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Intelligence


1995 Congressional Documents
Intelligence and Security

                                                       Calendar No. 126
104th Congress                                                   Report
                                 SENATE
 1st Session                                                     104-97
_______________________________________________________________________
 AUTHORIZING APPROPRIATIONS FOR FISCAL YEAR 1996 FOR THE INTELLIGENCE 
ACTIVITIES OF THE UNITED STATES GOVERNMENT AND THE CENTRAL INTELLIGENCE 
     AGENCY RETIREMENT AND DISABILITY SYSTEM AND FOR OTHER PURPOSES
                                _______
    June 14 (legislative day, June 5), 1995.--Ordered to be printed
_______________________________________________________________________
 Mr. Specter, from the Select Committee on Intelligence, submitted the 
                               following
                              R E P O R T
                         [To accompany S. 922]
    The Select Committee on Intelligence, having considered the 
original bill (S. 922), which authorizes appropriations for 
fiscal year 1996 for the intelligence activities and programs 
of the United States Government and the Central Intelligence 
Agency Retirement and Disability system, and which accomplishes 
other purposes, reports favorably thereon and recommends that 
the bill do pass.
                          purpose of the bill
    This bill would:
          (1) Authorize appropriations for fiscal year 1996 for 
        (a) the intelligence activities and programs of the 
        United States Government; (b) the Central Intelligence 
        Agency Retirement and Disability System; and (c) the 
        Community Management of the Director of Central 
        Intelligence;
          (2) Authorize the personnel ceilings as of September 
        30, 1996, for the intelligence activities of the United 
        States 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) Permit the President to delay the imposition of 
        sanctions related to proliferation of weapons of mass 
        destruction when necessary to protect an intelligence 
        source or method or an ongoing criminal investigation;
          (5) Provide for forfeiture of the U.S. Government 
        contribution to the Thrift Savings Plan under the 
        Federal Employees Retirement System (FERS), along with 
        interest, if an employee is convicted of national 
        security offenses;
          (6) Restore spousal benefits to the spouse of an 
        employee so convicted if the spouse cooperates in the 
        investigation and prosecution;
          (7) To allow employees of the excepted services to 
        take an active part in certain local elections;
          (8) Amend the Fair Credit Reporting Act to permit the 
        Federal Bureau of Investigation to obtain consumer 
        credit reports necessary to foreign counterintelligence 
        investigations under certain circumstances and subject 
        to appropriate controls on the use of such reports; and
          (9) Make certain other changes of technical nature to 
        existing law governing intelligence agencies.
           the classified supplement to the committee report
    The classified nature of the United States intelligence 
activities prevents the Committee from disclosing 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 a public law. The classified annex to this report 
explains the full scope and intent of the Committee's actions 
as set forth in the classified schedule of authorizations. The 
classified annex has the same status as any Senate Report, and 
the Committee fully expects the Intelligence Community to 
comply with the limitations, guidelines, directions, and 
recommendations contained therein.
    This 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 also made available to 
affected departments and agencies within the Intelligence 
Community.
                       scope of committee review
    As it does annually, the Committee conducted a detailed 
review of the Administration's budget request for the National 
Foreign Intelligence Program (NFIP) for fiscal year 1996. The 
Committee also reviewed the Administration's fiscal year 1996 
request for a new intelligence budget category, called the 
Joint Military Intelligence Program (JMIP). The Committee's 
review included a series of briefings and hearings with the 
Director of Central Intelligence (DCI), the Acting Deputy 
Assistance Secretary of Defense for Intelligence and Security, 
and other senior officials from the Intelligence Community, 
numerous staff briefings, review of budget justification 
materials and numerous written responses provided by the 
Intelligence Community to specific questions posed by the 
Committee.
    In addition to its annual review of the Administration's 
budget request, the Committee performs continuing oversight of 
various intelligence activities and programs, to include the 
conduct of audits and reviews by the Committee's audit staff. 
These inquiries frequency lead to actions initiated by the 
Committee with respect to the budget of the activity or program 
concerned.
    The Committee also reviewed the Administration's fiscal 
year 1996 budget request for the Tactical Intelligence and 
Related Activities (TIARA) program aggregation of the 
Department of Defense. The Committee's recommendations 
regarding the programs are provided separately to the Committee 
on Armed Services for consideration within the context of the 
Committee's annual review of the National Defense Authorization 
Act.
                  follow-up to the ames espionage case
    In the wake of last year's controversy surrounding the Ames 
espionage case, the Intelligence Community leadership pledged 
renewed dedication of the counterintelligence mission. In the 
testimony he gave before the Committee at his confirmation 
hearing in open session, DCI John Deutch stated that 
counterintelligence was one of the four principal purposes 
toward which the Intelligence Community should direct its 
efforts.
    The Committee and CIA Inspector General reports on the Ames 
espionage case published last year identified several serious 
shortcomings on the part of the Central Intelligence Agency. 
The Committee held a closed hearing with Intelligence Community 
officials on January 25, 1995, to review progress made to date 
in implementing counterintelligence reforms recommended by the 
aforementioned reports and by DCI Woolsey. The Committee also 
focused on the adequacy of counterintelligence programs and 
activities in the context of its review and mark-up of the 
Administrator's fiscal year 1996 budget request and provides 
several recommendations to enhance U.S. capabilities in this 
critical area in the classified annex accompanying this report.
    Another issue raised by the Ames case is the apparent 
failure of the Intelligence Community to weed out poor 
performers. That Aldrich Ames was not only retained but 
promoted despite clear problems with alcohol and marginal 
performance is testament to a personnel process in need of 
reform. The Committee also has found a culture at CIA which has 
fostered stagnation at the senior levels of management, 
particularly within the Directorate of Operations. Senior 
officers are retained without formal evaluation of their 
leadership contribution. As a result, mid-grade officers with 
demonstrated leadership and new ideas are denied advancement. 
As a result, the Committee has included in this bill a 
provision requiring the DCI to develop for all civilian 
employees in the Intelligence Community personnel procedures to 
provide for mandatory retirement for expiration of time in 
class and termination based on relative performance, comparable 
to sections 607 and 608, respectively, of the Foreign Service 
Act of 1980.
                      focus on high-priority areas
    Notwithstanding the rhetorical priority placed on critical 
intelligence topics such as proliferation, terrorism, and 
counternarcotics, the Committee has identified areas where 
insufficient funds have been programmed for new capabilities, 
or where activities are funded in the name of high-priority 
targets which make little or no contribution to the issue. 
Therefore, in the classified annex accompanying this report, 
the Committee recommends a number of initiatives to enhance 
U.S. capabilities in the areas of proliferation, terrorism, and 
counternarcotics.
           creation of a joint military intelligence program
    As noted above, this year the Administration submitted a 
modification of the existing budgeting structure for 
intelligence activities and programs, by adding a third budget 
category--the Joint Military Intelligence Program--to 
supplement the existing NFIP and TIARA. The Administration 
acted to resubordinate formerly national (NFIP) and tactical 
(TIARA) programs under JMIP and created a new management 
structure to oversee JMIP that includes senior officials of the 
Intelligence Community and Defense. The JMIP Program Executive 
is the Deputy Secretary of Defense, who also chairs the new 
Defense Intelligence Executive Board (DIEB)--a senior 
management body providing planning, programming, and budget 
oversight of defense intelligence. JMIP was initially 
established by Secretary of Defense Memorandum dated May 14, 
1994, which was superseded by Department of Defense Directive 
5205.0, dated April 7, 1995. The Administration is submitting 
the first JMIP budget request to the Congress in fiscal year 
1996.
    The Committee does not yet endorse the decision by the 
Deputy Secretary of Defense and the Director of Central 
Intelligence (DCI) to develop a new set of funding criteria for 
intelligence activities. The Committee understands the Defense 
Department's requirement to exercise more top-down oversight 
and control of defense intelligence programs and to create a 
management forum for evaluating these activities. Additionally, 
advances in technology have made the former definitions of 
``national'' and ``tactical'' less meaningful to the budget 
process. However, the Committee has reservations about whether 
the Administration proposal for three intelligence programs is 
the optimal solution. Further, the Committee is not convinced 
that the presence of the Director of Central Intelligence on 
the DIEB, or the ``joint review'' process undertaken by the DCI 
and Deputy Secretary of Defense, will ensure that both 
Intelligence Community and Defense Department equities are 
served in the planning, programming, and management of all 
intelligence activities and programs. The Committee plans to 
review the appropriate budgeting structure for intelligence as 
part of its review of roles and missions of the Intelligence 
Community later this year.
    In addition, the Committee is concerned that the fiscal 
year 1996 budget request includes many programs that are 
budgeted in one intelligence program but more appropriately 
belong in another intelligence program according to the 
definitions set forth by the Deputy Secretary of Defense and 
the DCI. A partial listing of such programs is provided by the 
Committee for illustrative purposes:
Programs belonging in NFIP because they serve multiple departments
          COBRA DANE, which this fiscal year is programmed in 
        the Administration's budget request for the Arms 
        Control and Disarmament Agency. The Committee 
        recommends returning funding responsibility for this 
        important arms control monitoring capability to the 
        NFIP;
          Air Force's COBRA JUDY, a specialized shipborne 
        reconnaissance program, funded in TIARA.
          Navy's P-3C REEF POINT, a specialized airborne 
        reconnaissance program, funded in TIARA.
Programs belonging in JMIP because they serve multiple DoD components
          Army's Guardrail and Airborne Reconnaissance Low 
        programs, funded in Tiara;
          Air Force's E-8C Joint Surveillance Tracking and 
        Reconnaissance System, funded in Tiara;
          Air Force's Space-Based Infrared System, funded in 
        Tiara.
Programs belonging in Tiara because they serve single military 
        departments
          Army's European Command Combat Intelligence Readiness 
        Facility, funded in the NFIP;
          Navy's Fleet Ocean Surveillance Information Facility 
        in the European Theater, funded in the NFIP.
    With the exception of Cobra Dane, the Committee makes no 
recommendations this fiscal year to transfer any of these 
programs, primarily to avoid confusion and the potential for an 
unintended ``appropriated-not authorized'' situation. Further, 
the Committee does not necessarily agree that last year's 
decision by the Administration to consolidate funding for 
spaceborne and airborne reconnaissance acquisition in the NFIP 
and JMIP respectively (regardless of the intended customer 
base) makes sense in light of the new definitions for 
programming and budgeting intelligence activities and programs.
    The Committee believes that the DCI and Deputy Secretary of 
Defense should review jointly the budget categories of these 
and other programs prior to the submission of the fiscal year 
1997 budget request and make the appropriate adjustments. 
Further, the DCI and Deputy Secretary of Defense should 
consider whether ``split funding'' arrangements (i.e. funding 
provided by more than one intelligence budget category) are 
required for those organizations charged with acquisition of 
intelligence platforms (i.e. the Defense Airborne 
Reconnaissance Office and the National Reconnaissance Office) 
on the grounds of improved management efficiency without regard 
to the consumer base as defined by Executive Order 12333 and 
Department of Defense Directive 5205.0. The Committee requests 
that a report assessing these issues and outlining any specific 
programmatic adjustments made in the President's fiscal year 
1997 budget request to more accurately reflect the intent of 
the new budgeting system be provided to the intelligence and 
defense committees by March 1, 1996.
                   committee recommendations on JMIP
    Unlike the activities of the National Foreign Intelligence 
Program which the Committee also authorizes, many activities 
funded by the new Joint Military Intelligence Program are 
unclassified. However, the amount of the total fiscal year 1996 
budget request for JMIP, like that for the NFIP, is classified, 
as is any comprehensive treatment of JMIP program elements. 
Given these facts, and in order to provide for the greatest 
degree of openness possible, the Committee provides in the 
following sections its unclassified recommendations on JMIP 
program elements. Further recommendations, as well as 
classified details on these unclassified recommendations, are 
provided in the classified annex accompanying this bill.
                   airborne reconnaissance priorities
    The Committee believes that it is vital to maintain a 
robust airborne reconnaissance force that is capable of 
collection satisfying priority intelligence requirements in 
peacetime, crisis, and war. The Committee also understands 
that, in the current constrained budget environment, choices 
need to be made between upgrades to current manned systems and 
the development of new unmanned platforms. Due to the 
increasing demands and requirements placed on our nation's 
current generation of manned reconnaissance systems, the 
Committee makes the following recommendations to redirect 
resources requested for unmanned aerial vehicle development 
activities to several manned reconnaissance upgrades which the 
Committee views as essential in order to provide mission-
capable forces to the warfighting Commanders-in-Chief (CINC's).
    Accordingly, the Committee recommends changes to the 
Administration's fiscal year 1996 budget request to terminate 
one of five unmanned aerial vehicle (UAV) programs currently 
under development by the Defense Airborne Reconnaissance 
Program (DARP) and, instead, to reallocate these resources to 
provide for the upgrade of existing manned reconnaissance 
platforms.
Conventional high altitude endurance UAV
    The Committee recommends termination of the Conventional 
High Altitude Endurance Unmanned Aerial Vehicle (CONV HAE UAV) 
development effort, a reduction to the DARP in fiscal year 1996 
of $117.0 million. The Committee believes that the CONV HAE UAV 
will not provide an increased capability over the current U-2 
airborne reconnaissance fleet and is therefore not required. 
The U-2 is an operational system currently supporting 
warfighting and national intelligence requirements. The CONV 
HAE UAV is an Advanced Concept Technology Demonstration (ACTD) 
project and has not achieved first flight.
    In fact, the U-2 is a much more capable multi-sensor 
reconnaissance aircraft today than the CONV HAE UAV is designed 
to be. The U-2 fleet provides radar, electro-optical, and film 
imagery as well as electronic intelligence collection support 
to national, theater, and tactical commanders. The CONV HAE UAV 
will have only imagery sensors, and these will be less capable 
than those on-board the U-2. The U-2 has a much greater payload 
capacity than the CONV HAE UAV design. The U-2 affords a deeper 
look capability than planned for the CONV HAE UAV. Further the 
Committee understands that the CONV HAE UAV operational 
concept, now under development, is virtually identical to that 
of the U-2.
    Cost comparisons are difficult to make because the U-2 is 
an existing asset flying missions on a daily basis and the CONV 
HAE UAV is an ACTD and has no flight experience. However, 
information provided to the Committee by the DARP indicates 
that the flying hour costs of the UAV are comparable to the U-
2.
    The Committee believes that development by the DARP of the 
low observable high altitude endurance unmanned aerial vehicle 
(LO HAE UAV) as a complementary system to the U-2 will provide 
the most capability to national policymakers and the 
warfighter. The Committee strongly suggests that the Department 
investigate increases in capability that can be achieved in the 
LO HAE UAV if the goal for unit fly-away cost is increased from 
$10.0 million to $20.0 million. The Committee requests that the 
DARP prepare an analysis on this alternative and provide it to 
the intelligence and defense committees by March 1, 1996.
RC-135V/W Rivet Joint engine upgrades
    Rivet Joint is an Air Force reconnaissance program which 
provides all-weather, worldwide signals intelligence collection 
support to theater commanders. The Committee has become 
concerned with the high OPTEMPO of the RC-135V/W Rivet Joint 
reconnaissance fleet. The RC-135 airframes currently are 
logging an extraordinary number of annual flight hours. 
Additionally, the schedule frequency and the extended mission 
times of the Rivet Joint program contribute significantly to 
the fuel and operating costs of the aircraft. Further, the 
current engines do not meet State III noise levels or EPA 
emission standards.
    The Committee is aware that the Air Force is considering 
the establishment of a re-engining program for the RC-135 
aircraft. Re-engining with the CFM-56 engines common to the 
tanker fleet and commercial airlines would increase RC-135 
nominal operating altitudes considerably, thereby greatly 
enhancing sensor field-of-view and area coverage, decreasing 
fuel consumption, increasing on-station time, and improving 
short-field capability for contingency operations. Current 
tanker support requirements and tanker flying could also be 
reduced significantly.
    Therefore, the Committee recommends an authorization of 
$79.5 million in fiscal year 1996 to begin re-engining the RC-
135 fleet. The Committee expects the DARP to budget the 
additional funds required to continue re-engining in fiscal 
year 1997 and beyond.
U-2 upgrades
    While the Committee is supportive of the DARP initiative to 
define a Joint Airborne SIGINT Architecture (JASA), there is 
concern about the affordability of this approach for the 
Military Departments. The Committee is also concerned with the 
Defense Department's apparent decision not to continue 
upgrading current platforms while focusing funding exclusively 
on a new development program. Therefore, the Committee 
recommends an authorization of $20.0 million in fiscal year 
1996 for the DARP to initiate a sensor upgrade program for the 
U-2 fleet. Further details about the proposed upgrade are 
contained in the classified annex accompanying this bill. The 
Committee expects the DARP to budget for the remaining funds 
required to complete this upgrade in fiscal year 1997 and 
beyond. The also Committee believes that this upgrade should be 
fully compliant with JASA standards.
    The Committee also makes a recommendation to improve the 
defensive capabilities of the U-2 fleet and provides $13.0 
million in fiscal year 1996 for this purpose. Details of this 
initiative are included in the classified annex accompanying 
this bill. As with the proposed sensor upgrade, the Committee 
expects the DARP to budget for the remaining funds required to 
complete this upgrade in fiscal year 1997 and beyond.
         defense intelligence counterdrug analysis initiatives
    In line with the Committee's efforts to enhance 
intelligence capabilities in the area of counternarcotics and 
other high-priority issues, the Committee recommends an 
authorization of an additional $7.0 million in fiscal year 1996 
to the Defense Intelligence Counterdrug Program (DICP). These 
funds should be applied against a variety of high-priority, 
counterdrug analysis and connectivity programs identified by 
the DICP Program Manager. Details of this initiative are 
included in the classified annex accompanying this bill.
                      information systems security
    While the Administration's fiscal year 1996 budget request 
for DoD's Information Systems Security Program provides for a 
significant increase over the amounts requested in fiscal year 
1995, the Committee notes that information security (INFOSEC) 
personnel and resources will still have declined by roughly 40% 
since 1987. Meanwhile, in planning for future conflicts, the 
Department of Defense is deliberately placing increased 
reliance on information systems to compensate for a reduced 
force structure.
    The Committee does not believe that the Department of 
Defense has adequately assessed U.S. information security 
requirements. Further, it does not believe that there is a 
coherent plan or program to rectify the vulnerabilities 
identified by the Joint Security Commission, the Commission on 
Roles and Missions, and independent organizations such as the 
RAND Corporation. An effective and comprehensive U.S. policy 
needs to be developed in order to prepare an integrated 
response that recognizes not only the vulnerabilities of U.S. 
government communications, but the vulnerabilities of the 
underlying Public Switch Network (PSN). In that regard, it is 
not clear what benefits can be achieved through increased DoD 
spending on information security when over 95% of DoD 
communications travel over the PSN and the PSN is not protected 
against attacks that sophisticated adversaries may employ in 
future conflicts. In sum, a comprehensive U.S. INFOSEC plan 
urgently needs to be developed.
    The Committee therefore requests the DCI and the Secretary 
of Defense to prepare a comprehensive report which: (a) 
identifies the key threats to U.S. computers and communications 
systems, including those of both the government and the private 
sector (i.e. the Public Switch Network upon which the 
government heavily depends); and, (b) provides a comprehensive 
plan for addressing the threats described in section (a), to 
include any necessary legislative or programmatic 
recommendations required to protect government or private U.S. 
information systems. The report shall be provided to the 
intelligence and defense committees not later than March 1, 
1996. In the absence of such a plan, the Committee remains 
skeptical regarding the benefits that can be achieved through 
increased funding for the Department of Defense Information 
Systems Security Program.
                  commercial off-the-shelf technology
    It is the sense of the Committee that, to the extent 
practicable, all high performance computing and communications 
(HPCC) equipment and products purchased with funds authorized 
in this Act should be Commercial-Off-The-Shelf (COTS) or 
modified COTS.
    The Department of Defense has already adopted a COTS policy 
in its purchase of high performance computing and 
communications systems, with significant cost savings to the 
taxpayers and with excellent performance results. Moreover, the 
Department's September 1994 Defense Technology Plan, prepared 
by the Director of Defense Research and Engineering, recommends 
the utilization of ``more commercially viable technologies'' in 
the purchase of high performance computer systems. (pp. 8-7, 
Computing and Software, Defense Technology Plan.)
    The Committee also believes that the application of a COTS 
technology policy among the intelligence agencies should be 
adopted and implemented beginning in fiscal year 1996. The 
Committee is hopeful that a COTS policy for the procurement of 
high performance computing and communications equipment could 
save millions of dollars and maintain the quality and 
performance standards required by the intelligence agencies 
both now and in the future.
    Therefore, the Committee requests the agencies receiving 
funding authorized in this bill to begin the process of 
adopting COTS technology procurement procedures in their high 
performance computing and communications programs and to 
report, through the DCI, to the Intelligence and Defense 
Committees not later than May 1, 1996, regarding compliance 
with this request.
technologies to improve sound processing devices used by the profoundly 
                                  deaf
    Recent technological advances have made it possible for the 
medical community to provide substantial hearing to profoundly 
deaf individuals who cannot benefit from conventional hearing 
aids. Surgically implanted electrodes, combined with external 
speech processing devices, have the demonstrated ability to 
provide sound information across the frequency range even at 
low volume (i.e. 30 decibels). Some children and adults, who 
would have had no option other than to use sign language, now 
have access to spoken language and can function in school and 
the workplace without any use of sign language. While the 
benefits can be enormous, it is also true that the quality of 
sound provided by cochlear implants is still crude compared to 
normal hearing. Remarkable progress has been made, but many 
technical issues remain, including the reliability, size, and 
the effectiveness of the hardware and software used by 
manufacturers of sound processing devices.
    The Intelligence Community, and the National Security 
Agency in particular, is a world leader in speech and signal 
processing. It is quite possible that some of the sophisticated 
technologies employed by the Intelligence Community could 
increase the signal-to-noise ratio in the sound processing 
devices used by the profoundly deaf. The Committee has recently 
seen how imaging technology developed by the Intelligence 
Community can be adapted to cancer screening by the medical 
community, and it is the Committee's hope that similar success 
can be achieved in this area. The Committee therefore requests 
the Intelligence Community to contact U.S. manufacturers of 
cochlear implant devices, review their technical needs, and 
identify any technologies that might be shared with such 
manufacturers in order to improve the quality of hearing for 
the hearing impaired. The Committee requests a report outlining 
the results of the Intelligence Community's review, to include 
identification of any capabilities that should be shared with 
U.S. manufacturers of cochlear implants, not later than May 1, 
1996.
  intelligence authorization act fiscal year 1996 section-by-section 
                        analysis and explanation
Title I--Intelligence activities
    Section 101 lists the departments, agencies, and other 
elements of the United States Government for whose intelligence 
activities and programs the Act authorizes appropriations for 
fiscal year 1996.
    Section 102 makes clear that the details of the amounts 
authorized to be appropriated for intelligence activities and 
programs and personnel ceilings covered under this title for 
fiscal year 1996 are contained in a classified Schedule of 
Authorizations. The Schedule of Authorizations is incorporated 
into the Act by this section.
    Section 103 authorizes the Director of Central 
Intelligence, with the approval of the Director of the Office 
of Management and Budget, in fiscal year 1996, to expand the 
personnel ceilings applicable to the components of the 
Intelligence Community under section 102 by an amount not to 
exceed two percent of the total of the ceilings applicable 
under section 102. The Director may exercise this authority 
only when necessary to the performance of important 
intelligence functions and any exercise of this authority must 
be reported to the two intelligence committees of the U.S. 
Congress.
    Section 104 provides details concerning the number and 
composition of the Intelligence Community Management Account of 
the Director of Central Intelligence.
    Subsection (a) authorizes appropriations in the amount of 
$93,283,000 for fiscal year 1996 for the staffing and 
administration of the various components under the Community 
Management Account of the Director of Central Intelligence. It 
also authorizes funds identified for the Advanced Research and 
Development Committee and the Environmental Task Force to 
remain available for two years.
    Subsection (b) authorizes 247 full-time personnel for the 
components under the Community Management Staff for fiscal year 
1996 and provides that such personnel may be permanent 
employees of the Staff or detailed from various elements of the 
United States Government.
    Subsection (c) requires that personnel be detailed on a 
reimbursable basis except for temporary situations.
Title II--Central Intelligence Agency retirement and disability system 
        and related provisions
            Authorization of Appropriations
    Section 201 authorizes appropriations in the amount of 
$213,900,000 for fiscal year 1996 for the Central Intelligence 
Agency Retirement and Disability Fund.
Title III--General provisions
    Section 301 provides that appropriations authorized by the 
conference report for salary, pay, retirement, and other 
benefits for federal employees may be increased by such 
additional or supplemental amounts as may be necessary for 
increases in such compensation or benefits authorized by law.
    Section 302 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.
    Section 303 permits the President to delay the imposition 
of sanctions or related actions when necessary to protect 
against the compromise of an intelligence source or method or 
an ongoing criminal investigation. Delays can be important when 
the life or safety of a cooperating intelligence source is at 
stake. Use of the term ``compromise'' in the section is 
intended to encompass actions that would result in disruption 
or cessation of a criminal investigation or the loss or 
rendering ineffectual of an intelligence source or method.
    The section provides the President must promptly report the 
rationale and circumstances that led to the delay, with respect 
to intelligence sources or methods, to the Senate and House 
intelligence oversight committees. The President must include 
in that report a description of the efforts being made to 
address the circumstances that led to the delay and an estimate 
of the date by which the delay will be lifted. A delay under 
this section cannot be indefinite in duration.
    The Committee recognizes that intelligence collection on 
proliferation targets and law enforcement investigations are 
critical components of the nation's nonproliferation efforts. 
In some circumstances, the imposition of sanctions could 
inhibit the full flow of information about weapons 
proliferation that might otherwise be acquired, or hinder a law 
enforcement initiative. The net result may be to undermine 
rather than enhance our nonproliferation objectives. This 
section is intended to be limited to proliferation sanctions, 
including those in the chemical and biological warfare, 
missile, and nuclear contexts.
    A delay under this section is not intended to protect 
generic or speculative intelligence interests. A delay would be 
appropriate to protect a sensitive intelligence source or 
method, for example, where:
          the Intelligence Community is actively collecting 
        important foreign intelligence and imposition of 
        sanctions will result in serious harm to a source or 
        the loss of the source of collection; or
          the Intelligence Community is engaged in an 
        operational activity that would be seriously hampered 
        by the imposition of sanctions.
    Section 304 adds a new subsection to section 8432(g) of 
title 5, United States Code, to provide that the Government's 
contribution to the Thrift Savings Plan under the Federal 
Employees Retirement System (FERS) and interest earned on that 
contribution shall be forfeited if the employee's annuity has 
been forfeited under subchapter II of Chapter 83, title 5, 
United States Code. This provision closes a loophole that was 
created when the FERS was established.
    Prior to the enactment of the FERS, an employee's 
retirement annuity was based entirely on contributions made by 
the employee and by the United States Government to the 
applicable retirement fund. Under subchapter II of Chapter 83, 
any employee convicted of various national security offenses, 
including espionage, would forfeit his annuity and be entitled 
to receive only this monetary contributions to the annuity. A 
new retirement benefit, however, was created with the 
establishment of FERS, payable under the Thrift Savings Plan.
    The Thrift Savings Plan now permits the employee to 
contribute a salary percentage into the Government-managed fund 
and requires that the Government also contribute to the fund on 
the employee's behalf. An oversight in enacting the FERS was 
that the forfeiture provisions of subchapter II were not 
amended to include the Government's contributions to the Plan. 
This situation clearly undermines the intent of subchapter II 
by permitting an employee convicted of espionage to retain the 
Government's contributions to the Plan. This provision would 
allow for the forfeiture of the Government's contribution to 
the Plan and attributable earnings on that contribution in 
situations where an individual was convicted of any of the 
various national security offenses cited in subchapter II.
    Section 305 amends section 8312 of title 5, United States 
Code, to restore spousal pension benefits to the spouse of a 
federal employee whose annuity or retired pay has been 
forfeited under section 9312 or 8313, as amended, if the spouse 
cooperated in the criminal investigation and prosecution of the 
employee. Enactment of this legislation will help to protect 
the national security interests of the United States by 
encouraging the spouse of a federal employee who knows or 
suspects that his or her consort is engaged in espionage 
activities to inform the Government and to cooperate in a 
subsequent criminal investigation and prosecution. Current law 
actually discourages a witting spouse from cooperating with the 
Government, since the person's spousal pension benefits will be 
forfeited upon the conviction of his or her consort, even if 
the spouse has cooperated with the Government.
    Section 306 restores the authority of the Office of 
Personnel Management (OPM) to extend ``de-Hatching'' to 
employees of the agencies listed in 5 U.S.C. 
Sec. 7323(b)(2)(B)(i).
    Previously, under 5 U.S.C. Sec. 7323, OPM had the authority 
to designate certain municipalities and other political 
subdivisions in which federal employees in both competitive and 
excepted services could actively participate in local partisan 
elections. (Such designation of municipalities and political 
subdivisions by OPM is commonly referred to as ``de-
Hatching''.) However, when this authority was amended by Pub. 
L. 103-94 and recodified in 5 U.S.C. Sec. 7325, the authority 
was granted only ``without regard to the prohibitions in 
paragraphs (2) and (3) of section 7323(a)''. The prohibitions 
in section 7323(a) apply to the federal employees, both 
competitive and excepted service. However, employees of NSA, 
CIA, DIA, and the other agencies listed in 5 U.S.C. 
Sec. 7323(b)(2)(B)(i) are subject to additional prohibitions 
under section 7323(b)(2)(A) which section 7325 does not permit 
OPM to disregard. Thus, OPM cannot extend de-Hatching to 
employees of the listed agencies and the implementing interim 
regulations issued by OPM (59 Fed. Reg. 5313 (1994) to be 
codified at 5 C.F.R. Part 733) reflect this restriction.
    This provision would amend the ``de--Hatching'' provision 
(5 U.S.C. Sec. 7325) to include the excepted services in the 
category of federal employees that OPM may permit to take an 
active part in local (not Federal) political campaigns.
    Section 307 requires the DCI to report to the intelligence 
oversight committees within three months detailed personnel 
procedures to be implemented across the intelligence community 
to provide for mandatory retirement at expiration of time in 
class and termination based on relative performance similar to 
comparable provisions in sections 607 and 608 of the Foreign 
Service Act of 1980 (Title 22 U.S.C. 4007 and 4008).
    In the wake of the Ames case, the Committee urged the 
Intelligence Community to adopt policies to weed out poor 
performers and develop headroom for young people coming up. The 
Director of Central Intelligence and Secretary of Defense were 
directed in the FY1995 Intelligence Authorization Act to 
provide a report by December 1, 1994, on the advisability of 
providing for mandatory retirement at expiration of time in 
class. It was never received. The Committee has reviewed the 
issue and determined that such a policy, combined with a 
``relative performance'' policy, is advisable and is now 
directing the DCI to move forward and develop procedures for 
implementation.
    Section 308 authorizes assistance to a foreign country's 
counterterrorism efforts, notwithstanding any other law, if it 
is provided for the purpose of protecting U.S. persons or 
property or furthering the apprehension of those responsible 
for any such acts of terrorism.
Title IV--Central Intelligence Agency
    Section 401 amends section 2(f) of the CIA Voluntary 
Separation Pay Act, 50 U.S.C. Sec. 403-4(f), to extend the 
Agency's authority to offer separation incentives until 
September 30, 1999. Without this amendment, the Agency's 
authority to offer such incentives will expire on September 30, 
1997. In light of the Committee's concern that this authority 
may have been used in the past in lieu of more rigorous 
personnel policies, this authority is extended with the 
understanding that the Intelligence Community will be 
implementing such policies, as directed in Section 307 of this 
Act, and that this authority can be used to ease the transition 
to the more rigorous, performance-based criteria and policy.
    Section 402 authorizes the Director to establish, as a 
demonstration project, a volunteer service program for fiscal 
years 1996 through 2001 whereby no more than 50 retirees can 
volunteer their services to the CIA to assist the Agency in its 
systematic and or mandatory review for declassification for 
downgrading of classified information under certain Executive 
Orders and P.L. 102-256. The provision limits expenditures to 
no more than $100,000.
    This section authorizes the Agency to pay costs incidental 
to the use of the services of volunteers, such as training, 
equipment, lodging, subsistence, equipment, and supplies. It 
also ensures that volunteers are covered by workers 
compensation (the Federal Employees Compensation Act). Without 
this legislation, the CIA would be unable to pay costs incident 
to the use of gratuitous services provided by volunteers, such 
as training and equipment. The program established under this 
section will be temporary and limited.
    Section 403(a) modifies the CIA Inspector General statute 
to require the IG to report of violations of Federal law by any 
person, as opposed to violations by officers or employees of 
the CIA. It also allows the reports to go directly from OIG to 
DoJ, rather than through the DCI, although the DCI must receive 
a copy of the report. This is consistent with the Inspector 
General of 1978 and enhances the independence of the IG.
    Section 403(b) clarifies the CIA IG statute to ensure that 
the identity of an employee who has been granted 
confidentiality can be disclosed to the DoJ official 
responsible for determining whether a prosecution should be 
undertaken. Current law already provides for this but this 
provision would clarify and simplify the process.
    Section 404 requires an annual report on all liaison 
relationships, to include the names of governments and 
entities, the purpose of each relationship, the resources 
dedicated, a description of the intelligence provided and 
received, and any significant changes anticipated. This 
responds to the longstanding concerns of the Committee, most 
recently highlighted by the events in Guatemala, about liaison 
relationships and the lack of reporting to Congress on 
potential ``flaps.''
Title V--Department of Defense
    Section 501 amends section 1605(a) of title 10, United 
States Code, and section 431 of title 37, United States Code, 
to provide to civilian personnel and members of the armed 
forces of the Defense HUMINT Service outside the United States 
benefits and allowances comparable to those provided by the 
Secretary of State to officers and employees of the Foreign 
Service.
    The Secretary of Defense has the authority to provide to 
civilian personnel and members of the armed forces assigned to 
the Defense Attache Offices and the Defense Intelligence Agency 
Liaison Offices outside the United States benefits and 
allowances comparable to those provided by the Secretary of 
State to officers and employees of the Foreign Service. This 
authority was attained in 1983 (P.L. 98-215).
    With the consolidation of Department of Defense human 
intelligence into the Defense HUMINT Service, the Defense 
Intelligence Agency will be responsible for a significant 
number of employees overseas. Although a number of these 
employees may be assigned to Defense Attache Offices or Defense 
Intelligence Agency Liaison Offices outside the United States, 
there will be a significant number of employees who will be 
assigned to other overseas locations. Since the Agency's 
authority to provide benefits and allowances to overseas 
employees is limited to the Defense Attache Office and the 
Defense Intelligence Agency Liaison Offices, inequities will 
once again occur. This amendment would ensure comparable 
benefits for civilian and military personnel assigned to the 
Defense HUMINT Service overseas.
    The benefits authorized in this provision are intended to 
supplement compensation packages that were designed for 
personnel who would be stationed on a military base, with all 
the benefits a base provides. Thus the authority to offer these 
additional benefits should only be exercised when a DIA officer 
is not stationed near a military base.
    Section 502 extends for five additional years the sunset 
provision for the exemption for certain DoD intelligence 
activities from administrative statutes applicable to federal 
agencies which are inconsistent with establishing and 
maintaining bona fide private commercial activities. Compliance 
with such statutes is excused where compliance would compromise 
the commercial activity concerned as an agency or 
instrumentality of the United States Government.
    This exemption was enacted in 1991, when the Secretary of 
Defense was provided a statutory framework clarifying his 
authority to engage in intelligence commercial activities. At 
that time, the Committee noted that ``such activities could, if 
not adequately coordinated and carefully regulated, lead to 
abuses and improprieties, or could lead to actions which might 
provide politically embarrassing to the United States.'' To 
ensure prudent exercise of the authority, the subchapter 
authorizing the activity imposed approval and coordination 
requirements as well as congressional oversight and reporting 
requirements. To further guard against abuse of the new 
authority, and to ensure adequate congressional review, the 
provision contained a clause which stated that no commercial 
activity may be initiated pursuant to this subchapter after 
December 31, 1995. The authority has never been used, however, 
due largely to significant budget cuts affected in December 
1992. Recently, however, DoD has enhanced its HUMINT efforts 
and is working closely with CIA to develop the skills, plans, 
and infrastructure necessary to effectively utilize this 
authority. Thus, the Committee is extending the sunset 
provision to December 31, 2000.
    Section 503 would authorize the Secretary of Defense to 
send civilian employees in the Military Departments' Civilian 
Intelligence Personnel Management System (CIPMS) to be students 
at accredited professional, technical, and other institutions 
of higher learning for training at the undergraduate level. 
This authority would be similar to that already granted to the 
Defense Intelligence Agency (DIA) in 10 U.S.C. section 1608 
(Public Law 101-93, title V, section 507(a)(1), Nov 30, 1989, 
103 Stat. 1710) and the National Security Agency (NSA) in 50 
U.S.C. 402 note. The purpose of the new section is to establish 
an undergraduate training program, including training which may 
lead to the baccalaureate degree, to facilitate the recruitment 
of individuals, particularly minority, to facilitate the 
recruitment of individuals, particularly minority, women, and 
handicapped high school students with a demonstrated capability 
to develop skills critical to the intelligence missions of the 
Military Departments in areas such as computer science, 
engineering, foreign language, and area studies. In exchange 
for this financial assistance from the respective CIPMS 
organization, the student participant would undertake an 
obligation to work for a period of one-and-one half years for 
each year or partial year of schooling.
    This mission of the intelligence entities of the Unites 
States Government demand employees of extraordinary aptitude 
and strong undergraduate training. Those same entities must 
compete with a private sector--capable of offering more 
favorable compensation arrangements--that in most instances has 
been able to outbid the USG in terms of attracting qualified 
minority candidates. Statistics in recent years indicate that 
the success of the Military Departments' CIPMS to attract 
minority group candidates has been marginal.
    This proposal is designed to enhance the capabilities of 
the intelligence elements of the Military Departments to (i) 
ensure equal employment opportunity with their civilian ranks 
through affirmative action; (ii) develop and retain personnel 
trained in skills essential to the effective performance of 
their intelligence mission; and, (iii) compete on equal footing 
with other Intelligence Community entities for personnel with 
critical skills.
Title VI--Federal Bureau of Investigation
    Section 601 would amend the Fair Credit Reporting Act 
(FCRA) (15 U.S.C. 1681f) to grant the Federal Bureau of 
Investigation (FBI) access to certain information in consumer 
credit records in counterintelligence investigations.
    A similar provision was included in the Intelligence 
Authorization Act for FY 1995 as reported by this Committee. 
The provision was dropped in conference at the request of the 
House Committee on Banking, Finance, and Urban Affairs upon 
assurances that that Committee would pursue similar 
legislation. The U.S. House of Representatives ultimately 
adopted H.R. 5178 which contained a provision along the lines 
of that which is included as section 601 of this Act. The bill 
was never acted upon by the Senate.
    This provision would provide a limited expansion of the 
FBI's authority in counterintelligence investigations 
(including terrorism investigations), to obtain a consumer 
credit report with a court order. In addition, it would allow 
the FBI to use a ``National Security Letter,'' i.e. a written 
certification by the FBI Director or the Director's designee, 
to obtain from a consumer credit agency the names and addresses 
of all financial institutions at which a consumer maintains an 
account, as well as certain identifying information.
    Under current law, when appropriate legal standards are 
met, FBI is able to obtain mandatory access to credit records 
by means of a court order or grand jury subpoena (see the FCRA, 
15 U.S.C. 1681b(1)), but such an option is available to the FBI 
only after a counterintelligence investigation has been 
formally converted to a criminal investigation or proceeding. 
Many counterintelligence investigations never reach the 
criminal stage but proceed for intelligence purposes or are 
handled in diplomatic channels.
    In addition FBI presently has authority to use the National 
Security Letter mechanism to obtain two types of records: 
financial institution records (under the Right to Financial 
Privacy Act, 12 U.S.C. 3414(a)(5)) and telephone subscriber and 
toll billing information (under the Electronic Communications 
Privacy Act, 18 U.S.C. 2709). Expansion of this extraordinary 
authority is not taken lightly by the Committee, but the 
Committee has concluded that on this instance the need is 
genuine, the threshold for use is sufficiently rigorous, and, 
given the safeguards built in to the legislation, the threat to 
privacy is minimized.
    Under a provision of the Right to Financial Privacy Act 
(RFPA) (12 U.S.C. 3414(a)(5)), the FBI is entitled to obtain 
financial records from financial institutions, such as banks 
and credit card companies, by means of a National Security 
Letter when the Director or the Director's designee certifies 
in writing to the financial institution that such records are 
sought for foreign counterintelligence purposes and that there 
are specific and articulable facts giving reason to believe 
that the customer or entity whose records are sought is a 
foreign power or an agent of a foreign power, as those terms 
are defined in section 101 of the Foreign Intelligence 
Surveillance Act of 1978 (50 U.S.C. 1801 et seq.).
    The FBI considers such access to financial records crucial 
to trace the activities of suspected spies or terrorists. The 
need to follow financial dealings in counterintelligence 
investigations has grown as foreign intelligence services 
increasingly operate under non-official cover, i.e., pose as 
business entities or executives, and as foreign intelligence 
service activity has focused increasingly on U.S. economic 
information.
    FBI's right of access under the Right to Financial Privacy 
Act cannot be effectively used, however, until the FBI 
discovers which financial institutions are being utilized by 
the subject of a counterintelligence investigation. Consumer 
reports maintained by credit bureaus are a ready source of such 
information, but, although such reports are readily available 
to the private sector, they are not available to FBI 
counterintelligence investigators. Under section 608 of the 
Fair Credit Reporting Act, without a court order, FBI 
counterintelligence officials, like other government agencies, 
are entitled to obtain only limited information from credit 
reporting agencies--the name, address, former addresses, places 
of employment, and former places of employment, of a person--
and this information can be obtained only with the consent of 
the credit bureau.
    FBI has made a specific showing to the Committee that the 
effort to identify financial institutions in order to make use 
of FBI authority under the Right to Financial Privacy Act can 
not only be time-consuming and resource-intensive, but can also 
require the use of investigative techniques--such as physical 
and electronic surveillance, review of mail covers, and 
canvassing of all banks in an area--that would appear to be 
more intrusive than the review of credit reports. FBI has 
offered a number of specific examples in which lengthy, 
intensive and intrusive surveillance activity was required to 
identify financial institutions doing business with a suspected 
spy or terrorist.
    Section 601 of the instant legislation would amend FCRA by 
adding a new section 624, consisting of 13 paragraphs.
    Paragraph 624(a) of the amended FCRA requires a consumer 
reporting agency to furnish to the FBI the names and addresses 
of all financial institutions at which a consumer maintains or 
has maintained an account, to the extent the agency has that 
information, when presented with a written request signed by 
the FBI Director or the Director's designee, which certifies 
compliance with the subsection. The FBI Director or the 
Director's designees may make such certification only if the 
Director or the Director's designee has determined in writing 
that such records are necessary for the conduct of an 
authorized foreign counterintelligence investigation and that 
there are specific and articulable facts giving reason to 
believe that the person whose consumer report is sought is a 
foreign power, a non-U.S. official of a foreign power, or an 
agent of a foreign power (as defined in Section 101 of the 
Foreign Intelligence Surveillance Act of 1978 (50 U.S.C. 1801 
et seq.)) and is engaged in terrorism or other criminal 
clandestine intelligence activities.
    The requirement that there be specific and articulable 
facts giving reasons to believe that a U.S. person is an agent 
of a foreign power before FBI can obtain access to a consumer 
report is consistent with the standards in the Right to 
Financial Privacy Act, 12 U.S.C. 3414(a)(5)(A), and the 
Electronic Communications Privacy Act, 18 U.S.C. 2709(b).
    However, in contrast to those statutes, the Committee has 
drafted the FCRA certification requirement to provide that the 
FBI demand submitted to the consumer reporting agency make 
reference to the statutory provision without providing the 
agency with a written certification that the subject of the 
consumer report is believed to be an agent of a foreign power. 
FBI would still be required to record in writing its 
determination regarding the subject, and the credit reporting 
agency would be able to draw the necessary conclusion, but the 
Committee believes that its approach would reduce the risk of 
harm from the certification process itself to the person under 
investigation. A similar approach is taken in paragraph 624(b), 
described below.
    Section 605 of the FCRA, 15 U.S.C. 1681c, defines 
``consumer report'' in a manner that prohibits the 
dissemination by credit reporting agencies of certain older 
information except in limited circumstances. None of these 
excepted circumstances would apply to FBI access under proposed 
FCRA paragraph 624(a) (or proposed FCRA paragraph 624(b)). 
Accordingly, FBI access would be limited to ``consumer 
reports'' as defined in 605.
    The term ``an authorized foreign counterintelligence 
investigation'' includes those FBI investigations conducted for 
the purpose of countering international terrorist activities as 
well as those FBI investigations conducted for the purpose of 
countering the intelligence activities of foreign powers. Both 
types of investigations are conducted under the auspices of the 
FBI's Intelligence Division, headed by an FBI Assistant 
Director.
    As is the case with the FBI's existing National Security 
Letter authority under the Right to Financial Privacy Act (see 
Senate Report 99-307, May 21, 1986, p. 16; House Report 99-952, 
October 1, 1986, p. 23), the Committee expects that, if the 
Director of the FBI delegates this function under paragraph 
624(a), as well as under paragraph 624(b) discussed below, the 
Director will delegate it no further down than the level of FBI 
Deputy Assistant Director. (There are presently two Deputy 
Assistant Directors for the National Security Division, one 
with primary responsibility for counterintelligence 
investigations and the other with primary responsibility for 
international terrorism investigations.)
    Paragraph 624(b) would give the FBI mandatory access to the 
consumer identifying information--name, address, former 
addresses, places of employment, or former places of 
employment--that it may obtain under current section 608 only 
with the consent of the credit reporting agency. A consumer 
reporting agency would be required to provide access to such 
information when presented with a written request signed by the 
FBI Director or the Director's designee, which certifies 
compliance with the subsection. The Director or the Director's 
designee may make such a certification only if the Director or 
the Director's designee has determined in writing that such 
information is necessary to the conduct of an authorized 
foreign counterintelligence investigation and that there is 
information giving reason to believe that the person about whom 
the information is sought has been, or is about to be, in 
contact with a foreign power or an agent of a foreign power, as 
defined in Section 101 of the Foreign Intelligence Surveillance 
Act of 1978 (50 U.S.C. 1801 et seq.).
    FBI officials have indicated that they seek mandatory 
access to this identifying information in order to determine if 
a person who has been in contact with a foreign power or agent 
is a government or industry employee who might have access to 
sensitive information of interest to a foreign intelligence 
service. Accordingly, the Committee has drafted this provision 
to require that such limited information can be provided only 
in circumstances where the consumer has been or is about to be 
in contact with the foreign power or agent.
    The Committee has also drafted paragraphs 624(a) and 624(b) 
in a manner intended to make clear the Committee's intent that 
the FBI may use this authority to obtain this information only 
as regards those persons who either are a foreign power or 
agent thereof or have been or will be in contact with a foreign 
power or agent. Although the consumer records of another 
person, such as a relative or friend of an agent of a foreign 
power, or identifying information respecting a relative or 
friend of a person in contact with an agent of a foreign power, 
may be of interest to FBI counterintelligence investigators, 
they are not subject to access under paragraphs 624(a) and 
624(b).
    It is not the Committee's intent to require any credit 
reporting agency to gather credit or identifying information on 
a period for the purpose of fulfilling an FBI request under 
paragraphs 624(a) and 624(b). A credit reporting agency's 
obligation under these provisions is to provide information 
responsive to the FBI's request that the credit reporting 
agency already has in its possession.
    Paragraph 624(c) provides that, if requested in writing by 
the FBI, a court may issue an order ex parte directing a 
consumer reporting agency to furnish a consumer report to the 
FBI upon a showing in camera that the report is necessary for 
the conduct of an authorization foreign counterintelligence 
investigation and that there are specific and articulable facts 
giving reason to believe the consumer is an agent of a foreign 
power and is engaged in international terrorism or clandestine 
intelligence activities that may involve a crime.
    Paragraph 624(d) provides that no consumer reporting agency 
or officer, employee, or agent of such institution shall 
disclose to any person, other than those officers, employees or 
agents of such institution necessary to fulfill the requirement 
to disclose information to the FBI under subsection 624, that 
the FBI has sought or obtained a consumer report or financial 
institution, or identifying information respecting any consumer 
under paragraphs 624, nor shall such agency, officer, employee, 
or agent include in any consumer report any information that 
would indicate that the FBI has sought or obtained such 
information. The prohibition against including such information 
in a consumer report is intended to clarify the obligations of 
the consumer reporting agencies. It is not intended to preclude 
employees of consumer reporting agencies from complying with 
company regulations or policies concerning the reporting of 
information, nor to preclude their complying with a subpoena 
for such information issued pursuant to appropriate legal 
authority.
    Paragraph 624(d) departs from the parallel provision of the 
RFPA by clarifying that disclosure is permitted within the 
contacted institution to the extent necessary to fulfill the 
FBI request. The Committee has not concluded, or otherwise 
taken a position whether, that disclosure for such purpose 
would be forbidden by the RFPA; indeed, practicalities would 
dictate that the provision not be interpreted to exclude such 
disclosure. However, the Committee believes that clarification 
of the obligation for purposes of the FCRA is desirable.
    Paragraph 624(e) requires the FBI, subject to the 
availability of appropriations, to pay to the consumer 
reporting agency assembling or providing credit records a fee 
in accordance with FCRA procedures for reimbursement for costs 
reasonably necessary and which have been directly incurred in 
searching for, reproducing, or transporting books, papers, 
records, or other data required or requested to be produced 
under section 624. The FBI informs the Committee that such 
reports are commercially available for approximately $7 to $25 
and that FBI could expect to pay fees in approximately that 
range. FBI officials have advised the Committee that the costs 
of such reports would be easily recouped from the savings 
afforded by the reduced need for other investigative techniques 
aimed at obtaining the same information.
    Paragraph 624(f) prohibits the FBI from disseminating 
information obtained pursuant to section 624 outside the FBI, 
except as may be necessary for the approval or conduct of a 
foreign counterintelligence investigation, or, where the 
information concerns military service personnel subject to the 
Uniform Code of Military Justice, to appropriate investigation 
authorities in the military department concerned as may be 
necessary for the conduct of a joint foreign counter-
intelligence investigation with the FBI. Since the military 
departments have concurrent jurisdiction to investigate and 
prosecute military personnel subject to the Uniform Code of 
Military Justice, paragraph 624(g) permits the FBI to 
disseminate consumer credit reports it obtains pursuant to this 
section to appropriate military investigative authorities where 
a foreign counterintelligence investigation involves a military 
service person and is being conducted jointly with the FBI.
    Paragraph 624(g) provides that nothing in section 624 shall 
be construed to prohibit information from being furnished by 
the FBI pursuant to a subpoena or court order, or in connection 
with a judicial or administrative proceeding to enforce the 
provisions of the FCRA. The paragraph further provides that 
nothing in section 624 shall be construed to authorize or 
permit the withholding of information from the Congress.
    Paragraph 634(h) provides that on a semiannual basis the 
Attorney General shall fully inform the Permanent Select 
Committee on Intelligence and the Committee on Banking, 
Finance, and Urban Affairs of the U.S. House of 
Representatives, and the Select Committee on Intelligence and 
the Committee on Banking, Housing, and Urban Affairs of the 
U.S. Senate concerning all requests made pursuant to section 
624.
    Seminannual reports are required to be submitted to the 
intelligence committees on (1) use of FBI's mandatory access 
provision of the RFPA by section 3414(a)(5)(C) of title 15, 
United States Code; and (2) use of the FBI's 
counterintelligence authority, under the Electronic Privacy 
Communications Act of 1986, to access telephone subscriber and 
toll billing information by section 2709(e) of title 18, United 
States Code. The Committee expects the reports required by FCRA 
paragraph 624(h) to match the level of detail included in these 
reports, i.e., a breakdown by quarter, by number of requests, 
by number of persons or organizations subject to requests, and 
by U.S. persons and organizations and non-U.S. persons and 
organizations.
    Paragraphs 624(i) through 624(m) parallel the enforcement 
provisions of the Right to Financial Privacy Act, 12 U.S.C. 
3417 and 3418.
    Paragraph 624(i) establishes civil penalties for access or 
disclosure by an agency or department of the United States in 
violation of section 624. Damages, costs and attorney fees 
would be awarded to the person to whom the consumer reports 
related in the event of a violation.
    Paragraph 624(j) provides that whenever a court determines 
that any agency or department of the United States has violated 
any provision of section 624 and that the circumstances 
surrounding the violation raise questions of whether an officer 
or employee of the agency or department acted willfully or 
intentionally with respect to the violation, the agency or 
department shall promptly initiate a proceeding to determine 
whether disciplinary action is warranted against the officer or 
employee who was responsible for the violation.
    Paragraph 624(k) provides that any credit reporting 
institution or agent or employee thereof making a disclosure of 
credit records pursuant to section 624 in good-faith reliance 
upon a certificate by the FBI pursuant to the provisions of 
section 624 shall not be liable to any person for such 
disclosure under title 15, the constitution of any State, or 
any law or regulation of any State or any political subdivision 
of any State.
    Paragraph 624(l) provides that the remedies and sanctions 
set forth in section 624 shall be the only judicial remedies 
and sanctions for violations of the section.
    Paragraph 624(m) provides that in addition to any other 
remedy contained in section 624, injunctive relief shall be 
available to require that the procedures of the section are 
compiled with and that in the event of any successful action, 
costs together with reasonable attorney's fees, as determined 
by the court, may be recovered.
Title VII--Technical correction
    Section 701 amends section 102(c)(3)(C) of the National 
Security Act by striking out the parenthetical reference 
``including military pay'' and inserting ``active duty'' before 
``commissioned.'' While we do not believe that this section 
applies to retired military officers, it is important to remove 
any ambiguity by making these changes. These technical 
corrections clarify that a retired military officer appointed 
as Director of Deputy Director of Central Intelligence can 
receive compensation at the appropriate level of the Executive 
Schedule under 5 U.S.C. Sec. 5313 (Director) or 5 U.S.C. 
Sec. 5314 (Deputy Director). This clearly was the intent of the 
drafters of this provision. The Senate Select Committee on 
Intelligence added section 102(c)(3)(C) to the FY 1993 
Intelligence Authorization Act to ensure that an active duty 
military officer appointed as Director or Deputy Director only 
receives his or her military pay, not to restrict the 
compensation of a retired military officer appointed to one of 
those positions.
    Section 702 amends the CIA Information Act of 1984 to 
reflect the recent reorganization of the CIA Office of Security 
into the Office of Personnel Security and the Office of 
Security Operations. The amendment will ensure that the Office 
of Personnel Security, where the records intended to be subject 
to the Act are kept, will continue to receive the benefit of 
the Act's exception from search and review under the Freedom of 
Information Act. It is the Committee's understanding that the 
types of records that will be kept in the Office of Personnel 
Security are identical to the types of records formerly kept in 
the CIA Office of Security to which the Act has applied.
                            committee action
    On May 24, 1995, the Select Committee on Intelligence 
approved the bill by a unanimous vote, and ordered that it be 
favorably reported.
                           estimate of costs
    In accordance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate, the Committee attempted to 
estimate the costs which would be incurred in carrying out the 
provisions of this bill in fiscal year 1996 and in each of the 
five years thereafter if these amounts are appropriated. For 
fiscal year 1996, the estimated costs incurred in carrying out 
the provisions of this bill 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.
                  congressional budget office estimate
    Pursuant to existing law, the Committee requested and 
received the following cost estimate from the Congressional 
Budget Office regarding this legislation:
                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 12, 1995.
Hon. Arlen Specter,
Chairman, Select Committee on Intelligence,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for the Intelligence 
Authorization Act for Fiscal Year 1996, as ordered reported by 
the Senate Select Committee on Intelligence on May 24, 1995.
    The bill would affect direct spending and thus would be 
subject to pay-as-you-go procedures under section 252 of the 
Balanced Budget and Emergency Deficit Control Act.
    If you wish further details on this estimate, we will be 
pleased to provide them.
            Sincerely,
                                              James L. Blum
                                   (For June E. O'Neill, Director).
    Enclosure.
    1. Bill number: Unassigned.
    2. Bill title: Intelligence Authorization Act for Fiscal 
Year 1996.
    3. Bill Status: As ordered reported by the Senate Select 
Committee on Intelligence on May 24, 1995.
    4. Bill purpose: The bill would authorize appropriations 
for fiscal year 1996 for intelligence activities of the United 
States government, the Community Management Staff of the 
Director of Central Intelligence, and the Central Intelligence 
Agency Retirement and Disability System
    5. Estimate cost to the Federal Government of Titles I 
(except sections 101-103), II, III (except section 301), IV, V, 
and VI: CBO was unable to obtain the necessary information to 
estimate the costs for Title I (except section 104) and section 
301 of Title III of this bill because they are classified at a 
level above clearances now held by CBO employees. The estimated 
costs in the table below, therefore, reflect only the costs of 
section 104 and Titles II, III (except section 301), IV, V, and 
VI.
------------------------------------------------------------------------
                      1995     1996     1997     1998     1999     2000 
------------------------------------------------------------------------
Direct spending:                                                        
    Estimated                                                           
     budget                                                             
     authority....        0    (\1\)    (\1\)        2        3        1
    Estimated                                                           
     outlays......        0    (\1\)    (\1\)        2        3        1
                   =====================================================
Spending subject                                                        
 to appropriations                                                      
 action:                                                                
    Spending under                                                      
     current law:                                                       
        Budget                                                          
         authority                                                      
          \2\.....      291        0        0        0        0        0
        Estimated                                                       
         outlays..      291       38       22        9        0        0
                   =====================================================
Proposed changes:                                                       
    Estimated                                                           
     authorization                                                      
     level \3\....        0      312    (\1\)        5        6        1
    Estimated                                                           
     outlays......        0      275       28       12        8        1
                   =====================================================
Spending under the                                                      
 Authorization Act                                                      
 for Fiscal Year                                                        
 1996:                                                                  
    Estimated                                                           
     authorization                                                      
     level \2\ \3\      291      312    (\1\)        5        6        1
    Estimated                                                           
     outlays......      291      313       50       21        8        1
------------------------------------------------------------------------
\1\ Less than $500,000.                                                 
\2\ The 1995 figure is the amount already appropriated.                 
\3\ Because parts of this bill are highly classified, CBO is unable to  
  provide a full accounting of the bill's costs over the 1996-2000      
  period and a comparison with the 1995 level.                          
    6. Basis of estimate: For purposes of this estimate, CBO 
assumed that the Intelligence Authorization Act of Fiscal Year 
1996 will be enacted by October 1, 1995, and that the full 
amounts authorized will be appropriated for fiscal year 1996. 
Outlays are estimated according to historical spending patterns 
for intelligence programs.
Direct spending
    CIA Separation Incentive. Section 401 would allow the 
Central Intelligence Agency (CIA) to offer separation incentive 
payments to employees from the end of fiscal year 1997 to the 
end of fiscal year 1999. Additional retirement costs would 
occur in the near term because employees who retire under this 
program would receive their annuities earlier than they would 
otherwise. The cost of these annuities would constitute direct 
spending. CBO estimates no costs to occur in 1996 and 1997 as a 
result of section 401. However, direct spending costs are 
estimated to be $2 million in 1998, $3 million in 1999, and $1 
million in 2000.
    Based on projections from the CIA, CBO estimates that 550 
employees would be offered an incentive payment in 1998 and 700 
in 1999. The CIA expects that one quarter of those offered an 
incentive payment would take the incentive and retire. The 
estimate assumes that about 60 percent of the retirees would 
have retired anyway, without the incentive. The estimate 
assumes that the remaining 40 percent who accept the incentive 
would retire one or two years earlier than they would have 
otherwise.
    Thrift Savings Plan (TSP) Forfeiture. Section 304 would 
allow forfeiture of the U.S. government contribution to the TSP 
under the Federal Employee Retirement System, along with 
interest, if an employee is convicted of national security 
offenses. According to the CIA, saving from this provision 
would not exceed $35,000 annually.
    Spousal Pension Benefits. Section 305 would allow 
restoration of spousal pension benefits to those spouses who 
cooperate in criminal investigations and prosecutions for 
national security offenses. According to the CIA, costs from 
this provision would not exceed $35,000 annually.
Authorizations of appropriations
    Section 104 would authorize appropriations of $98.3 million 
for 1996 for the Intelligence Community Management Account of 
the Director of Central Intelligence (DCI). Similarly, section 
201 specifies an authorization of appropriations for a 
contribution to the Central Intelligence Agency Retirement and 
Disability Fund of $213.9 million.
    In addition to the added retirement costs, section 401 
(discussed above under direct spending) would increase 
discretionary spending for inventive costs. The cash incentives 
would cost $4 million in 1998 and $5 million in 1999. CBO 
assumes that the savings in salary and benefits from these 
reductions would be incurred under current law as part of the 
anticipated reduction in the CIA workforce. Thus, these savings 
would not be a result of this bill and would not offset the 
cost of incentive payments in this estimate.
    Section 501 would extend comparable benefits and allowances 
to civilian and military personnel assigned to defense 
intelligence functions overseas. According to the Defense 
Intelligence Agency, this provision would increase personnel 
costs by approximately $200,000 annually.
    Section 503 would authorize the Secretary of Defense to 
establish an undergraduate training program for recruiting 
individuals with skills that are critical to the intelligence 
missions of the Military Departments. According to the Defense 
Intelligence Agency, this provision could cost approximately 
$600,000 annually by the year 2000 depending on how the 
different branches of the armed services subscribe to the 
program.
    Section 601 would extend access to consumer credit records 
to the Federal Bureau of Investigation provided that such 
information is to be used for an authorized foreign 
counterintelligence investigation. The costs to reimburse 
reporting agencies for processing costs would be insignificant.
    7. Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act of 1985 sets up pay-as-you-go 
procedures for legislation affecting direct spending or 
receipts through 1998. CBO estimates that the Intelligence 
Authorization Act for Fiscal Year 1996 would have the following 
pay-as-you-go impact:
------------------------------------------------------------------------
                                        1995     1996     1997     1998 
------------------------------------------------------------------------
Change in outlays...................        0        0        0        2
Change in receipts..................       NA       NA       NA       NA
------------------------------------------------------------------------
    8. Estimated cost to State and local governments: None.
    9. Estimate comparison: None.
    10. Previous CBO estimate: None.
    11. Estimate prepared by: Wayne Boyington and Elizabeth 
Chambers.
    12. Estimate approved by: Robert R. Singhine, for Paul N. 
Van de Water, Assistant Director for Budget Analysis.
                    evaluation of regulatory impact
    In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee finds 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.
                               <greek-d> 



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