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                                                       Calendar No. 108
106th Congress                                                   Report
                                 SENATE
 1st Session                                                     106-48
======================================================================
 
 AUTHORIZING APPROPRIATIONS FOR FISCAL YEAR 2000 FOR THE INTELLIGENCE 
ACTIVITIES OF THE UNITED STATES GOVERNMENT AND THE CENTRAL INTELLIGENCE 
     AGENCY RETIREMENT AND DISABILITY SYSTEM AND FOR OTHER PURPOSES

                                _______
                                

                  May 11, 1999.--Ordered to be printed

                                _______
                                

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

                              R E P O R T

                         [To accompany S. 1009]

    The Select Committee on Intelligence, having considered the 
original bill (S. 1009), which authorizes appropriations for 
fiscal year 2000 for intelligence-related activities and 
programs, the Community Management Account, the Central 
Intelligence Agency Retirement and Disability System, and 
accomplishes other purposes, reports favorably thereon and 
recommends that the bill do pass.

                          PURPOSE OF THE BILL

    This bill will:
          (1) Authorize appropriations for fiscal year 2000 for 
        (a) U.S. intelligence activities and programs; (b) the 
        Central Intelligence Agency Retirement and Disability 
        System; and (c) the Community Management Account of the 
        Director of Central Intelligence;
          (2) Authorize the personnel ceilings as of September 
        30, 2000, for intelligence activities of the U.S. 
        Government and for the Community Management Account of 
        the Director of Central Intelligence;
          (3) Authorize the Director of Central Intelligence, 
        with Office of Management and Budget approval, to 
        exceed the personnel ceilings by up to two percent;
          (4) Extend for one additional year the President's 
        authority to delay the imposition of proliferation-
        related sanctions when

        necessary to protect an intelligence source or method 
        or an on-going criminal investigation;
          (5) Provide for appropriate U.S. Government access to 
        computers and computer data of Executive branch 
        employees with access to classified information;
          (6) Allow the naturalization of certain applicants 
        for citizenship who have made important contributions 
        to United States intelligence;
          (7) Expand the CIA's Central Services Program and 
        clarify the authorities for the Central Services 
        Working Capital Fund;
          (8) Extend the Director of Central Intelligence's 
        authority under the Central Intelligence Agency 
        Voluntary Separation Act of 1993 to offer separation 
        pay to employees;
          (9) Impose a moratorium on, and require a net 
        assessment of, the Department of Energy's Foreign 
        Visitor Program;
          (10) Expand the definition of ``agent of a foreign 
        power'' for foreign counterintelligence investigations 
        to include a person who assumes a false or fraudulent 
        identity for or on behalf of a foreign power; and
          (11) Require the FBI to consult with Executive 
        departments and agencies concerning espionage cases at 
        an early stage of the investigation.

             CLASSIFIED SUPPLEMENT TO THE COMMITTEE REPORT

    The classified nature of U.S. intelligence activities 
prevents the Committee from disclosing the details of its 
budgetary recommendations in this Report.
    The Committee has prepared a classified supplement to this 
Report, which contains (a) the classified annex to this Report 
and (b) the classified schedule of authorizations, which is 
incorporated by reference in the Act and has the same legal 
status as public law. The classified annex to this Report 
explains the full scope and intent of the Committee's action as 
set forth in the classified schedule of authorizations. The 
classified annex has the same status as any Senate Report.
    The classified supplement to the Committee Report is 
available for review by any Member of the Senate, subject to 
the provisions of Senate Resolution 400 of the 94th Congress.
    The classified supplement is made available to the 
Committees on Appropriations of the Senate and the House of 
Representatives and to the President. The President shall 
provide for appropriate distribution within the Executive 
branch.

                       SCOPE OF COMMITTEE REVIEW

    The Committee conducted a detailed review of the fiscal 
year 2000 budget requests for the National Foreign Intelligence 
Program (NFIP) of the Director of Central Intelligence; the 
Joint Military Intelligence Program (JMIP) of the Deputy 
Secretary of Defense; and the Tactical Intelligence and Related 
Activities (TIARA) of the military services. The Committee's 
review entailed briefings by and hearings with senior 
intelligence officials, staff briefings, review of budget 
justification materials, and responses provided by the 
Intelligence Community to specific questions posed by the 
Committee. The Committee monitors compliance with statutory 
reporting requirements. The Committee scrutinizes each such report 
and takes appropriate action.
    In accordance with a Memorandum of Agreement with the 
Senate Armed Services Committee (SASC), the Committee is 
including its recommendations on both JMIP and TIARA in its 
public report and classified annex. The Committee has agreed 
that JMIP and TIARA issues will continue to be authorized in 
the defense authorization bill. The SASC has also agreed to 
involve the Committee staff in defense authorization conference 
meetings and to provide the Chairman and Vice Chairman the 
opportunity to consult with the SASC Chairman and Ranking 
Member before JMIP or TIARA issue is finally closed out in 
conference in a manner with which they disagree. The Committee 
looks forward to continuing its productive relationship with 
the SASC on all issues of mutual concern.
    In addition to its annual review of the Administrations's 
budget request, the Committee performs continuing oversight of 
various intelligence activities and programs. The Committee has 
a dedicated Audit Staff that conducts in depth audits and 
reviews of specific programs and activities identified by the 
Committee as needing a thorough and concentrated scrutiny. The 
Audit Staff also provides significant support to the 
Committee's review of a number of administrative and 
operational issues relating to the agencies of the Intelligence 
Community. Most recently, the Audit Staff reviewed CIA's 
contracting procedures and participated in the Committee's 
China investigation by conducting a review of the Intelligence 
Community's collection and analysis capabilities against the 
People's Republic of China. The staff is currently conducting a 
review of the authorities and administrative operations of the 
National Imagery and Mapping Agency. These inquiries frequently 
lead to Committee action with respect to the authorities, 
applicable laws, and budget of the activity or program 
concerned.
    The Committee also established a Technical Advisory Group 
(TAG) in 1997. The TAG is an independent panel of twenty-five 
experts drawn from the private sector. Each member of the TAG 
was selected by the Committee for their extensive expertise in 
a particular discipline. The purpose of the TAG is to provide 
the Committee an objective and comprehensive evaluation of 
various intelligence programs and activities. Many of the TAG 
members have never worked within the Intelligence Community and 
therefore bring a fresh and independent perspective to 
intelligence programs and activities. The results of these 
examinations and the TAG will be discussed later in its report.

                       COMMITTEE RECOMMENDATIONS

    The vast majority of the Committee's specific 
recommendations relating to the Administration's budget request 
for intelligence and intelligence-related activities are 
classified and are contained in the classified schedule of 
authorizations and the classified annex. The Committee is 
committed, however, to making its concerns and priorities for 
intelligence programs and activities public to the greatest 
extent possible consistent with the nation's security. 
Therefore, the Committee has included in this report 
information that is unclassified.

                 NATIONAL FOREIGN INTELLIGENCE PROGRAM

Customer satisfaction with intelligence collection and analysis and 
        production

    The Committee is encouraged by the progress of the Deputy 
Director of Central Intelligence for Community Management 
(DDCI/CM) and the Assistant Directors of Central Intelligence 
(ADCIs) for Collection and Analysis and Production in defining 
the Community's Strategic Direction and looks forward to 
further refinements in those strategies. Nevertheless, the 
Committee is recommending that several additional actions be 
taken to further enhance these ongoing efforts.
    The Committee recommends that the DCI direct the ADCIs for 
Collection and Analysis and Production, working with the 
Intelligence Community's collection and analysis and production 
managers, to conduct a comprehensive annual review or customer 
satisfaction. Each review should: (a) evaluate the performance 
of the Community's collection and analysis and production 
programs in responding to consumer requirements; (b) address 
the Community's ability to fill key gaps in collection and 
analysis; (c) describe significant successes and failures of 
the collection and production communities in responding to 
consumer requirements; (d) review the allocation of resources 
across the collection and production communities to evaluate 
whether consumer requirements are being met; and, (e) make 
recommendations for improvement. The DCI should provide the 
ADCIs with the means necessary to conduct these assessments, 
and provide written reports of these reviews to the 
Congressional intelligence committees. Further, the DCI should 
direct all participating agencies to provide information as 
required by the ADCIs for this purpose.
    The DCI should provide the first of these written reports 
to the Congress no later than September 30, 2000.

Future imagery architecture

    The Intelligence Community is proceeding with the Future 
Imagery Architecture (FIA) to modernize imagery collection to 
meet the challenges of the next century. The National Imagery 
and Mapping Agency (NIMA) has developed a comprehensive set of 
requirements and challenges the National Reconnaissance 
Office's system will have to meet. The FIA focuses on 
collection and pays relatively less attention to the tasking, 
processing, exploitation, and dissemination functions necessary 
to a coherent and comprehensive end-to-end architecture. The 
Intelligence Community has not developed the FIA's latter 
features or analyzed the cost.
    The classified annex of the Intelligence Authorization Act 
for Fiscal Year 1999 imposed a cap on FIA. Congress believed 
that the measure would ensure that other aspects of the imagery 
collection cycle as well as other activities within the 
National Foreign Intelligence Program could be funded at 
fiscally responsible levels and that the Director of Central 
Intelligence had program flexibility to meet future 
intelligence challenges. The FIA contract is currently being 
negotiated. It is imperative that the cap remain in place until 
the contractors can define what requirements can be met within 
the cap and whether the Intelligence Community may need 
additional resources. Accordingly, the Committee, sustains the 
cap on the Future Imagery Architecture as it is in the 
Classified Annex.
    Furthermore, the Committee strongly urges the National 
Imagery and Mapping Agency to identify those imagery 
requirements that can be met by commercial provides so that 
funds can be targeted for the purchase of commercial imagery.

                  JOINT MILITARY INTELLIGENCE PROGRAM

National Imagery and Mapping Agency

    The Committee believes the National Imagery and Mapping 
Agency (NIMA) has made much progress since 1996 when NIMA was 
authorized in the National Defense Authorization Act For Fiscal 
Year 1997. The Director of NIMA and his staff deserve credit 
for their dedicated efforts. While great strides have been made 
toward the goal of seamless provision of imagery, imagery 
intelligence and geospatial information to policy makers and 
war fighters, much remains to be accomplished.
    One of NIMA's objectives has been greater use of the 
commercial sector for production of geospatial information. The 
Committee supports NIMA's efforts but believes the transition 
to greater reliance on the private sector can be accelerated. 
To help achieve this goal, the Committee recommends a reduction 
in Geospatial Production of $75 million and an increase in 
acquisition of commercially-provided geospatial data of $25 
million.
    In 1998, NIMA moved into new facilities in St. Louis, 
Missouri. The rationale for this move was cost savings. The 
previous facility was much older and more expensive. Budget 
projections, however, do not account for the savings the 
Committee believes can be attained. Therefore, the Committee 
recommends a reduction in Mission Support of $25 million.

Joint SIGINT avionics family

    Last year, in an effort to expedite delivery of this 
capability, the Committee reviewed an accelerated production 
effort. Based on briefings from the Air Force and the 
contractors, the Committee found that the delivery schedule 
could be accelerated up to three years in the case of the U-2, 
and two years for other platforms, simply by requiring that 
platforms be equipped with JSAF components at their next 
periodic depot maintenance (PDM) cycle following a JSAF 
production decision. No additional program risks are involved 
in this acceleration.
    Under the plan submitted to Congress last year, both low 
and high band subsystems were scheduled to begin delivery to 
the Armed Services in fiscal year 2001 and conclude delivery in 
fiscal year 2007. During that period, some aircraft would 
complete a PDM cycle and not have the new components installed 
even though the components would have been readily available. 
Maintaining the older systems when they could be replaced would 
increase support costs. In an effort to deliver capability 
sooner and save $44 million in program costs, the Committee 
recommended an accelerated delivery schedule consistent with 
platform PDM schedules.
    Unfortunately, since the Committee made those 
recommendations last year, there have been cost overruns and 
schedule slippages based on poor performance by the contractors and by some 
unforeseen technical difficulties. Under the current 
development schedule, barring any further problems with the 
contractors' performance, the earliest that a procurement 
decision can be made in May 2001.
    Recent contractor performance, however, leads the Committee 
to believe that this schedule is now optimistic. Barring 
further delays in system development, a May 2001 decision to go 
forward with production potentially pushes delivery of the 
first production units into fiscal year 2003 and perhaps 
beyond.
    As a result of the JSAF program cost growth, the 
Administration's budget request is underfunded by a minimum of 
$12 million in fiscal year 2000. The Committee recommends an 
authorization for appropriations of an additional $12 million 
in Air Force RDT&E; for JSAF Advanced Sensors.

Global Hawk unmanned aerial vehicle

    The Global Hawk is an unmanned aerial vehicle (UAV) and is 
the air vehicle component of the High Altitude Endurance 
Unmanned Aerial Vehicle (HAE UAV) System. The HAE UAV System is 
comprised of two components, the Global Hawk air vehicle and 
the ground control station, or Common Ground Segment (CGS).
    The program began as an Advanced Concept Technology 
Demonstration (ACTD), and, in 1998, the program was transferred 
to the Air Force from the Defense Advanced Research Projects 
Agency (DARPA). The Military Utility Assessment (MUA) of Global 
Hawk was to begin in April 1999. Unfortunately, the MU test 
vehicle, known as Air Vehicle Number Two, crashed in early 
April 1999. Resultant program delays, combined with unforseen 
manufacturing difficulties experienced by the contractor, have 
caused substantial cost growth in the program. The following 
charts compare the program as contained in the Administration's 
budget submission with current program projections.

                                            [In millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                             Fiscal year--
                                                     -----------------------------------------------------------
                                                        2000      2001      2002      2003      2004      2005
----------------------------------------------------------------------------------------------------------------
President's Budget..................................        48        65        58        96        98       100
Estimated Shortfall.................................        31        58        67        54       110       156
Estimated Requirement...............................        79       123       125       150       208       256
Air Vehicles........................................         0         1         1         1         2         2
Common Ground Segment...............................  ........  ........         1  ........         1  ........
----------------------------------------------------------------------------------------------------------------

    The Committee strongly supports giving unmanned aerial 
vehicles a greater role in performing many intelligence, 
surveillance and reconnaissance missions, as well as, early 
warning missions, airborne communications relay missions and, 
potentially, boost phase intercept missions in support of 
Ballistic Missile Defense. The Committee believes that the 
original Global Hawk design for the Advanced Concept Technology 
Demonstration (ACTD) was too limited.
    The goal of the ACTD was delivery of an air vehicle with 
sensor payload for $10 million, while at the same time 
delivering an air vehicle capable of 40-hour flight duration. 
This was a worthy goal for fiscal reasons, but was potentially 
shortsighted for reasons of military utility. The program cost 
constraints limited the size of the air vehicle, which in turn 
limited the size of the payload.
    For example, weight and payload capabilities of the current 
Global Hawk design rule out the potential for configuration of 
one air vehicle for collection of both Signals Intelligence 
(SIGINT) and Synthetic Aperture Radar (SAR) data during the 
same mission, as well as ruling out growth to other missions 
such as those currently performed by the Joint Surveillance 
Target Acquisition Radar System (Joint STARS), the Airborne 
Warning and Control System (AWACS), or the RC-135 Rivet Joint, 
Combat Sent and Cobra Ball missions.
    In an effort to prevent further delays and additional cost 
overruns, the Committee recommend an authorization for 
appropriations of an additional $31 million for the Global Hawk 
program.

U-2 polarimetric kit

    The Senior Year Electro-optical Reconnaissance System 
(SYERS) began service with the U-2 in 1988. Since that time, 
the Air Force and Congress have supported several upgrades to 
SYERS. In an effort to counter the growing threat of camouflage 
and denial and deception practices, the Committee recommends an 
authorization for appropriations of $9 million to acquire, 
field, and test a polarimetric upgrade kit on a SYERS system.

Outrider tactical unmanned aerial vehicle

    In 1999, the Army restructured its tactical UAV acquisition 
program. As a result, the $45.8 million requested in 
procurement funds for fiscal year 2000 cannot be obligated. The 
funds, however, are required in RDT&E; for continuation of 
source selection efforts. The Committee recommends that $45.8 
million requested for procurement be authorized for 
appropriations in RDT&E.;

Dark Star unmanned aerial vehicle termination

    The Department of Defense has terminated the Dark Star UAV 
program. The $6 million requested for fiscal year 2000 is no 
longer needed. The Committee recommends a reduction in the 
authorization for appropriations for Dark Star of $6 million.

RC-135 Rivet Joint quick reaction capabilities

    As a result of delays in the JSAF program and changes in 
the threat, Quick Reaction Capabilities modifications to the 
RC-135 Rivet Joint fleet are underfunded by $12 million in 
fiscal year 2000. The Committee recommends an authorization for 
appropriations of an additional $12 million to address Quick 
Reaction Capability shortfalls in Fiscal Year 2000.

Rivet Joint theater airborne warning system

    The Committee has supported development and fielding of a 
theatre airborne warning system (TAWS) for the RC-135 Rivet 
Joint fleet to detect and track the launch of tactical 
ballistic missiles. The Committee recommends an authorization 
for appropriations of $17 million to continue this effort.

Gulf States initiative

    The Committee is concerned by the growing threat posed to 
the United States both domestically and internationally by 
transnational threats. Transnational threats include, but are 
not limited to, the following: terrorism, narcotics 
trafficking, organized crime and the proliferation of chemical, 
biological and nuclear weapons or agents. The Committee 
believes that a concerted effort on the part of federal, state 
and local entities is required to address transnational 
threats.
    The model U.S. response to transnational threats can be 
found in the Gulf States Initiative (GSI), which is a part of 
the Defense Intelligence Special Technologies Program (DISTP) 
within the Joint Military Intelligence Program (JMIP). The GSI 
was established by congressional direction in fiscal year 1992. 
Formerly known as the Gulf States Counterdrug Initiative, GSI 
formalized Defense Department support to Alabama, Mississippi, 
and Louisiana in the effort to combat narcotics trafficking. 
Georgia was added to GSI in fiscal year 1997.
    One of the critical features of GSI has been the 
establishment of state-run command, control, communications, 
and computer (C4) capabilities that have facilitated the flow 
of information from federal entities to state and local law 
enforcement agencies (LEA). Based upon the success of GSI, 
Congress directed that the activities of GSI be broadened to 
include counter-terrorism. The Committee believes that GSI can 
be expanded beyond its traditional focus on combating narcotics 
trafficking and its more recent involvement in counter-
terrorism to form the ``backbone'' of a national capability to 
combat the spectrum of transnational threats. Therefore, the 
Committee recommends an authorization for appropriations of an 
additional $15 million in fiscal year 2000 to expand the Gulf 
States Initiative.

               DEPARTMENT OF ENERGY INTELLIGENCE PROGRAMS

    Over the past nine years, the Committee repeatedly has 
highlighted its deep concern about the adequacy of the 
Department of Energy's (DOE) Counterintelligence Program and 
the national security impact of the DOE's wide-ranging 
programs, including its Foreign Visitors Program. During that 
time, the Committee has directed that a number of assessments 
of the DOE's counterintelligence practices be conducted. Each 
has reinforced the Committee's view that the DOE's 
counterintelligence program in riddled with systemic 
weaknesses.
    Beginning in 1990, the Committee has matched its concerns 
with recommended increases in the size and effectiveness of 
DOE's counterintelligence program. Specifically, the Committee 
increased resources in this area in 1991, 1992, 1995, 1997, 
1998, and 1999. This year, the Committee, in its markup of the 
Administration's Fiscal Year 2000 budget request, has 
recommended that spending for cyber counterintelligence be 
increased by $30.0 million. These additional resources would 
allow the DOE to install computer intrusion detection devices 
and monitor e-mail at virtually all of its facilities. The 
absence of this capability today is a counterintelligence 
weakness.
    The Committee is encouraged by the steps now being taken by 
the DOE to address its counterintelligence programs. 
Nevertheless, the Committee's longstanding fears have been 
confirmed in recent months.
    While the Foreign Visitors Program incurs risks, it 
produces real benefits. To the Committee's knowledge, however, 
there has been no assessment that would provide policymakers 
with the facts necessary to judge the overall efficacy of the 
Visitor's Program.
    Section 504 of the Bill therefore requires a net assessment 
of the Foreign Visitors Program. The Committee intends that the 
Director of Central Intelligence and the Director of the 
Federal Bureau of Investigation appoint an independent panel of 
experts, similar to that which was appointed to assess the 
Intelligence Community's performance on the 1998 Indian Nuclear 
Tests, to perform a net assessment analysis of the DOE's 
Foreign Visitors Program. In carrying out its assessment, the 
panel should work in cooperation with the President's Foreign 
Intelligence Advisory Board (PFIAB). To the extent feasible, 
such report shall be unclassified and made available to the 
public. Such report shall be supplemented as necessary by a 
classified report or annex, which shall be provided separately 
to the President and the congressional intelligence committees.
    In the interim, the Committee believes that we must ensure 
the integrity of the U.S. National Laboratories and believes 
that a moratorium on the Foreign Visitors Program must be 
imposed at certain facilities until the Department fully 
implements a comprehensive, fully effective, and sustained 
counterintelligence program. Accordingly, Title V of the 
Authorization Act for Fiscal Year 2000 also establishes a 
moratorium on the Department of Energy's Foreign Visitors 
Program and requires background checks on all foreign visitors 
to national laboratories. The moratorium applies only to 
individuals from countries on the DOE's sensitive country list. 
The term ``background checks'' is intended to mean the 
consultation of all available, appropriate, and relevant 
intelligence community and law enforcement indices and data 
bases.

                          COUNTERINTELLIGENCE

    The Committee understands that polygraphing is employed as 
a tool by the CIA, FBI, and DOE for counterintelligence 
purposes, Polygraphing has been described as a ``useful, if 
unreliable'' investigative tool. Given the potential 
unreliability of the polygraph system, the Committee believes 
that alternatives to the polygraph should be explored. The 
Committee understands that alternatives to polygraphing exist 
and have been explored by several agencies, including the CIA 
and the FBI.
    Therefore, the Director of Central Intelligence and the 
Director of the Federal Bureau of Investigation jointly shall 
conduct an assessment of alternative technologies to the 
polygraph for use in counterintelligence programs. The DCI and 
Director of the FBI shall report their findings to the 
Committee not later than 90 days after the enactment of this 
Bill. The report should include the three most viable 
alternative technologies, along with detailed cost projections 
for 25, 50, and 100 examinations per year. The report also 
should include a brief description of the contribution each 
technology might make over and above continued employment of 
polygraph procedures.

                     TECHNICAL ADVISORY GROUP (TAG)

    In 1997, the Committee empaneled a Technical Advisory Group 
(TAG) composed of scientists, former senior military officers, 
and industry leaders to review various complex systems 
engineering efforts within the Intelligence Community (IC); the 
task organization of components of the IC to accomplish their 
missions, and myriad other highly technical issues designated 
by the Committee for review. During the first session of the 
106th Congress, the TAG was asked to review U.S. capabilities 
with regard to measurements and signatures intelligence 
(MASINT) and the future of U.S. imagery intelligence (IMINT).
    The collection of MASINT depends upon a wide range of 
technologies and phenomena. It includes detection of nuclear, 
chemical, and biological effluvia, images within the 
electromagnetic radiation spectrum, not visible to the human 
eye, and processing and exploitation of radar phase history 
data collected by synthetic aperture radar (SAR). The MASINT 
TAG was asked to study both the IC organizational structure for 
MASINT issues as well as the technologies themselves. The IMINT 
TAG reviewed the Future Imagery Architecture, the requirements 
underpinning the architecture, and our tasking, processing, 
exploitation, and dissemination (TPED) capabilities.
    Both groups reported their findings and recommendations to 
the Committee on April 21, 1999. Most of their findings and 
recommendations are classified and are addressed in the 
Classified Annex accompanying this Report.

                               ENCRYPTION

    The Committee believes that export restrictions on 
encryption are necessary to protect our national security. 
Export restrictions on encryption and other telecommunications 
products are essential to the IC's signals intelligence 
mission. Signals intelligence assists the national and military 
policymaking customer by providing information on foreign 
governments, militaries, and nonstate actors. SIGINT also is 
instrumental in protecting our citizens and military from 
military actions, terrorist attacks, the proliferation of 
weapons of mass destruction, narcotics trafficking, and other 
threats to our national security.
    Over the past four years, the Administration has 
significantly loosened restrictions on the export of 
encryption. Nevertheless, legislation has been introduced in 
Congress that would further relax restrictions on encryption 
exports. The Committee believes further precipitous and 
inappropriate loosening of encryption export restrictions may 
severely damage the Intelligence Community's ability to perform 
its SIGINT mission. Therefore, the Committee intends to look 
very closely at any legislation regarding encryption export 
policy.

                   ADMINISTRATIVE INSPECTORS GENERAL

    The Committee has been concerned for a number of years 
about the capabilities and independence of the administrative 
Inspectors General within the Intelligence Community (IC). The 
administrative Inspectors General within the IC include those 
at the National Reconnaissance Office (NRO), the National 
Security Agency (NSA) the National Imagery and Mapping Agency 
(NIMA), and the Defense Intelligence Agency (DIA). The 
classified annex accompanying the Conference Report on the 
Intelligence Authorization Act for Fiscal Year 1998 requested 
that the quality control review being conducted by the 
statutory Inspectors General from the CIA and the Department of 
Defense (DoD) include recommendations for improving the 
authority and effectiveness of the NRO Office of Inspector 
General (IG).
    The results of the CIA/DoD quality control review of the 
NRO IG were delivered to the Committee in January 1999. The 
report makes several recommendations relating to the NRO IG 
that this Committee believes should apply to all administrative 
IGs within the Intelligence Community. These recommendations 
include: a separate budget line item and personnel 
authorization for the IG; sole authority, within applicable 
laws and regulations, for the IG to manage its authorized staff 
and appropriate funds; and, the ability to obtain legal 
services from the appropriate agency General Counsel, the DoD 
or CIA Offices of Inspectors General, or to employ his or her 
own counsel.
    The Committee understands that the NRO is attempting to 
implement the above recommendations. However, the NRO's lack of 
its own personnel system results in a situation where a 1995 
Memorandum of Understanding (MOU) between the CIA and NRO 
stipulates that NRO IG employees must be hired on staff reserve 
appointments that equate to temporary five year contracts. 
Also, the MOU does not clearly state the extent of the IG's 
authority to promote his or her staff. These limitations have 
inhibited the NRO IG's ability to recruit and retain qualified 
personnel and threaten the Office's independence and 
effectiveness. Therefore, the Committee recommends that the DCI 
ensure that the NRO Director and CIA Executive Director work 
together to revise the 1995 MOU to allow the NRO IG to 
establish, manage, and administer his or her own career 
service.
    The Committee also recommends that the Directors of NSA, 
NIMA, and DIA take the appropriate steps to create a separate 
budget line item and personnel authorization for their 
respective administrative IG offices, and ensure that their IGs 
have all the authorities required to independently manage these 
resources. These authorities should include the ability to hire 
and retain appropriately skilled personnel, and the option to 
retain independent legal counsel. The Committee requests that 
the Directors of the NRO, NSA, NIMA, and DIA provide a written 
response on the status of these initiatives by no later than 
July 31, 1999.
    The Committee is also concerned about its insight into the 
administrative and operational activities of the administrative 
IGs. In order to improve its oversight of these offices, the 
Committee directs that the Inspectors General from the NRO, 
NIMA, NSA, and
DIA shall provide the intelligence committees of both Houses 
with an annual report, in conjunction with, but separate from 
the Congressional Budget Justification, that details the fiscal 
and personnel resources requested, and the plan for their use. 
This report also should include the programs and activities 
scheduled for review during the fiscal year, comments on the 
office's ability to hire and retain qualified personnel, and 
any other concerns relating to the independence and 
effectiveness of the IG's office.

              SECTION-BY-SECTION ANALYSIS AND EXPLANATION

                    TITLE I--INTELLIGENCE ACTIVITIES

Sec. 101. Authorization of appropriations

    Section 101 lists departments, agencies, and other elements 
of the U.S. Government for whose intelligence and intelligence-
related activities the Act authorized appropriations for fiscal 
year 2000.

Sec. 102. Classified schedule of authorizations

    Section 102 makes clear that the details of the amounts 
authorized to be appropriated for intelligence and 
intelligence-related activities and personnel ceilings for the 
entities listed in section 101 for fiscal year 2000 are 
contained in a classified Schedule of Authorizations. The 
classified Schedule of Authorizations is incorporated into the 
Act by this section.

Sec. 103. Personnel ceiling adjustments

    Section 103 authorizes the Director of Central 
Intelligence, with the approval of the Director of the Office 
of Management and Budget, in fiscal year 2000 to exceed the 
personnel ceilings applicable to the components of the 
Intelligence Community under section 102 by an amount not to 
exceed 2 percent of the total of the ceilings applicable under 
section 102. The Director may exercise this authority only when 
necessary to the performance of important intelligence 
functions or to the maintenance of a stable personnel force, 
and any exercise of this authority must be reported to the two 
congressional intelligence committees.

Sec. 104. Community Management Account

    Section 104 provides details concerning the amount and 
composition of the Community Management Account (CMA) of the 
Director of Central Intelligence.
    Subsection (a) authorizes appropriations in the amount of 
$171,672,000 for fiscal year 2000 for the staffing and 
administration of various components under the CMA.
    Subsection (b) authorizes a total of 348 full-time 
personnel for elements within the CMA for fiscal year 2000 and 
provides that such personnel may be permanent employees of the 
CMA element or detailed from other elements of the U.S. 
Government.
    Subsection (c) explicitly authorizes the classified portion 
of the CMA.
    Subsection (d) requires that personnel be detailed to the 
Community Management staff on a reimbursable basis, with 
certain exceptions.
    Subsection (e) authorizes $27,000,000 of the amount 
authorized for the CMA under subsection (a) to be made 
available for the National Drug Intelligence Center (NDIC) in 
Johnstown, Pennsylvania. Subsection (e) requires the Director 
of Central Intelligence to transfer the $27,000,000 to the 
Department of Justice to be used for NDIC activities under the 
authority of the Attorney General and subject to section 
103(d)(1) of the National Security Act.

 TITLE II--CENTRAL INTELLIGENCE AGENCY RETIREMENT AND DISABILITY SYSTEM

Sec. 201. Authorization of appropriations

    Section 201 authorizes appropriations in the amount of 
$209,100,000 for fiscal year 2000 for the Central Intelligence 
Agency Retirement and Disability Fund.

                     TITLE III--GENERAL PROVISIONS

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

    Section 301 provides that appropriations authorized by the 
conference reports 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

    Section 302 provides that the authorization of 
appropriations by the conference report shall not be deemed to 
constitute authority for the conduct of any intelligence 
activity which is not otherwise authorized by the Constitution 
or laws of the United States.

Sec. 303. Extension of application of sanctions laws to intelligence 
        activities

    Section 303 extends until January 6, 2001, the authority 
first granted by section 303 of the Intelligence Authorization 
Act for Fiscal Year 1996 for the President to delay the 
imposition of an economic, cultural, diplomatic, or other 
sanction upon his determination that proceeding with the 
sanction could compromise an ongoing criminal investigation or 
an intelligence source or method. This authority was extended 
until January 6, 1998, by section 304 of the Intelligence 
Authorization Act for Fiscal Year 1997, until January 6, 1999, 
by section 304 of the Intelligence Authorization Act for Fiscal 
Year 1998; and again until January 6, 2000 by section 303 of 
the Intelligence Authorization Act for Fiscal Year 1999. There 
is continuing need for this authority in the event that an 
automatic or immediate imposition of sanctions would seriously 
jeopardize a criminal investigation or sources and methods of 
intelligence collection.

Sec. 304. Access to computers and computer data of executive branch 
        employees with access to classified information

    Section 304 authorizes investigative components like the 
FBI (and internal Intelligence Community investigative or 
security units) access to computers of individuals handling 
classified data.
The provision requires the government to obtain consent, which, 
in turn, would place the computer information within the 
already existing ``consent'' exceptions to the Fourth Amendment 
and the Electronic Communications Privacy Act. The definition 
of ``computer'' is drawn from the Computer Fraud and Abuse Act 
(18 U.S.C. 1030), with some minor modifications.

Sec. 305. Naturalization of certain persons affiliated with a Communist 
        or similar party

    Section 305 applies to certain applicants for 
naturalization (1) who are within the class described in 
section 313(a)(2) of the Immigration and Nationality Act (INA) 
because of past membership in or affiliation with the Communist 
Party or any other totalitarian organization, and (2) who meet 
all other statutory requirements for naturalization except for 
the requirement that they be free for at least ten years from 
such membership or affiliation. This provision authorizes the 
naturalization of these individuals otherwise eligible for 
naturalization, if the Director of Central Intelligence, the 
Attorney General, and the Commissioner of Immigration and 
Naturalization determine the applicants have made a 
contribution to the national security or the intelligence 
mission of the United States. These determinations will be made 
prior to the filing of the applicant's naturalization petition. 
When making a determination in these cases, the Director of 
Central Intelligence will be acting in his capacity as head of 
the U.S. Intelligence Community but will, in advance, reach 
consensus on the merits of each case with the heads of all 
other Departments and agencies of the U.S. Intelligence 
Community.
    Unlike section 316(f) of the INA, this new section 313(e) 
does not provide for expedited naturalization. Although 
individuals covered by this new provision must have made a 
contribution to the national intelligence mission, generally 
few will have made a contribution of such an extraordinary 
nature as to merit U.S. citizenship after only one year of 
lawful permanent residence and without regard to any prior 
Communist Party membership, as is already provided under 
section 316(f) of the INA. Nevertheless, after having taken 
great risks in furtherance of the U.S. intelligence mission, 
these individuals should not be penalized from obtaining U.S. 
citizenship at the otherwise allowable time because of their 
former Communist Party membership or affiliation.

Sec. 306. Infrastructure and quality of life improvements at Bad 
        Aibling and Menwith Hill Stations

    Section 306 extends through the end of FY 2001 the 
authority granted the Army in the Intelligence Authorization 
Act for Fiscal Year 1998 for infrastructure and quality of life 
improvements at Bad Aibling and Menwith Hill Stations. With 
respect to Bad Aibling Station, this authority is requested as 
an interim measure for contingency maintenance pending any 
final decision on the status of the Station.
    The Army became the Executive Agent for Bad Aibling Station 
in FY 1995 and Menwith Hill Station in FY 1996. Without 
congressional action, the Army is prohibited by 31 U.S.C. 
Sec. 1301 from using appropriated funds to support these field 
sites, notwith-

standing that the Army is the Executive Agent for them. The 
Intelligence Authorization Act for FY 1998 provided the 
necessary flexibility to allow the Army to transfer or 
reprogram up to $2 million in FY 1998 O&M; and $2 million in FY 
1999 O&M; funds for necessary maintenance at these stations. 
However, sufficient funding has not been available to allow the 
Army to meet all of the stations' needs, given financial 
constraints and increasing operational tempo. Consequently, in 
order to continue addressing infrastructure and quality of life 
needs at Menwith Hill Station and to be able to meet 
contingencies on an interim basis at Bad Aibling Station, the 
Army's flexible transfer and reprogramming authority is 
extended through the end of FY 2001.

Sec. 307. Technical amendment

    Section 307 makes a technical correction to Section 
305(b)(2) of the Intelligence Authorization Act for Fiscal Year 
1997. Section 305 of that Act authorizes the expedited 
naturalization of spouses and children of a deceased alien 
whose death resulted from an intentional and unauthorized 
disclosure of classified information. Section 305(b)(2) 
references ``subparagraph (A), (B), (C), or (D) of section 
243(h)(2)'' of the Immigration and Nationality Act, which 
describes the categories of aliens who are ineligible for 
expedited naturalization or asylum (i.e., those who have 
participated in the persecution of any person; have been 
convicted of a particularly serious crime, thus constituting a 
danger to the U.S. community; have committed a serious 
nonpolitical crime outside the United States; or are regarded 
as a danger to the security of the United States).
    The Immigration and Nationality Act was amended extensively 
(by the Illegal Immigration Reform and Immigrant Responsibility 
Act of 1996, which was Division C of Omnibus Consolidated 
Appropriations Act, 1997, Public Law 104-208, September 30, 
1996) at about the same time that section 305 of the 
Intelligence Authorization Act for Fiscal Year 1997 was 
enacted. Section 305 makes the necessary technical correction 
to Section 305(b)(2) of the Intelligence Authorization Act for 
Fiscal Year 1997 by deleting the no longer current or accurate 
Immigration and Nationality Act reference.

                 TITLE IV--CENTRAL INTELLIGENCE AGENCY

Sec. 401. Modification to Central Intelligence Agency's central 
        services program

    Section 401 of the Act makes a number of changes to the 
Central Intelligence Agency's Central Services Program.
    First, section 401 expands section 21(a) of the CIA Act to 
authorize the Director of Central Intelligence to provide items 
and services under the Program to nonappropriated fund 
entities, such as the Northwest Federal Credit Union and the 
Employee Activities Association, which are affiliated with the 
Agency.
    Second, section 401 clarifies that the Central Services 
Program Working Capital Fund may retain and use proceeds from 
the sale or exchange of equipment or property of a central 
service provider, as well as amounts collected in payment for 
loss or damage to such equipment or property. Third, the 
amendments made by section 401 also clarify that the fee central service providers are 
authorized to impose and collect under section 21(f) of the 
Central Intelligence Agency Act may be levied and used by 
existing central service providers already in the Program to 
acquire or improve their equipment and systems, that is, to 
recapitalize and modernize, in order to remain competitive and/
or expand their business operations (within the limits of 
subsection (a) and other parts of section 21). It is the 
committee's intent and direction that the costs of such 
recapitalization and/or modernization by central service 
providers not be considered or included as ``other expenses'' 
within the meaning of section 21(c) of the CIA Act. These two 
clarifications address and are intended to resolve concerns 
raised by the Agency's Inspector General in its most recent 
annual audit report on the Central Services Program and its 
Working Capital Fund.
    Finally, section 401 extends to March 31, 2005 the 
scheduled sunset or expiration date for the Program, which 
otherwise would occur as of March 31, 2000. While the Agency's 
Program has shown considerable promise and potential to improve 
the efficiency and cost-effectiveness of the Agency's 
administrative and/or support activities, it would not be 
appropriate to consider making the DCI's authority to run such 
a Program permanent until a somewhat longer track record and 
experience base can be evaluated.

Sec. 402. Extension of the CIA Voluntary Separation Pay Act

    Section 402 amends section 2(f) of the CIA Voluntary 
Separation Pay Act, Public Law 103-36, 50 U.S.C. 403-4 note, to 
extend the Agency's authority to offer separation incentives 
until September 30, 2000. Without this amendment, the Agency's 
authority to offer such incentives would expire on September 
30, 1999.
    CIA's separation incentive has been an effective workforce 
reduction tool. However, due to rapid and worldwide 
technological change and increasingly divergent intelligence 
collection requirements, the Agency must continue to address 
skills mix issues, to include reducing or eliminating outdated 
professions. Therefore, it is critical that the CIA separation 
incentive authority be extended to provide the Agency greater 
flexibility in addressing its skills mix requirements.
    CIA has worked hard over the past decade to streamline and 
refocus its workforce to address critical, cutting-edge 
national security issues. The Agency has reduced significantly 
the size of its employee population and begun reengineering 
business processes in order to hire personnel with new skills, 
expand the diversity of the Agency workforce, and acquire new 
technologies.
    The net impact of the six CIA early out exercises thus far, 
along with normal attrition and reduced hiring, has been a 
significant drop in the Agency's on-duty strength since the 
separation incentive program began in FY 1993. However, rapid 
worldwide technological change and increasing concern about 
such diverse issues as international terrorism, drug 
trafficking, and political instability require the Agency to do 
more to address the skills mix of the Agency population.
    The Agency must continue to reduce or eliminate outdated 
professions, accelerate the transfer of resources from support 
to mission-critical work, and hire people with state-of-the-art 
skills. Voluntary Separation Incentive Pay authority--used for specific, 
targeted populations--will help the CIA achieve those goals 
without resorting to involuntary separations in certain 
occupational categories. The incentive pay would be targeted 
principally at individuals in outdated occupations and skill 
categories who would not be separating via regular attrition or 
switching to another work area after retraining. Incentive pay 
also helps to provide a ``soft'' landing for Agency employees 
in outdated or surpluses occupations, and thus mitigates the 
counterintelligence risk associated with a reduction in force.
    Without an incentive authority, there would be a decline in 
separation rates. This would, in turn, limit the Agency's 
ability to keep pace with the rapidly expanding technologies 
and dynamic geopolitical realities central to the Agency's 
changing mission. Incentive authority through fiscal year 2002 
will help enable the Agency to ensure its workforce has the 
right skills in the right areas at the right times.
    The Committee notes that the Departments of Defense and 
Energy have agency-specific voluntary separation pay incentive 
authority through 30 September 2001 and until 1 January 2001, 
respectively.

         TITLE V--DEPARTMENT OF ENERGY INTELLIGENCE ACTIVITIES

    Section 502 establishes a moratorium on foreign visitors to 
classified facilities at Department of Energy (DOE) National 
Laboratories. The moratorium applies to citizens of nations on 
the DOE ``sensitive countries list.'' Section 502 also provides 
for a waiver of this moratorium on a case-by-case basis if the 
Secretary of Energy justifies the waiver and certifies that the 
visit is necessary for the national security of the United 
States.
    Section 503 requires that the Secretary of Energy perform 
background checks on all foreign visitors to the National 
Laboratories. The term ``background checks'' means the 
consultation of all available, appropriate, and relevant 
intelligence community and law enforcement indices and data 
bases.
    Section 504 requires a report to Congress on the 
counterintelligence activities at the National Laboratories and 
a net assessment of the Foreign Visitors Program at the 
National Laboratories to be produced by a panel of experts. The 
required report shall include a recommendation as to whether 
the moratorium (Section 502) should be repealed.
    Section 505 defines ``National Laboratory'' to include the 
Lawrence Livermore, Los Alamos, and Sandia National 
Laboratories and defines the ``sensitive countries list'' to 
include countries on a list by that name maintained by the 
Secretary of Energy.

      TITLE VI--FOREIGN INTELLIGENCE AND INTERNATIONAL TERRORISM 
                             INVESTIGATIONS

    Section 601 amends the Foreign Intelligence Surveillance 
Act of 1978, 50 U.S.C. Sec. 1802, et seq. (FISA) to expand the 
definition of an ``agent of a foreign power'' to include a 
person who, for or on behalf of a foreign power, knowingly 
enters the United States under a false or fraudulent identity 
or, while in the United States and for or on behalf of a 
foreign power, knowingly assumes a false
or fraudulent identity. The definition is intended to include 
the classic illegal spy, who comes to the United States with a 
false identity and can remain hidden for many years before 
being tasked by his or her foreign master. The definition would 
also include the person who, for or on behalf of a foreign 
power, is in the United States under a fraudulent identity, 
which could be accomplished by changing letters or characters 
in a name or adding or deleting parts of a name. The fact that 
a person, for or on behalf of a foreign power, enters or is in 
the United States under these circumstances is, in the 
Committee's view, dangerous enough to the national security of 
the United States to allow application of the FISA.
    Section 602 amends Section 811 (a)(c)(2) of the 
Intelligence Authorization Act of 1995 by deleting the words 
``after a report has been provided pursuant to paragraph 
(1)(a)''. The deletion makes it clear that the FBI's obligation 
to consult with departments and agencies concerned begins 
before a report has been provided, if, for example, the FBI has 
knowledge of the activities from other sources or as a result 
of its own investigation.

                            COMMITTEE ACTION

    On May 5, 1999, the Select Committee on Intelligence 
approved the Bill and ordered that it be favorably reported.

                           ESTIMATE OF COSTS

    Pursuant to paragraph 11(a) of rule XXVI of the Standing 
Rules of the Senate, the estimated costs incurred in carrying 
out the provisions of this Bill, for fiscal year 2000, are set 
forth in the classified annex to this Bill. Estimates of the 
costs incurred in carrying out this Bill in the five fiscal 
years thereafter are not available from the Executive branch, 
and therefore the Committee deems it impractical, pursuant to 
paragraph 11(a)(3) of rule XXVI of the Standing Rules of the 
Senate, to include such estimates in this report.

                    EVALUATION OF REGULATORY IMPACT

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

                        CHANGES IN EXISTING LAW

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