Attorney General and DCI should seek input from 
experts in law, technology, public policy, and national 
security when drafting this report. This report should be 
provided to the Intelligence Committees no later than one year 
after enactment of this Act.
      From the Permanent Select Committee on Intelligence, for 
consideration of the House bill and the Senate amendment, and 
modifications committed to conference:
                                   Porter J. Goss,
                                   Doug Bereuter,
                                   Sherwood Boehlert,
                                   Jim Gibbons,
                                   Ray LaHood,
                                   Randy ``Duke'' Cunningham,
                                   Pete Hoekstra,
                                   Richard Burr,
                                   Terry Everett,
                                   Elton Gallegly,
                                   Mac Collins,
                                   Jane Harman,
                                   Alcee L. Hastings,
                                   Silvestre Reyes,
                                   Leonard L. Boswell,
                                   Collin C. Peterson,
                                   Bud Cramer,
                                   Anna G. Eshoo,
                                   Rush Holt,
                                   C.A. Dutch Ruppersberger,
                From the Committee on Armed Services, for 
                consideration of defense tactical intelligence 
                and related activities:
                                   Duncan Hunter,
                                   Curt Weldon,
                                 Managers on the Part of the House.

                From the Select Committee on Intelligence:
                                   Pat Roberts,
                                   Orrin Hatch,
                                   Mike DeWine,
                                   Christopher S. Bond,
                                   Trent Lott,
                                   Olympia Snowe,
                                   Chuck Hagel,
                                   Saxby Chambliss,
                                   John Warner,
                                   Jay Rockefeller,
                                   Carl Levin,
                                   Dianne Feinstein,
                                   Ron Wyden,
                                   Dick Durbin,
                                   Evan Bayh,
                                   John Edwards,
                                   Barbara A. Mikulski,
                From the Committee on Armed Services:
                                   Wayne Allard,
                                   Bill Nelson,
                                Managers on the Part of the Senate.

                                
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