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Congressional Documents

                                  59 006                                 
                            105 th Congress                             
                                 Report                                 
                                                                             
                        HOUSE OF REPRESENTATIVES                        
                               2d Session                               
                                105 508                                 
                 INTELLIGENCE AUTHORIZATION ACT FOR FISCAL YEAR 1999           
  May 5 , 1998.--Committed to the Committee of the Whole House on the    
 State of the Union and ordered to be printed                            
  Mr. Goss , from the Permanent Select Committee on Intelligence,        
 submitted the following                                                 
                                  REPORT                                 
                         [To accompany H.R. 3694]                        
       [Including cost estimate of the Congressional Budget Office]      
     The Permanent Select Committee on Intelligence, to whom was referred 
  the bill (H.R. 3694) to authorize appropriations for fiscal year 1999   
  for intelligence and intelligence-related activities of the United      
  States Government, the Community Management Account, and the Central    
  Intelligence Agency Retirement and Disability System, and for other     
  purposes, having considered the same, report favorably thereon with an  
  amendment and recommend that the bill as amended do pass.               
                               CONTENTS                                 
         The bill as reported                                             2
         Purpose                                                          5
         Overall perspective on the intelligence budget and committee inte6
         Scope of committee review                                        6
         Committee findings and recommendations                           7
   Areas of Special Interest                                               
        9                                                                       
                    The National Security Agency Budget, Culture, Method
          of Operation                                                  
        9                                                                       
          National Reconnaissance Program                               
        11                                                                      
          The National Imagery and Mapping Agency (NIMA)                
        12                                                                      
          Imagery Archiving                                             
        13                                                                      
          Automated Intelligence Data Fusion                            
        14                                                                      
          Imagery Server Systems                                        
        14                                                                      
          Defense Counterintelligence                                   
        15                                                                      
          Intelligence Congressional Justification Books                
        16                                                                      
   Joint Military Intelligence Program                                     
        16                                                                      
   Tactical Intelligence and Related Activities                            
        28                                                                      
   Section-by-Section Analysis of the Bill as Reported                     
        33                                                                      
          Title I--Intelligence Activities                              
        33                                                                      
   Section 101--Authorization of Appropriations                            
        33                                                                      
   Section 102--Classified Schedule of Authorizations                      
        33                                                                      
   Section 103--Personnel Ceiling Adjustments                              
        33                                                                      
   Section 104--Community Management Account                               
        33                                                                      
                     Title II--Central Intelligence Agency Retirement   
          and Disability System                                         
        35                                                                      
   Section 201--Authorization of Appropriations                            
        35                                                                      
           Title III--General Provisions                                
        35                                                                      
      Section 301--Increase in Employee Compensation and Benefits          
   Authorized by Law                                                       
        35                                                                      
   Section 302--Restriction on Conduct of Intelligence Activities          
        35                                                                      
   Section 303--Application of Sanctions Laws to Intelligence Activities   
        35                                                                      
   Section 304--Sense of Congress on Intelligence Community Contracting    
        36                                                                      
          Title IV--Central Intelligence Agency                         
        36                                                                      
   Section 401--Extension of CIA Voluntary Separation Pay Act              
        36                                                                      
      Section 402--Enhanced Protective Authority for CIA Personnel and     
   Family Members                                                          
        37                                                                      
   Section 403--Technical Corrections                                      
        38                                                                      
          Title V--Department of Defense                                
        38                                                                      
      Section 501--Extension of Authority to Engage in Commercial          
   Activities as Security for Intelligence Collection Activities           
        38                                                                      
   Committee position                                                      
        39                                                                      
      Findings and recommendations of the Committee on Government Reform   
   and Oversight                                                           
        39                                                                      
   Oversight findings                                                      
        39                                                                      
   Fiscal year cost projections                                            
        39                                                                      
   Congressional Budget Office estimates                                   
        39                                                                      
   Committee cost estimates                                                
        41                                                                      
      Specific Constitutional authority for Congressional enactment of this
   legislation                                                             
        42                                                                      
   Changes to existing law                                                 
        42                                                                      
   The amendment is as follows:                                           
     Strike out all after the enacting clause and insert in lieu thereof  
  the following:                                                          
          SECTION 1. SHORT TITLE; TABLE OF CONTENTS.                              
     (a) Short Title.--This Act may be cited as the ``Intelligence        
  Authorization Act for Fiscal Year 1999''.                               
     (b) Table of Contents.--The table of contents for this Act is as     
  follows:                                                                
      Sec. 1. Short title; table of contents.                                 
                              TITLE I--INTELLIGENCE ACTIVITIES                    
      Sec. 101. Authorization of appropriations.                              
      Sec. 102. Classified schedule of authorizations.                        
      Sec. 103. Personnel ceiling adjustments.                                
      Sec. 104. Community management account.                                 
           TITLE II--CENTRAL INTELLIGENCE AGENCY RETIREMENT AND DISABILITY SYSTEM 
      Sec. 201. Authorization of appropriations.                              
                               TITLE III--GENERAL PROVISIONS                      
            Sec. 301. Increase in employee compensation and benefits          
      authorized by law.                                                      
      Sec. 302. Restriction on conduct of intelligence activities.            
      Sec. 303. Application of sanctions laws to intelligence activities.     
      Sec. 304. Sense of Congress on intelligence community contracting.      
                           TITLE IV--CENTRAL INTELLIGENCE AGENCY                  
      Sec. 401. Extension of the CIA Voluntary Separation Pay Act.            
            Sec. 402. Enhanced protective authority for CIA personnel and     
      family members.                                                         
      Sec. 403. Technical amendments.                                         
                   TITLE V--DEPARTMENT OF DEFENSE INTELLIGENCE ACTIVITIES         
            Sec. 501. Extension of authority to engage in commercial          
      activities as security for intelligence collection activities.          
           TITLE I--INTELLIGENCE ACTIVITIES                                        
          SEC. 101. AUTHORIZATION OF APPROPRIATIONS.                              
     Funds are hereby authorized to be appropriated for fiscal year 1999  
  for the conduct of the intelligence and intelligence-related activities 
  of the following elements of the United States Government:              
    (1) The Central Intelligence Agency.                                   
    (2) The Department of Defense.                                         
    (3) The Defense Intelligence Agency.                                   
    (4) The National Security Agency.                                      
       (5) The Department of the Army, the Department of the Navy, and the 
   Department of the Air Force.                                            
    (6) The Department of State.                                           
    (7) The Department of the Treasury.                                    
    (8) The Department of Energy.                                          
    (9) The Federal Bureau of Investigation.                               
    (10) The National Reconnaissance Office.                               
    (11) The National Imagery and Mapping Agency.                          
          SEC. 102. CLASSIFIED SCHEDULE OF AUTHORIZATIONS.                        
     (a) Specifications of Amounts and Personnel Ceilings.--The amounts   
  authorized to be appropriated under section 101, and the authorized     
  personnel ceilings as of September 30, 1999, for the conduct of the     
  intelligence and intelligence-related activities of the elements listed 
  in such section, are those specified in the classified Schedule of      
  Authorizations prepared to accompany the bill H.R. 3694 of the 105th    
  Congress.                                                               
     (b) Availability of Classified Schedule of Authorizations.--The      
  Schedule of Authorizations shall be made available to the Committees on 
  Appropriations of the Senate and House of Representatives and to the    
  President. The President shall provide for suitable distribution of the 
  Schedule, or of appropriate portions of the Schedule, within the        
  executive branch.                                                       
          SEC. 103. PERSONNEL CEILING ADJUSTMENTS.                                
     (a) Authority for Adjustments.--With the approval of the Director of 
  the Office of Management and Budget, the Director of Central            
  Intelligence may authorize employment of civilian personnel in excess of
  the number authorized for fiscal year 1999 under section 102 when the   
  Director of Central Intelligence determines that such action is         
  necessary to the performance of important intelligence functions, except
  that the number of personnel employed in excess of the number authorized
  under such section may not, for any element of the intelligence         
  community, exceed two percent of the number of civilian personnel       
  authorized under such section for such element.                         
     (b) Notice to Intelligence Committees.--The Director of Central      
  Intelligence shall promptly notify the Permanent Select Committee on    
  Intelligence of the House of Representatives and the Select Committee on
  Intelligence of the Senate whenever he exercises the authority granted  
  by this section.                                                        
          SEC. 104. COMMUNITY MANAGEMENT ACCOUNT.                                 
     (a) Authorization of Appropriations.--There is authorized to be      
  appropriated for the Community Management Account of the Director of    
  Central Intelligence for fiscal year 1999 the sum of $139,123,000.      
  Within such amount, funds identified in the classified Schedule of      
  Authorizations referred to in section 102(a) for the Advanced Research  
  and Development Committee shall remain available until September 30,    
  2000.                                                                   
     (b) Authorized Personnel Levels.--The elements within the Community  
  Management Account of the Director of Central Intelligence is authorized
  283 full-time personnel as of September 30, 1999. Personnel serving in  
  such elements may be permanent employees of the Community Management    
  Staff or personnel detailed from other elements of the United States    
  Government.                                                             
   (c)  Classified Authorizations.--                                      
       (1) Authorization of appropriations.--In addition to amounts        
   authorized to be appropriated for the Community Management Account by   
   subsection (a), there is also authorized to be appropriated for the     
   Community Management Account for fiscal year 1999 such additional       
   amounts as are specified in the classified Schedule of Authorizations   
   referred to in section 102(a).                                          
       (2) Authorization of personnel.--In addition to the personnel       
   authorized by subsection (b) for elements of the Community Management   
   Account as of September 30, 1999, there is authorized such additional   
   personnel for such elements as of that date as is specified in the      
   classified Schedule of Authorizations.                                  
     (d) Reimbursement.--Except as provided in section 113 of the National
  Security Act of 1947, during fiscal year 1999, any officer or employee  
  of the United States or a member of the Armed Forces who is detailed to 
  the staff of the Community Management Account from another element of   
  the United States Government shall be detailed on a reimbursable basis, 
  except that any such officer, employee or member may be detailed on a   
  nonreimbursable basis for a period of less than one year for the        
  performance of temporary functions as required by the Director of       
  Central Intelligence.                                                   
   (e)  National Drug Intelligence Center.--                              
       (1) In general.--Of the amount appropriated pursuant to the         
   authorization in subsection (a), the amount of $27,000,000 shall be     
   available for the National Drug Intelligence Center. Within such amount,
   funds provided for research, development, test, and evaluation purposes 
   shall remain available until September 30, 2000, and funds provided for 
   procurement purposes shall remain available until September 30, 2001.   
       (2) Transfer of funds.--The Director of Central Intelligence shall  
   transfer to the Attorney General of the United States funds available   
   for the National Drug Intelligence Center under paragraph (1). The      
   Attorney General shall utilize funds so transferred for the activities  
   of the National Drug Intelligence Center.                               
       (3) Limitation.--Amounts available for the National Drug            
   Intelligence Center may not be used in contravention of the provisions  
   of section 103(d)(1) of the National Security Act of 1947 (50 U.S.C. 403
   3(d)(1)).                                                               
       (4) Authority.--Notwithstanding any other provision of law, the     
   Attorney General shall retain full authority over the operations of the 
   National Drug Intelligence Center.                                      
     (f) Transfer Authority for Funds for Security Requirements at        
  Overseas Locations.--                                                   
       (1) In general.--Of the amount appropriated pursuant to the         
   authorization in subsection (a), the Director of Central Intelligence   
   may transfer funds to departments or other agencies for the sole purpose
   of supporting certain intelligence community security requirements at   
   overseas locations, as specified by the Director.                       
       (2) Limitation.--Amounts made available for departments or agencies 
   under paragraph (1) shall be--                                          
    (A) transferred to the specific appropriation;                         
       (B) allocated to the specific account in the specific amount, as    
   determined by the Director;                                             
       (C) merged with funds in such account that are available for        
   architectural and engineering support expenses at overseas locations;   
   and                                                                     
       (D) available only for the same purposes, and subject to the same   
   terms and conditions, as the funds described in subparagraph (C).       
           TITLE II--CENTRAL INTELLIGENCE AGENCY RETIREMENT AND DISABILITY SYSTEM  
          SEC. 201. AUTHORIZATION OF APPROPRIATIONS.                              
     There is authorized to be appropriated for the Central Intelligence  
  Agency Retirement and Disability Fund for fiscal year 1999 the sum of   
  $201,500,000.                                                           
           TITLE III--GENERAL PROVISIONS                                           
                    SEC. 301. INCREASE IN EMPLOYEE COMPENSATION AND BENEFITS      
          AUTHORIZED BY LAW.                                                      
     Appropriations authorized by this Act for salary, pay, retirement,   
  and other benefits for Federal employees may be increased by such       
  additional or supplemental amounts as may be necessary for increases in 
  such compensation or benefits authorized by law.                        
          SEC. 302. RESTRICTION ON CONDUCT OF INTELLIGENCE ACTIVITIES.            
     The authorization of appropriations by this Act shall not be deemed  
  to constitute authority for the conduct of any intelligence activity    
  which is not otherwise authorized by the Constitution or the laws of the
  United States.                                                          
          SEC. 303. APPLICATION OF SANCTIONS LAWS TO INTELLIGENCE ACTIVITIES.     
     Section 905 of the National Security Act of 1947 (50 U.S.C. 441d) is 
  amended by striking out ``January 6, 1999'' and inserting in lieu       
  thereof ``January 6, 2000''.                                            
          SEC. 304. SENSE OF CONGRESS ON INTELLIGENCE COMMUNITY CONTRACTING.      
     It is the sense of Congress that the Director of Central Intelligence
  should continue to direct that elements of the intelligence community,  
  whenever compatible with the national security interests of the United  
  States and consistent with operational and security concerns related to 
  the conduct of intelligence activities, and where fiscally sound, should
  competitively award contracts in a manner that maximizes the procurement
  of products properly designated as having been made in the United       
  States.                                                                 
           TITLE IV--CENTRAL INTELLIGENCE AGENCY                                   
          SEC. 401. EXTENSION OF THE CIA VOLUNTARY SEPARATION PAY ACT.            
     Section 2(f) of the Central Intelligence Agency Voluntary Separation 
  Pay Act (Public Law 103 36, 50 U.S.C. 403 4 note) is amended by striking
  out ``September 30, 1999'' and inserting in lieu thereof ``September 30,
  2001''.                                                                 
                    SEC. 402. ENHANCED PROTECTIVE AUTHORITY FOR CIA PERSONNEL AND 
          FAMILY MEMBERS.                                                         
     Section 5(a)(4) of the Central Intelligence Agency Act of 1949 (50   
  U.S.C. 403f(a)(4)) is amended by striking out ``and the protection of   
  Agency personnel and of defectors, their families'' and inserting in    
  lieu thereof ``and the protection of current and former Agency personnel
  and their immediate families, and defectors and their immediate         
  families''.                                                             
          SEC. 403. TECHNICAL AMENDMENTS.                                         
     (a) Central Intelligence Agency Act of 1949.--(1) Section 5(a)(1) of 
  the Central Intelligence Agency Act of 1949 (50 U.S.C. 403f(a)(1)) is   
  amended--                                                               
       (A) by striking out ``subparagraphs (B) and (C) of section          
   102(a)(2)'' and inserting in lieu thereof ``paragraphs (2) and (3) of   
   section 102(a)'';                                                       
       (B) by striking out ``(c)(5)'' and inserting in lieu thereof        
   ``(c)(6)'';                                                             
    (C) by inserting ``(3),'' after ``403(a)(2),'';                        
    (D) by inserting ``(c)(6), (d)'' after ``403 3''; and                  
    (E) by inserting ``(a), (g)'' after ``403 4''.                         
     (2) Section 6 of such Act (50 U.S.C. 403g) is amended by striking out
  ``(c)(5)'' each place it appears and inserting in lieu thereof          
  ``(c)(6)''.                                                             
     (b) Central Intelligence Agency Retirement Act.--Section 201(c) of   
  the Central Intelligence Agency Retirement Act (50 U.S.C. 2011(c)) is   
  amended by striking out ``(c)(5)'' each place it appears and inserting  
  in lieu thereof ``(c)(6)''.                                             
           TITLE V--DEPARTMENT OF DEFENSE INTELLIGENCE ACTIVITIES                  
                    SEC. 501. EXTENSION OF AUTHORITY TO ENGAGE IN COMMERCIAL      
          ACTIVITIES AS SECURITY FOR INTELLIGENCE COLLECTION ACTIVITIES.          
     Section 431(a) of title 10, United States Code, is amended by        
  striking out ``December 31, 1998'' and inserting in lieu thereof        
  ``December 31, 2001''.                                                  
                                          PURPOSE                                 
   The bill would:                                                         
       (1) Authorize appropriations for fiscal year 1999 for (a) the       
   intelligence and intelligence-related activities of the U.S. Government,
   (b) the Community Management Account, and (c) the Central Intelligence  
   Agency Retirement and Disability System;                                
       (2) Authorize the personnel ceilings on September 30, 1999 for the  
   intelligence and intelligence-related activities of the U.S. Government 
   and permit the Director of Central Intelligence to authorize personnel  
   ceilings in Fiscal Year 1999 for any intelligence element up to two     
   percent above the authorized levels, with the approval of the Director  
   of the Office of Management and Budget;                                 
       (3) Authorize $27 million for the National Drug Intelligence Center 
   in Johnstown, Pennsylvania;                                             
       (4) Extend the authority of the President to defer the imposition of
   sanctions through January 6, 2000, when to proceed without delay would  
   seriously risk the compromise of an intelligence source or method, or an
   ongoing criminal investigation;                                         
       (5) Extend the CIA's authority to offer ``early out'' incentives to 
   employees to enable the CIA to meet the intelligence personnel needs of 
   the next century;                                                       
       (6) Enhance the CIA's ability to provide personal protection to its 
   employees and defectors and the families of such protectees in          
   situations presenting specific or credible threats of physical harm; and
       (7) Extend the current Department of Defense authority to engage in 
   commercial activities as security for intelligence collection.          
            OVERALL PERSPECTIVE ON THE INTELLIGENCE BUDGET AND COMMITTEE INTENT   
      The classified annex to this public report includes the classified   
   Schedule of Authorizations and its associated language. The committee   
   views the classified Annex as an integral part of this legislation. The 
   classified Annex contains a thorough discussion of all budget issues    
   considered by the committee, which underlies the funding authorization  
   found in the Schedule of Authorizations. The committee intends that all 
   intelligence programs discussed in the classified Annex to this report  
   be conducted in accord with the guidance and limitations set forth as   
   associate language therein. The classified Schedule is incorporated     
   directly into this legislation. The classified Annex is available for   
   review by all Members of the House of Representatives, subject to the   
   requirements of clause 13 of rule XLIII of the House.                   
                                 SCOPE OF COMMITTEE REVIEW                        
      U.S. intelligence and intelligence-related activities under the      
   jurisdiction of the committee include the National Foreign Intelligence 
   Program (NFIP), and the Tactical Intelligence and Related Activities    
   (TIARA) and the Joint Military Intelligence Program (JMIP) of the       
   Department of Defense.                                                  
      The NFIP consists of all programs of the Central Intelligence Agency,
   as well as those national foreign intelligence and/or                   
   counterintelligence programs conducted by: (1) the Department of        
   Defense; (2) the Defense Intelligence Agency; (3) the National Security 
   Agency; (4) the Departments of the Army, Navy, and Air Force; (5) the   
   Department of State; (6) the Department of the Treasury; (7) the        
   Department of Energy; (8) the Federal Bureau of Investigation; (9) the  
   National Reconnaissance Office; and (10) the National Imagery and       
   Mapping Agency.                                                         
      The Department of Defense TIARA are a diverse array of reconnaissance
   and target acquisition programs that are a functional part of the basic 
   military force structure and provide direct information support to      
   military operations. TIARA, as defined by the Joint Chiefs of Staff and 
   the Secretary of Defense, include those military intelligence activities
   outside the General Defense Intelligence Program that respond to the    
   needs of military commanders for operational support information, as    
   well as to national command, control, and intelligence requirements. The
   Committee on National Security in the House of Representatives has joint
   oversight and authorizing jurisdiction of the programs comprising TIARA.
      The JMIP was established in 1995 to provide integrated program       
   management of defense intelligence elements that support defense-wide or
   theater-level consumers. Included within JMIP are aggregations created  
   for management efficiency and characterized by similarity, either in    
   intelligence discipline (e.g., Signals Intelligence (SIGINT), Imagery   
   Intelligence (IMINT)), or function (e.g., satellite support, aerial     
   reconnaissance). The following aggregations are included in the JMIP:   
   (1) the Defense Cryptologic Program (DCP); (2) the Defense Imagery and  
   Mapping Program (DIMAP); (3) the Defense General Intelligence           
   Applications Program (DGIAP), which itself includes (a) the Defense     
   Airborne Reconnaissance Program (DARP), (b) the Defense Intelligence    
   Tactical Program (DITP), (c) the Defense Intelligence Special           
   Technologies Program (DISTP), (d) the Defense Intelligence Counterdrug  
   Program (DICP), and (e) the Defense Space Reconnaissance Program (DSRP).
                           COMMITTEE FINDINGS AND RECOMMENDATIONS                 
      The committee completed its review of the President's fiscal year    
   1999 budget, carrying out its annual responsibility to prepare an       
   authorization based on close examination of intelligence programs and   
   proposed expenditures. The review reflected the committee's continuing  
   belief that intelligence activities must be examined by function as well
   as by program. Thus, the committee's review was structured across       
   program lines and intelligence disciplines and themes. The committee    
   held seven full committee budget-related hearings on budgetary issues,  
   including: acquisition of overhead collection systems, SIGINT issues,   
   IMINT issues, Human Intelligence (HUMINT) issues, Analysis and          
   Production, and Covert Action. A specific hearing was also held that    
   dealt with the Future Imagery Architecture, and two hearings were held  
   at which the Director of Central Intelligence (DCI) testified, in order 
   to understand his views and plans for the future of intelligence and the
   Intelligence Community (IC). The committee also held six full-committee 
   briefings on areas such as commercial mapping technology, collection    
   management, and the status of the space reconnaissance programs, in     
   particular, and the status of IC acquisition processes, in general.     
   There were, in addition, numerous individual briefings of Members and   
   over 100 staff briefings on programs, specific activities, and budget   
   requests.                                                               
      The committee continued to place heavy emphasis on understanding and 
   addressing the future needs of the IC, and the several distinct roles   
   that it plays in national security. For the past three years, the       
   committee has discussed the fact that our national security is affected 
   by a set of issues more broad than those emphasized for the past 50     
   years. Heretofore, some of these issues have not been identified so     
   readily with our global interests. Throughout our continuing review,    
   there has been a constant theme: the threats that face our nation demand
   that the IC be vigilant on both the strategic and tactical levels and   
   the IC must maintain a world-wide view, with a highly flexible set of   
   resources.                                                              
      The committee is struck by what can be characterized as a growing    
   sense of apathy toward our national security and intelligence. Because  
   the threats are less obvious and untraditional, many inside and outside 
   of government believe that our nation has fewer worries and is somehow  
   safer. That we can dramatically reduce our intelligence and defense     
   resources, because we are at peace, is a concept that many endorse,     
   especially when weighing such expenditures against those needed         
   domestically. Unfortunately, our nation is no less at risk now than     
   during the Cold War. What has changed is the nature of the threat. The  
   likelihood of a major nuclear confrontation has receded. But other      
   aspects of our security are at greater risk, including the growing      
   possibility that a rogue nation will attack United States' interests, or
   even the United States itself, with a nuclear device or some other      
   weapon of mass destruction.                                             
      Two specific incidents occurred recently that have shown light on how
   much at risk, and how ill-prepared, we are. First is the most recent    
   confrontation with Iraq. Yet again, the United States faced a dilemma in
   how to deal with Saddam Hussein, a dictator possessing weapons of mass  
   destruction and a demonstrated will to use them, who has consistently   
   threatened stability of a critically important, strategic region. The   
   real issues in this situation could be boiled down to two--did we have a
   policy, and did we have the intelligence that would not only support a  
   policy decision and its implementation, but would also provide the      
   information necessary to develop options? Regarding the latter, the     
   answer was a resounding ``no.''                                         
      The second incident is related to our nation's vulnerability to      
   technological attack. In February 1998, Department of Defense computer  
   systems fell victim to systematic, coordinated attacks by individuals   
   who, luckily, appeared to be driven by the challenge of conducting such 
   attacks rather than by malicious intent. Regardless of intent, the      
   attack again demonstrates that information technology has become this   
   nation's strength as well as its Achilles' heel. Consequently, high     
   priority must be placed on developing our abilities to warn, detect and 
   defend against such attacks, as well as to be positioned to conduct such
   attacks when necessary. The committee stresses that this is a national  
   security issue that encompasses the entirety of our nation's            
   infrastructure, not just that of Defense or of the government. Likewise,
   this issue must be faced in terms of threat and attack, not just in     
   terms of law enforcement. At the end of the day, we must be vigilant in 
   ensuring that the IC is positioned to address this new challenge.       
      Our intelligence capabilities have dwindled since the breakup of the 
   Soviet Union, and we have failed to build new capabilities that will    
   become increasingly critical. This is especially true in the areas of   
   espionage, covert action, and in our toughest SIGINT activities. We, as 
   a nation, cannot continue this course. The world is such that           
   individuals and groups will continue to disrupt our foreign policy      
   objectives and threaten our national security. The only thing that will 
   change will be that their resources will increase and their capabilities
   will grow ever more fearsome. We must be prepared, by having the        
   intelligence resources we need, well before a crisis occurs, and        
   preferably in a fashion that might allow us to preempt it. We can do no 
   less.                                                                   
      As a result of these demands, the committee evaluated the budget     
   submission with an eye toward looking at future needs and capabilities. 
   Specifically, five major themes came out of this evaluation:            
       We must invest in a recapitalization and modernization of our SIGINT
   capabilities;                                                           
       We must invest in re-establishing and rebuilding our clandestine    
   espionage or HUMINT infrastructure;                                     
       We must continue to invest in all-source analysis, establishing a   
   ``global,'' strategic outlook that will allow for proper indications and
   warning for the policymakers and key decision makers throughout         
   government;                                                             
    We must rebuild covert action capabilities; and,                       
       We must invest in advanced research and development in all programs 
   within the IC.                                                          
      Likewise, the committee's review brought to light some fundamental   
   questions that are partially addressed in this budget, and will be      
   specifically pursued over the next year. These include:                 
      Will the growing cost of the National Reconnaissance Program (NRP)   
   continue unabated, and how is this affecting the other programs within  
   the NFIP?                                                               
      Are we placing the proper requirements on the development of our     
   future overhead systems? In essence, are we structuring it only to      
   monitor and surveil known targets, or do we want to develop systems that
   focus on reconnaissance and uncovering truly secret information?        
      Is financial management within the IC, specifically within the NRP   
   and the National Imagery and Mapping Program, rigorous enough that the  
   DCI can make needed tradeoffs?                                          
      Is the balance of investment between overhead systems and other      
   methods of collection correct, given the types of information that is   
   needed for national security and foreign policy planning?               
      Are we properly emphasizing and investing in areas such as           
   processing, analysis and distribution, the activities that make useful  
   the massive amounts of data that is anticipated with new technical      
   collection systems?                                                     
      Is the IC approaching information operations in a fashion that       
   properly positions us to face the future challenges?                    
      Are we investing properly in the right types of research and fully   
   exploiting commercially available technologies?                         
      These are questions that must be addressed. They will be the focus of
   the committee's future oversight and actions.                           
                                 AREAS OF SPECIAL INTEREST                        
    THE NATIONAL SECURITY AGENCY BUDGET, CULTURE, METHOD OF OPERATION    
      The committee has concluded that very large changes in the National  
   Security Agency's culture and method of operations need to take place,  
   including changes in its budget methodology. NSA should be given credit 
   for many changes already introduced, but the committee believes that the
   results have not gone far enough, and that NSA will not meet its Unified
   Cryptologic Architecture (UCA) goals without tackling head-on some very 
   fundamental internal obstacles.                                         
      Additions to the Consolidated Cryptologic Program (CCP) budget are   
   being used as leverage to effect some of the internal reforms urgently  
   needed. This is being done in several ways. First, the committee is     
   funding and mandating external management reviews. Second, the committee
   is attempting to infuse fresh thought, needed expertise (especially in  
   systems engineering), and greater fairness by insisting that significant
   portions of certain categories be contracted out and that outside       
   proposals and expertise be solicited, notably in systems engineering,   
   advanced research and development, and in development activities        
   conducted by the Advanced Technology Centers. Third, fences have been   
   placed on portions of the budget, with the prospect that a considerable 
   amount of money could be reprogrammed for other IC needs if NSA does not
   develop detailed strategic and business planning.                       
      These steps are taken partially because the committee has been       
   frustrated in attempts to start needed reforms during fiscal year 1998. 
   Outside management reviews, budget cuts and adds to reduce acquisition  
   cycle time, plus cuts to lower the budget percentage allocated to       
   support, were initiated in the fiscal year 1998 authorization process,  
   but all have met resistance and have been deflected from their intended 
   purpose. Subsequently, the committee also found unreceptiveness to      
   development of cost effectiveness analyses that could direct the        
   agency's and SIGINT community's investment priorities. It also found    
   that fiscal year 1998 and fiscal year 1999 investments of money and     
   personnel in categories critical to the future, continue to be          
   minimized, at best, and that NSA often cannot track allocations for     
   critical functions that cross the old program and bureaucratic lines,   
   much less enforce implementation of DIRNSA policy priorities.           
      Therefore, the committee concludes that a far more radical revision  
   of the budget process than presently contemplated is necessary. Just as 
   the military must train the way it will fight, NSA must budget according
   to the critical categories of a new and completely different            
   architecture and mode of operations. Further, the old budget categories 
   have provided little insight into and fulfillment of the old            
   architecture.                                                           
      Most difficult of all, NSA must develop a new culture in which all   
   team together on a new architecture, rather than bubbling up disparate  
   ideas and programs from across NSA and expending much of its energy on  
   probable duplication. This challenge cannot be minimized, because much  
   of NSA's past strength has come from its localized creativity and       
   quick-reaction                                                          
                    capability, which enabled it to rise when necessary to        
          overcome the stultifying effect that the bureaucracy of such a large    
          organization can have.                                                  
      It has often been said, by both Congress and the administration, that
   the IC neglects processing and the entire ``downstream'' area in favor  
   of more exotic and interesting collection programs, and that this trend 
   has worsened in recent years. The committee requests that, after        
   receiving this bill, the Community Management Staff (CMS) organize an   
   effort to provide statistics on trends for investment in collection as  
   opposed to processing or downstream areas. Even if comparable data      
   cannot be found to document the balance over the past ten years, we     
   should establish a 1997 baseline, if practicable, and keep track        
   thereafter. Eventually, we may be able to establish some rule of thumb  
   for the amount of downstream investment required to use efficiently our 
   investments in collection, although this could be subject to changing   
   technology and the effect on costs at either end. The CMS is asked to   
   explore this possible system for tracking SIGINT investment, in         
   conjunction with NSA, which has thought about potential methodologies.  
   CMS participation appears necessary because much SIGINT collection and  
   processing crosses program boundaries and accumulation of the data would
   require access to information outside NSA, as well as the presence of an
   objective arbiter.                                                      
      For the same reasons, CMS is also asked to undertake immediately the 
   establishment of meaningful metrics to evaluate henceforth the cost     
   effectiveness of various SIGINT collection programs. NSA has resisted   
   this on grounds that meaningful metrics cannot be found, but the        
   committee believes they must be found and that NSA and other community  
   programs must be run more like a corporation that systematically        
   evaluates the productivity of various lines of operation, terminates or 
   downgrades some accordingly, and switches available dollars to those    
   that produce the most return or have the greatest promise. Such data is 
   needed across the IC to determine where our funds should be placed, and 
   should have been developed to help guide the UCA deliberations. It can  
   still have a major impact on UCA implementation plans. There are many   
   other potential uses, including for decisions on the elimination of     
   legacy systems within NSA and for DCI and DoD consideration of          
   cross-program trades.                                                   
      Finally, the committee has requested that an independent panel assess
   community-wide Electronic Intelligence (ELINT) planning and budgeting.  
                     National Reconnaissance Program                     
      For several years, the committee has been concerned with the         
   increasing costs of several major National Reconnaissance Office (NRO)  
   programs and the NRP's growing share of the NFIP budget. Not seeing any 
   relief from the tight fiscal environment, the committee has sought to   
   find technological innovations and managerial reforms in the NRP that   
   could reduce costs. This goal lay behind the committee's push to shift  
   to larger numbers of smaller satellites, which the committee thought    
   also would provide better performance against hard targets, reduce      
   satellite vulnerability, and help to counter foreign denial and         
   deception practices.                                                    
      The committee had hoped that acquisition reform and a shift in       
   strategy to smaller satellites would control if not reduce costs in the 
   near-term, and enable the DCI to increase investment elsewhere in the   
   NFIP and the NRO to invest new technologies, in support of new or higher
   priority missions, like counter-proliferation. So far, however, this    
   hope has not been fulfilled, but the committee still believes that this 
   strategy, if properly enforced, will produce results in time. The       
   committee is now exploring also the benefits of cost caps, believing    
   with the DCI that they may help to discipline the acquisition system.   
      The committee, in summary, is not satisfied that all appropriate     
   measures have been taken to reduce or control costs in the NRP or to    
   adequately measure the cost-effectiveness of all overhead collection    
   activities. The committee believes that the DCI needs to exercise much  
   more knowledgeable and diligent oversight of NRO programs, with an eye  
   to freeing up funds for investment elsewhere, wherever possible. This   
   oversight must extend from requirements tradeoffs, to cost estimating,  
   to acquisition oversight. The DCI also needs to acquire the expertise   
   necessary to make tradeoffs across the major NFIP programs. The DCI can 
   no longer afford to rely on the major program managers to police their  
   organizations and budgets. The committee has recommended additional     
   funds for the DCI to accelerate the development of these capabilities.  
              The National Imagery and Mapping Agency (NIMA)             
      The committee is very concerned about incidents which cause it to    
   question the adequacy of financial management at NIMA. Although the     
   committee appreciates the extra information given in the CBJB addenda   
   and found the data to be helpful in tracking general costs, it has been 
   almost impossible to get consistent budget information from NIMA on     
   detailed questions. There have been numerous instances over the past few
   months where NIMA has provided conflicting data on major programs and   
   has been unable to reconcile the different numbers. Committee inquiries 
   aside, these are basic questions that NIMA must be able to answer       
   internally in order to function.                                        
      Of further concern, the committee learned the evening before the     
   committee mark that NIMA is facing a shortfall in fiscal year 1999 in   
   its civilian pay, similar to that faced last year. Although the         
   committee understands the difficulty in forecasting civilian pay, most  
   agencies' problems occur during a fiscal year when promotions or new    
   hiring outpaces attrition. The committee does not understand why NIMA is
   already forecasting a shortfall for fiscal year 1999, especially since  
   the agency lost hundreds of employees in fiscal year 1998.              
      The committee is also concerned about the internal reallocation of   
   funds that NIMA has implemented, thus far, in fiscal year 1998. Although
   the committee understands that NIMA took its share of unallocated cuts, 
   this does not fully explain the movement of money between programs, nor 
   why reprogramming requests were not received. Further, the apparent     
   ambiguity associated with these actions, the apparent fungibility of the
   accounts, and the fact that, on occasion, NIMA had difficulty explaining
   such actions, draws into question whether the management at NIMA has the
   ability or desire to force analytic rigor over the budget process.      
      The committee is concerned that NIMA either simply does not want to  
   tell Congress of its dealings, or it simply doesn't know how money is   
   being spent and managed. Neither option                                 
                    is good. Generally, the committee is skeptical regarding      
          whether NIMA has the ability to forecast, manage, and execute its       
          budget.                                                                 
      Two factors weigh in NIMA's favor, however. First, the new Director  
   of NIMA has indicated his understanding that changes, and some difficult
   decisions, must be made. He has also indicated his willingness and      
   desire to work with the committee to take on these challenges. Second,  
   the committee is aware of the DCI's budget task force on NIMA (within   
   the Community Management Staff) and strongly supports this effort. The  
   committee encourages the Director of NIMA to fully utilize the task     
   force resources to provide concrete steps in getting NIMA on track. Put 
   simply, NIMA must make significant changes in the way it executes and   
   manages its budget, and relates this information to Congress, in order  
   to establish any credibility.                                           
                            Imagery Archiving                            
      The committee believes there is a need for a long-term, cohesive     
   strategy for preserving the Nation's investment in space and airborne   
   reconnaissance imagery (including all formats: film-based,              
   electro-optic, infrared, radar and video). Currently, the responsibility
   of archiving imagery belongs to various organizations, including the    
   NIMA, the Defense Intelligence Agency (DIA), and the National Archives. 
   Each maintains literally millions of images in various formats.         
      The committee is concerned that these archiving efforts are          
   disjointed and do not provide an indefinite, cost-effective retention   
   solution. Although much of the value associated with investments in     
   imagery relates to short-term, national defense requirements, the future
   value to scientific and domestic requirements cannot be adequately      
   estimated. The life expectancy of archived imagery, however, is         
   dependent on the various storage media; some of these media may not     
   survive even for longer-term national defense use. The committee        
   believes recent technological developments in the commercial sector can 
   provide economical and extremely long-life mass imagery storage. These  
   technologies also provide an opportunity for developing and instituting 
   a cohesive long-term strategy for archiving imagery.                    
      The committee directs the Secretary of Defense and the DCI to        
   develop, and report to the congressional defense and intelligence       
   committees not later than February 28, 1999, a cohesive and coordinated 
   set of practices and procedures for storing and archiving all           
   imagery--both U.S. reconnaissance and, to the extent necessary,         
   commercially-procured imagery. This report will include a recommendation
   for consolidating these responsibilities under a single organization.   
   Further, the report will include the new processes and technologies     
   necessary for maintaining imagery ``on-line'' for national and military 
   use and the processes for subsequently archiving all U.S. government    
   imagery indefinitely and at the lowest cost. The committee recommends   
   that the Administration investigate the latest data storage technologies
   that are capable of indefinitely maintaining data quality to determine  
   whether their application will decrease archival costs by allowing,     
   among other things, higher density storage, longer-term (hundreds of    
   years) storage between restorations, and less stringent                 
   storage-environment requirements.                                       
                    Automated Intelligence Data Fusion                   
      The committee is disturbed by the number of requests in the          
   Congressional Justification Books (CJBs) that are justified by the      
   development and fielding of data ``fusion'' algorithms, systems, and    
   processes. Although the committee fully supports the need to assist     
   human analytical processes with automated capabilities, the committee   
   believes there is no intelligence community leadership coordinating     
   these various developments and activities to ensure that the proper     
   fusion efforts are being undertaken and that there are no, or at least  
   minimal, duplications of effort.                                        
      Further, the committee notes that the very notion of data fusion is  
   enigmatic to the point that ``correlation'' and ``fusion'' become       
   interchangeable, and the very definitions preclude a holistic view of   
   the issue. There have been no agreed goals regarding what fusion is to  
   provide, what it is to accomplish or what products it is to create.     
   Simply put, there is no way the Congress can fully understand the issues
   of intelligence data fusion because the IC does not seem to understand  
   it.                                                                     
      The committee believes that community-wide emphasis is necessary to  
   address the many issues surrounding ``fusion.'' Therefore, the committee
   requests that the Deputy Director of Central Intelligence for Community 
   Management (DDCI/CM) and the Assistant Secretary of Defense (Command,   
   Control, Communications, and Intelligence)(ASD(C\3\I)) provide the      
   intelligence committees with a long-term strategy and plan for          
   coordinating and developing the various intelligence data fusion        
   efforts. The committee believes that this plan should include the       
   establishment of community-wide definitions, required products and      
   services of fusion developments, a highly visible insight as to the     
   numerous projects to promote interoperability and coordination of       
   developments, and a detailed funding plan for community-wide fusion     
   needs. The committee requests this plan be provided no later than April 
   15, 1999.                                                               
                          Imagery Server Systems                         
      In response to a critical need for imagery dissemination, the Office 
   of Special Technologies, ASD (C\3\I), sponsored a U.S. Pacific Command  
   project to put digitized imagery on a server-based network. This project
   became known as the Demand Driven Direct Digital Dissemination System,  
   or 5D. This system was meant as an interim solution, to eventually be   
   incorporated into NIMA's Imagery Product Archive/Imagery Product Library
   (IPA/IPL) server system.                                                
      The committee understands that, despite expectations, the 5D imagery 
   server system will not be replaced soon by NIMA's libraries program. The
   reasons for this are numerous, and range from slow software development 
   for the IPA and the initial version of the IPL, to obsolete 5D hardware 
   that cannot run the new IPL software. This latter issue is particularly 
   problematic since it means that replacement of 5D systems requires new  
   hardware procurement that is not funded in NIMA's current Libraries     
   budget. In fact, there are many 5D terminals not included in the IPL    
   systems currently funded in NIMA's budget.                              
      The committee notes that NIMA will soon field the national-level     
   Library and expects that 5D users will want to be able to interface with
   it immediately. As stated before, this may not be possible with current 
   5D hardware. The committee believes that 5D systems should be replaced  
   as soon as possible, but that current users cannot afford a lapse in    
   image product availability. Finally, the committee notes that NIMA funds
   the maintenance of the 5D but that the ASD(C\3\I) sponsors the system,  
   and that both have informed the committee that there are limited funds  
   available to keep 5D fully functional. These problems must be solved.   
      The committee requests that ASD(C\3\I) and the Director of NIMA      
   provide the committee a report on the background, status, direction, and
   cost of both the 5D and IPL systems. Further, the committee requests    
   that during the preparation of the fiscal year 2000 budget request, a   
   plan be prepared for correcting the funding and system fielding problems
   outlined above.                                                         
                       DEFENSE COUNTERINTELLIGENCE                       
      For several years, the committee has raised concerns about downsizing
   Department of Defense Counterintelligence (CI) personnel and funding at 
   the same time that Defense CI is being asked to take on additional      
   responsibilities and cope with an unprecedented increase in operations  
   tempo. For example, the FCIP has been challenged to improve its         
   counterterrorism and force protection capabilities. The revised DoD CI  
   strategic plan suggests that future FCIP budgets may reflect further    
   shifts in resources to support military commanders in these areas. At   
   the same time, the FCIP must continue its traditional counterespionage  
   activities, provide protection to U.S. military acquisition activities, 
   better analyze and detect anomalies that might detect espionage         
   activities and, most recently, develop a computer intrusion             
   investigations capability and training regimen. The downsizing of CI    
   seems to take place almost absent analysis of the importance of the CI  
   contribution, for example, to the intelligence effort supporting        
   deployed commanders. Feedback from recent deployments indicates that CI 
   and HUMINT have been preeminent intelligence disciplines and, in fact,  
   have been described by G2s and commanders as the disciplines of choice  
   within the Defense Department. Yet, in the competition for funding      
   within the Defense Department and across the National Foreign           
   Intelligence Program, the FCIP's resource needs, in the committee's     
   opinion, are frequently shortchanged.                                   
      The program elements that fund counterintelligence within the Defense
   Department are complex and spread across the Department. In addition to 
   the FCIP, CI programs can be found in the Tactical Intelligence and     
   Related Activities budget. Dispersed CI funding has value in that       
   tactical CI elements maintain close operational relationships with their
   assigned units, both in terms of presence and resources. Totally        
   centralized management of CI might diminish these operational           
   relationships and the responsiveness of the elements to unique Service  
   requirements. However, the limited authority that the Office of the     
   Secretary of Defense (OSD) focal point for CI has to oversee and        
   evaluate the various CI programs within the Department has made it      
   difficult to develop or sustain a comprehensive CI capability for       
   Defense. This is particularly evident in the apparently limited ability 
   of OSD to influence resource allocation decisions concerning the        
   Department's aggregate CI capabilities.                                 
      The committee understands that efforts are underway to centralize and
   improve OSD's focus on significant CI activities government-wide which  
   have an impact on the Department. This is a step in the right direction.
   Yet, there may be need for more to be done. For example, many have been 
   concerned that limited procurement dollars in the FCIP and other CI     
   programs can make even modest equipment acquisition or modernization    
   programs almost impossible. Repeatedly, Congress has had to increase    
   funding lines so that reasonable levels of modernization or equipment   
   purchases could occur. The intelligence committees have acted to repair 
   shortages in funding for operational and investigative activities in the
   last few FCIP budget submissions, and they have expressed concern about 
   the impact of continued manpower downsizing on the CI program.          
              INTELLIGENCE CONGRESSIONAL JUSTIFICATION BOOKS             
      In the committee report on H.R. 1119 (H. Rept. 105 132), the         
   committee directed that the Congressional Justification Books (CJB) and 
   the Congressional Budget Justification Books (CBJB) accompanying the    
   intelligence budget request must contain all direct costs of a program, 
   including the costs of operating and maintaining the systems or project.
   The committee notes the very good progress the Intelligence Community   
   made in this respect with the fiscal year 1999 CBJBs, but that the      
   materials received were still not complete with the information         
   required. For example, in the CJBs, the operations and maintenance costs
   of some intelligence aircraft systems show the direct operating costs,  
   but do not reflect the direct depot maintenance costs. Numerous service 
   systems show procurement costs, but do not reflect the operations costs 
   for fielded systems nor the personnel required to man them. In the      
   CBJBs, there were large gaps in necessary budget crosswalks from past   
   years to the current year. In fact, some of the fiscal year 1999 CBJBs  
   had less budget information on programs than was available in the fiscal
   year 1998 CBJB. At best, these gaps make understanding the total costs  
   of a program difficult; at worst, this is suggestive of an attempt to   
   hide total program costs.                                               
      The committee directs, beginning with the fiscal year 2000 budget    
   request that the Secretary of Defense and the Director of Central       
   Intelligence include all associated costs of an intelligence program or 
   project within the justification materials. The committee will monitor  
   progress carefully over the next year and will consider stronger        
   measures as necessary.                                                  
                            JOINT MILITARY INTELLIGENCE PROGRAM                   
           ES 3A,-$3.2 million                                                     
      The budget request contained $3.2 million in research and            
   development, Defense-Wide, for continued upgrade of the SIGINT systems  
   on the ES 3A aircraft.                                                  
      The committee has been informed that the Navy has decided to         
   terminate this aircraft. The committee, therefore, recommends no funding
   for the requested upgrades.                                             
           Tactical Control and Analysis Center, Transfer $800,000                 
      The budget request included $800,000 in research and development,    
   Defense-Wide, for continued development of the Marine Corps Tactical    
   Control and Analysis Center (TCAC).                                     
      The committee believes the development of an analytical center for   
   Marine Corps tactical operations is more appropriately a Marine Corps   
   responsibility rather than a National Security Agency, Defense          
   Cryptologic Program activity. Therefore, the committee recommends the   
   budget request in research and development, Marine Corps, line 170.     
           Information production, -$10.0 million                                  
      The committee understands that NIMA is testing and evaluating COTS   
   applications as part of the USIGS migration and firmly approves of this 
   approach. However, it also appears that NIMA continues to do a          
   substantial amount of proprietary development. Therefore, the committee 
   authorizes a reduction to this account by $10.0 million and recommends  
   that NIMA decrease its development of proprietary applications.         
           Information production: Product generation, -$15.0 million              
           Information production: Product outsourcing, +$15.0 million             
           Information production: Integrated product cells, +$5.0 million         
      The budget request contains $740.6 million for National Imagery and  
   Mapping Agency (NIMA) operations, including $391.5 million for          
   geospatial information production.                                      
      The committee is very supportive of NIMA's efforts to outsource the  
   acquisition of a global feature foundation database. Because of this,   
   the committee believes that NIMA should not wait to develop the most    
   manpower intensive of the production functions--NIMA's standard         
   products--within the private sector. The committee authorizes an        
   additional $15 million to the geospatial information production request 
   to be used to begin demonstrations with industry similar to the process 
   whereby NIMA-qualified contractors produce its feature foundation data. 
      The committee has also been impressed with the efficiencies gained in
   NIMA's integrated production cells, now called NIMA Production Cells.   
   NIMA is only projecting an increase of about five new cells per year    
   over the FYDP. The committee authorizes an additional $5.0 million over 
   the budget request, to allow NIMA to acquire more cells in fiscal year  
   1999.                                                                   
      As indicated above, the committee is interested in seeing NIMA's     
   efficiencies increase through the use of more modern technologies and   
   outsourcing. NIMA faces a funding shortfall in its civilian pay accounts
   and also must modernize its infrastructure to effectively produce       
   products in a timely fashion. NIMA can no longer afford a               
   disproportionate portion of its budget going to civilian pay and        
   maintenance of legacy systems. NIMA must move more of its funds to      
   investment. By outsourcing, NIMA will be able to leverage leading-edge  
   commercial imaging and mapping technologies and production capabilities.
   To further encourage NIMA to address this issue in the near term, the   
   committee decreases the overall amount requested in operations and      
   maintenance by $15.0 million. This decrease may be applied as NIMA      
   judges most appropriate, except that no reductions should be made to the
   funds authorized and appropriated for outsourcing or for NIMA Production
   Cells, and no more than half of the decrease may be applied to          
   personnel. The committee will evaluate any potential impacts this       
   reduction may have on NIMA as it prepares for conference. NIMA is       
   encouraged to develop options and impact assessments for this purpose.  
                      Information Applications & Systems/National Technology       
           Alliance (NTA), +$5.0 million                                           
      The committee continues to believe that NIMA must pursue commercial  
   alternatives to its legacy systems. The National Technology Alliance    
   (NTA) has developed an alternative approach to the Defense Dissemination
   System (DDS) and the Enhanced Processing Segment (EPS) in response to   
   the Navy's concern over high operations and maintenance costs for the   
   DDS system. Therefore, the committee authorizes $5.0 million within the 
   US Imagery and Geospatial Information System line for the NTA to        
   demonstrate this capability with the Navy. The committee requests a     
   progress report on this activity by January 31, 1999, including an      
   evaluation by the Navy's N6 organization and NIMA.                      
           Sustaining capabilities, -$14.0 million                                 
      The committee does not understand why the Joint Military Intelligence
   Program (JMIP) portion of sustaining capabilities is only reduced by    
   $4.2 million between fiscal years 1998 and 1999. NIMA lost the lease on 
   the old DMA headquarters building when it consolidated at the Bethesda  
   facility. Also, the Philadelphia distribution center is being closed as 
   well as other Washington, DC facilities as described in the             
   Congressional Justification Book. Further, the committee is confused as 
   to why this activity has increased its personnel by 65 people (all in   
   the civilian workforce) during this same period, when NIMA lost about   
   800 people in fiscal year 1998. The committee assumes that, with less   
   people in the workforce, corporate affairs, and management and          
   administration would also need less personnel and should see a          
   corresponding reduction, not an increase. Finally, the committee        
   assumes, with the implementation of the Peoplesoft software that        
   automates many of the functions of the human resources (HR) area, NIMA  
   would be able to downsize its HR department. Given all of this, the     
   committee would expect to see a larger reduction in the O&M of NIMA's   
   sustaining capabilities segment and, therefore, recommend a reduction to
   this account of $14.0 million.                                          
           Geospatial database integration and display, no budgetary change        
      In two studies, NIMA has concluded that the commercial sector has    
   already developed innovative, high quality, affordable software products
   to integrate and display NIMA's digital geospatial databases. However,  
   the services and defense agencies continue to invest substantial funds  
   in government-developed, custom products that cost the government more  
   than they should, inhibit achieving a common operating picture, and     
   complicate training. The committee is particularly concerned that the   
   Defense Information Systems Agency (DISA) is funding a custom software  
   development program for the Joint Mapping Tool Kit (JMTK) module of the 
   Global Command and Control System (GCCS), even though commercial        
   products already exist that can meet the need and even though NIMA, the 
   functional manager with expertise in this area, has recommended against 
   this acquisition strategy.                                              
      The committee notes that NIMA is trying again to convince DISA of the
   wisdom of a commercial procurement. The committee recommends that no    
   funds authorized and appropriated to NIMA be made available for the JMTK
   module for GCCS until the Assistant Secretary of Defense for Command,   
   Control, Communications and Intelligence certifies that DISA will       
   procure this module commercially, or reports to the Congressional       
   intelligence and defense committees as to why a commercial procurement  
   does not make sense. The committee requests that the Assistant Secretary
   also establish a defense-wide policy for acquiring geospatial database  
   integration, display, and visualization capabilities. As part of this   
   policy review, the Assistant Secretary should examine individual service
   and defense agency acquisition programs to ensure that they are         
   cost-effective, and not duplicative.                                    
      In addition, although NIMA is itself utilizing commercial            
   visualization tools internally, the committee is concerned that NIMA is 
   not aggressively taking steps to ensure that such database integration  
   and display capabilities are available for procurement, or licensing, by
   its customers, apart from the JMTK module in GCCS. These capabilities,  
   after all, are a central part of NIMA's mission and provide a primary   
   means by which NIMA's customers can understand and exploit the          
   underlying data and products that NIMA provides. The committee notes    
   that the recent Defense Science Board study of DoD mapping urged that   
   NIMA rapidly develop or acquire such capabilities. The committee        
   recommends that NIMA begin to acquire the ability to make these products
   available to its customers in fiscal year 1999 from within available    
   resources, and develop a plan to expand and sustain this effort in      
   fiscal year 2000 and beyond.                                            
           Geospatial database production, no budgetary change                     
      The mapping strategy of the Defense Mapping Agency had been to meet  
   as many of its customers' requirements for detailed, comprehensive      
   mapping products in as many areas of the world as possible. Since       
   resources were quite limited, however, this strategy meant that only a  
   small portion of overall requirements could be met, and large parts of  
   the world were not mapped at all or the products that were available    
   were terribly out of date.                                              
      NIMA's strategy is to try to produce a minimal set of mapping data   
   for the world, or most of it, and enhance that data as rapidly as need  
   arises. This strategy requires NIMA's customers to accept less detail   
   and comprehensiveness in some geographic areas--presumably high priority
   ones--in exchange for a higher overall readiness level in much larger   
   geographic areas.                                                       
      The key issues facing NIMA as it tries to implement this strategy are
   these:                                                                  
      Will NIMA require additional funding up front to create the          
   foundation level data base, or can it generate the necessary resources  
   through internal reforms, competitive outsourcing, process              
   modernization, and shifts in priorities?                                
      Once created, is this data base inexpensive to keep current, since it
   is less detailed than the standard products NIMA produces today and     
   since much of it is automated? In other words, would the investment     
   needed to create the data base above NIMA's planned budgets truly be a  
   non-recurring expense?                                                  
      If additional funding is required, will the Defense Department agree 
   that the requirement competes favorably with other defense priorities?  
      If not, could less than global coverage for the foundation level data
   base be acceptable? Alternatively, is it acceptable for NIMA to achieve 
   the desired level of geographic coverage for its foundation level data  
   base over a longer period of time, without causing the data base to     
   become stale?                                                           
      At what pace will NIMA's customers allow it to cut back on the       
   production of standard products now to shift resources to building the  
   foundation level data base? How far can NIMA go in the near-term in     
   shifting resources to this function, given that NIMA will have to retain
   the ability to surge to enhance the foundation data base to support     
   ongoing operations, potential major and minor contingencies, and other  
   crises (since the commercial sector does not yet possess much capacity  
   for this function)?                                                     
      How much efficiency will NIMA gain by modernizing its production     
   processes under the so-called ``USIGS Migration'' program? Can these    
   gains be realized in time to help with the near-term creation of the    
   foundation level data base?                                             
      How much will NIMA be able to reduce the time required to enhance the
   foundation data base to support crises, through equipment and process   
   modernization and through outsourcing? Will it be enough to support the 
   overall strategy?                                                       
      The answers to these questions will determine the pace by which NIMA 
   can competitively procure a foundation level data base. The committee   
   believes that these issues must be addressed as part of the preparation 
   of the fiscal year 2000 Future Years Defense Program budget. The        
   committee requests the DCI and the Deputy Secretary of Defense assign   
   these issues to the Intelligence Program Review Group and Expanded      
   Defense Resources Board, or some other suitable forum, for resolution.  
   In any event, the committee requests the NIMA                           
                    Director to prepare answers to these questions and report to  
          the Congressional intelligence and defense committees by March 1, 1999. 
           Endurance unmanned aerial vehicle, No budgetary change                  
      The budget request contained $178.7 million in PE 35205D8Z for       
   endurance unmanned aerial vehicles, and included $40.6 million for the  
   Dark Star stealthy high altitude endurance (HAE) unmanned aerial vehicle
   (UAV), $90.1 million for Global Hawk HAE UAV, and $48.0 million for the 
   common ground segment.                                                  
      The committee is aware that Global Hawk has made its first flight,   
   but that continuing problems with the Dark Star development has         
   prevented its continued flight test. The committee is concerned by      
   continuing delays in the Dark Star testing, reportedly caused by a lack 
   of redundancy of the aircraft's systems and a continuing series of      
   hardware and software failures. Further, the committee is aware that    
   there has been a tendency to describe existing advanced concept         
   technology demonstration (ACTD) aircraft such as Dark Star and Global   
   Hawk as systems that may, in part, replace manned reconnaissance        
   aircraft. Though noting that ACTD aircraft may form the basis for a     
   future capability, the committee has been informed by operational users 
   that the new HAE UAVs must undergo a thorough user evaluation to        
   determine military utility. Such demonstration aircraft are not, nor    
   were they designed to be, operational aircraft. Potential users note    
   that subsequent to evaluation, the ACTD aircraft design must be         
   modified, as necessary, based on information gathered, to meet an       
   operational requirement. Based on service requirements, they then must  
   be procured using the established acquisition process. Predator, the    
   first ACTD UAV to transition to production has followed this process.   
   The committee reminds the Secretary of Defense that the ACTD program is 
   not to be used to circumvent established acquisition procedures.        
      The committee strongly supports continued development of HAE UAVs as 
   potential replacements for manned reconnaissance aircraft, and          
   recommends $178.7 million only for HAE UAV and common ground segment    
   development.                                                            
           Joint signals intelligence avionics family, No budgetary change         
      The budget request contained $80.4 million in PE 35206D8Z for the    
   joint signals intelligence avionics family (JSAF).                      
      The committee continues to be concerned by problems with JSAF        
   developments. While the committee is encouraged by progress in design of
   the low band subsystem (LBSS), it is concerned by schedule delays and   
   cost increases that have forced reduction of system performance to      
   remain within budget. Further, the committee remains doubtful that the  
   high band subsystem (HBSS) development can successfully meet its cost   
   and performance goals. The committee's concerns are heightened by the   
   fact that the JSAF development is the only planned upgrade for future   
   airborne SIGINT reconnaissance. If JSAF fails to provide the needed     
   capabilities, users ranging from theater tactical forces to national    
   policy makers will be severely impacted.                                
      Executive Order 12333 charges the Director of the National Security  
   Agency (NSA) to conduct ``research and development to meet the needs of 
   the United States for signals intelligence * * *''. To ensure proper    
   joint oversight of JSAF development, the committee recommends the budget
   request be authorized in PE 35885G, the Defense Cryptologic Program. The
   committee believes this will allow the Air Force, as the executive agent
   for JSAF, to continue to execute the program, while providing joint     
   oversight by NSA.                                                       
           Tactical unmanned aerial vehicles, Funding transfers                    
      The budget request contained $75.6 million in PE 35204A and $37.2    
   million in PE 35204D8Z for tactical unmanned aerial vehicles (UAV).     
      The committee notes that the Under Secretary of Defense for          
   Acquisition and Technology recently provided the Congressional defense  
   and intelligence committees with the Department's plan to implement     
   legislative direction included in the National Defense Authorization Act
   for Fiscal Year 1998 (P.L. 105 85) for reorganization of the Defense    
   Airborne Reconnaissance Office (DARO) and commends the Department for   
   its prompt response. The National Defense Authorization Act for Fiscal  
   Year 1998 (P.L. 105 85) contained further direction that the Department 
   of Defense review commercial solutions for the various UAV requirements.
   The committee notes that the Navy is now conducting a three-phase       
   competitive demonstration of vertical takeoff or landing (VTOL) UAVs to 
   meet the Navy and Marine Corps VTAL UAV requirements. The committee     
   continues to support this approach and urges the Navy to continue the   
   multiple-participant competitive demonstration through the shipboard    
   phase prior to final selection using the funds provided.                
      The committee notes the proposed plan for transfer of DARO funding   
   included in the fiscal year 1999 request to appropriate service accounts
   and recommends the following adjustments: $49.6 million in PE 35204A for
   Army tactical UAV, a decrease of $26.0 million; $18.0 million in PE     
   35204N for VTOL UAV; $37.2 million in PE 35204N for ongoing common      
   tactical control system development previously managed by the Joint     
   Program Office; and $8.0 million in PE 35204M for the Marine Corps'     
   close range tactical UAV.                                               
           Defense airborne reconnaissance program management,-$4.7 million        
      The budget request contained $15.7 million for Defense Airborne      
   Reconnaissance Program (DARP) integration and support in PE 35209D8Z.   
      The committee notes that, subsequent to development of this year's   
   budget request, the Defense Airborne Reconnaissance Office (DARO) has   
   been eliminated and its functions absorbed within the reorganized office
   of the Deputy Assistant Secretary of Defense for Command, Control,      
   Communications, Intelligence, Surveillance, and Reconnaissance and      
   within the military services. The committee supports actions that adhere
   to the Department's stated objective of maintaining a very small cadre  
   oversight organizations within the Office of the Secretary of Defense   
   (OSD), focused solely on policy level guidance to ensure reconnaissance 
                    system interoperability and architectural compliance. The     
          Department has indicated that it plans to request reprogramming         
          authority to shift DARO funding for DARP integration and support from PE
          35209D8Z to program elements within the Air Force and other DoD         
          agencies, as well as Defense-wide operations and maintenance.           
      The committee supports this transfer of funding, and, therefore      
   recommends $7.0 million in Operations & Maintenance, Defense-wide, $1.0 
   million in PE 35208F, $1.0 million in PE 35208BQ, $1.0 million in       
   35208G, and $1.0 million in PE 35208L, a total decrease of $4.7 million.
            18 reconnaissance capable, -$1.0 million, transfer $42.4 million       
      The budget request included $43.4 million for developing the Super   
   Hornet Advanced Reconnaissance Pod (SHARP).                             
      The committee continues to fully support the development of a podded 
   tactical reconnaissance capability for use by fighter aircraft and has  
   supported the concept that a podded reconnaissance capability should not
   be focused strictly on the E/F 18 aircraft. The Navy has agreed with    
   this broader concept and has decided to change the name SHARP to the    
   Shared Reconnaissance Pod to reflect the change in approach.            
      Due to this decision, the committee believes the funds should be more
   appropriately reflected in the Joint Military Intelligence Program,     
   within the Navy's Manned Reconnaissance line. Therefore, the committee  
   recommends $42.4 million in P.E. 35207N for this purpose.               
                      Advanced synthetic aperture radar system improvement program,
           +$8.0 million                                                           
      The budget request contained $5.0 million in PE 35207D8Z for the     
   Advanced Synthetic Aperture Radar System (ASARS) Improvement Program    
   (AIP) for the U 2 aircraft. As a result of the termination of the       
   Defense Airborne Reconnaissance Office, the Deputy Secretary of Defense 
   for Acquisition and Technology sent a letter to the Congress            
   recommending specific redistribution of Defense Airborne Reconnaissance 
   Program funding in fiscal year 1999. Included in this recommendation was
   an additional $2.5 million for AIP research and development. Further,   
   the Air Force has requested a transfer of AIP procurement funding into  
   the research and development account.                                   
      The AIP program will dramatically increase the U 2's radar system    
   with significantly improved synthetic aperture radar imagery, a highly  
   capable moving target indicator tracking capability, and integral       
   onboard processing functions. Unfortunately, the AIP has suffered cost  
   growth and has a fiscal year 1999 shortfall of over $18.0 million. Some 
   of this growth is due to contractor overruns and schedule slips caused  
   by late deliveries of commercial processors. Some of this growth is due 
   to a decision to postpone certain Global Hawk High Altitude Unmanned    
   Aerial Vehicle radar developments that were cost sharing with AIP. This 
   growth has forced the Air Force to make decisions to slip the AIP,      
   thereby further increasing costs. In order to deliver the AIP when      
   required, the Air Force has stated a need to reprogram funding from     
   procurement to research and development in fiscal year 1999. However,   
   such a step would have a significant procurement funding impact in      
   fiscal year 2000.                                                       
      The committee recommends an authorization of $13.0 million, an       
   increase of $8.0 million for AIP development.                           
           Electro-optic framing technologies, +$8.0 million                       
      The budget request contained $5.4 million in PE 35207D8Z for         
   electro-optic (EO) framing technology.                                  
      The committee continues to support the state-of-the-art EO framing   
   with on-chip forward motion compensation (FMC). This technology is      
   proving itself in operationally deployed systems.                       
      The committee recommends $13.4 million, an increase of $8.0 million  
   in PE 35206N for the purposes of furthering the EO with on-chip FMC     
   technologies. Specifically, these additional funds are to be used for   
   continued development of the ultra-high resolution focal plane array and
   conformance with JPEG 2000 compression standards. These developments    
   should produce form/fit operational insertions into currently deployed  
   CA 260 framing cameras. Further, these funds are to be used to develop  
   infra-red EO framing technologies and image intensified EO framing      
   sensors with FMC for operational insertion into existing Air National   
   Guard tactical reconnaissance aircraft and other aircraft as            
   appropriate.                                                            
                      Unmanned aerial vehicle systems integration laboratory, No   
           budgetary change                                                        
      The budget request contained $5.0 million in PE 35204D8Z for the U.S.
   Army's Unmanned Aerial Vehicle (UAV) Systems Integration Laboratory     
   (SIL), and included $3.0 million for continued development of the       
   Multiple UAV Simulation Environment (MUSE).                             
      The committee supports the SIL's joint UAV developmental work and it 
   is concerned that the reorganization of Defense Airborne Reconnaissance 
   Program will leave the SIL without a sponsor, thereby possibly losing a 
   valuable joint UAV integration organization and jeopardizing continued  
   evolution and improvement of the MUSE tool. While SIL is clearly a      
   service organization, it provides joint support that may well be        
   overseen directly by the new Deputy Assistant Secretary of Defense      
   (DASD) for Command, Control, Communications, and Intelligence,          
   Surveillance and Reconnaissance.                                        
      Therefore, the committee directs the Assistant Secretary of Defense  
   (Command, Control, Communications and Intelligence) to provide the      
   congressional defense and intelligence committees a plan, which includes
   a funding profile, for the continued operation of the SIL, no later than
   March 31, 1999.                                                         
           Multi-function self aligned gate technology, +$4.0 million              
      The budget request contained $32.1 million for continued development 
   of the unmanned aerial vehicle (UAV) tactical control system (TCS).     
      The committee notes that the TCS will provide interoperability and   
   commonality for mission planning, command and control, communications,  
   and data dissemination for the current and future family of tactical and
   medium altitude endurance UAVS. The multi-function self aligned gate    
   (MSAG) technology developed as part of the TCS development has been     
   successfully demonstrated and is now ready for larger scale testing. The
   committee supports MSAG and recommends $36.1 million, an increase of    
   $4.0 million for fabrication and testing of prototype MSAG active array 
   antennae for TCS UAVS.                                                  
      Finally, the committee is aware that after the field tests of the AAA
   in fiscal year 1998, there are no plans to continue to develop, produce 
   or test this technology. The committee believes this technology has the 
   potential for many applications, including use as highly reliable       
   satellite communications antennas with no mechanical parts. Therefore,  
   committee requests the Assistant Secretary of Defense (Command, Control,
   Communications, and Intelligence) to provide the defense and            
   intelligence committees a plan for moving forward with, and possibly    
   fielding, this technology. This plan should include a spend plan for the
   fiscal year 1999 funding, potential users--including National Foreign   
   Intelligence Program users--and schedule. The committee requests the    
   plan be provided no later than 31 January 1999.                         
           Integrated imagery planning, No budgetary change                        
      The committee believes that the numerous, but separate, Department of
   Defense and Intelligence Community (IC) imagery programs should be      
   closely coordinated and integrated to maximize their collective         
   capabilities. Better planning of visible and multi-spectral imagery,    
   synthetic aperture radar (SAR), moving target indicator (MTI) radar, and
   video collection could improve support to military operations and save  
   resources.                                                              
      Moving target indicator (MTI) radar provides a real-time acquisition 
   and can provide continuous tracking capability, but has limited         
   abilities for target identification. Electro-optic (EO) and SAR imagery,
   in contrast, are excellent for target classification and identification,
   but are exploited by humans and do not provide a continuous tracking    
   capability. It would appear that the two types of imagery are highly    
   complementary, and that their individual strengths offset their         
   individual deficiencies. For example, if proper MTI coverage of an area 
   could be maintained, EO or SAR imagery, even with significant latencies,
   could be used to identify immediate targets without additional imaging. 
   Logically, the need for repeatedly imaging those targets with high      
   resolution sensors might be reduced, as would associated communications 
   requirements. Unfortunately, these complementary types of imagery have  
   been managed, and moreover, tasked, in isolation.                       
      DoD is, for example, acquiring a host of unrelated MTI capable       
   systems. With few exceptions, these systems are not interoperable. If   
   adequate numbers of systems could be fielded and their data streams     
   integrated, however, overall performance could be far greater than the  
   sum of their parts, improving the chances for continuous and precise    
   tracking. Similarly, the DoD and IC are operating and acquiring a host  
   of imagery systems. Although the products may be interoperable in many  
   cases, there is reason for concern that we have not yet determined the  
   right relationship and balance between these systems to best combine    
   their total capabilities.                                               
      Finally, every imagery requirements analysis has concluded that two  
   foot resolution is necessary for imagery analysts conducting wide-area  
   search. Many sensors do not meet this standard--particularly those being
   planned for the unmanned aerial vehicles. Meeting such requirements, and
   absorbing the costs associated, may not be necessary if the various     
   forms of ``imagery'' can be combined into a holistic information effort.
      The committee believes that there is a compelling need to carefully  
   examine ways to integrate imagery and MTI systems to not only make      
   requirements, cost and capability tradeoffs across programs, but,       
   moreover, to take fullest advantage of the totality of all our          
   information capabilities. This will require better mission planning and 
   tasking, more robust connectivity between sensors, fusion developments, 
   and analysis interactions. Further, it will require a removal of        
   stovepiped management processes.                                        
      The committee directs DoD and the IC to conduct a study on the issues
   discussed above, using the study of MTI technical issues and            
   requirements mandated by Congress last year as a model. The committee   
   expects the technical assessment portion of the study to be led jointly 
   by ASD(C3I) in coordination and the Community Management Staff, with    
   appropriate participation of NIMA, NRO, DARPA, the services, and the    
   joint staff. The committee directs that this study be completed and the 
   results conveyed to the congressional defense and intelligence          
   committees no later than March 1, 1999.                                 
           Defense imagery program, Funding transfers                              
      The budget request included $29.4 million in research and            
   development, defense-wide, line 150 for the Common Imagery              
   Ground/Surface Station (CIGSS) and $1.9 million for development of the  
   standards for the Distributed Common Ground Station (DCGS). The         
   committee believes there is a need for the National Imagery and Mapping 
   Agency (NIMA) to create from within existing resources a management     
   structure analogous to the National Security Agency's Defense           
   Cryptologic Program (DCP). The DCP is responsible for coordinating and  
   providing funding for advanced research and development of signals      
   intelligence capabilities that have applicability across all services.  
   This structure requires close coordination with the services as they    
   develop, field, and evolve tactical systems, with the service needs     
   driving the leading edge developments. The committee believes that, just
   as the Director, NSA is responsible for coordinating research and       
   development to meet the tactical needs of the U.S. Cryptologic System,  
   so should the Director, NIMA for the U.S. Imagery System.               
      Therefore, the committee recommends these funding requests be        
   authorized in research and development, defense-wide, line 138A.        
   Further, the committee directs NIMA to create a management structure to 
   provide a Defense Imagery Program within the Defense Imagery and        
                    Mapping Agency Program of the Joint Military Intelligence     
          Program. No additional billets are authorized for this management.      
           Integrated architecture plan, +$3.0 million                             
      The budget request contained $6.1 million for the Command, Control,  
   Communications, Computers, Intelligence, Surveillance, and              
   Reconnaissance (C4ISR) Integrated Architecture Plan (CIAP).             
      CIAP has been strongly endorsed by the Assistant Secretary of Defense
   for Command, Control, Communications, and Intelligence as well as the   
   commanders-in-chief of the nine unified commands. The CIAP developments 
   have included the highly successful C4ISR Architecture Framework for the
   Department of Defense, the Command C4ISR Architectures for the regional 
   Commanders in Chief, and the initiation of the C4ISR Architectures for  
   the Warfighter (CAW) effort at selected unified commands. The committee 
   believes this later effort should be extended to all nine unified       
   commands.                                                               
      The committee believes these architectural developments will provide 
   a cohesive and more cost effective strategy for developing and procuring
   the proper intelligence support systems for the users. The committee    
   recommends $9.1 million for the continuation of these efforts and       
   extension of the CAW to all unified commands.                           
           Joint reserve intelligence program, +$3.0 million                       
      The budget request contained $9.4 million in operations and          
   maintenance, defense-wide, for continued reserve component man days for 
   the conduct of the Joint Reserve Intelligence Program (JRIP).           
      The committee is favorably impressed by the intelligence production  
   mission load the JRIP has been able to accommodate in support of the    
   active forces. This has been particularly true of the JRIP support to   
   the European Joint Analysis Center (JAC) from the Fort Sheridan,        
   Illinois, Joint Reserve Intelligence Center. This world-wide support has
   included direct personnel support via temporary duty assignments as well
   as support from the continental United States via virtual connectivity  
   whereby reservists can drill with their gaining units without having to 
   leave their home area. Further, this support, in excess of 34,000 man   
   days, has provided the active components with critical intelligence     
   augmentation to conduct collection operations, process backlogs, and    
   produce targeting materials, final reports and studies--all without     
   having to use the presidential selected reserve call-up authority.      
      The committee believes this program should be expanded and its       
   benefits maximized to the extent possible. The committee recommends     
   $12.6 million, an increase of $3 million for these purposes.            
           Joint inter-agency task force west, -$3.5 million                       
      The budget request included $4.2 million for operating an all-source 
   intelligence analysis cell for the Joint Inter-Agency Task Force (JIATF)
   West. This cell is focused on coordinating tactical and operational     
   intelligence support to U.S. Embassy Country Teams performing           
   counter-drug operations in the Southeast Asia and Southwest Asia areas. 
      The committee notes that JIATF-West is attached to PACOM, but appears
   to have little command support. Further, the Drug Enforcement Agency,   
   the Crime and Narcotics Center, and other JIATFs have indicated to the  
   committee that this cell offers little value for the funds expended and 
   has not produced any actionable tactical intelligence or strategic      
   analysis. Therefore the committee recommends an authorization of        
   $700,000 for this intelligence function, and recommends an evaluation to
   terminate it altogether.                                                
           Defense support program office training and exercise, -$7.8 million     
      The budget request contained $7.8 million for Defense Support Program
   Office (DSPO) training and exercise support.                            
      The Secretary of Defense has informed the committee that the DSPO is 
   being abolished and its functions consolidated within the National      
   Reconnaissance Office (NRO). The committee understands that the National
   Military and Operations Support Office within the NRO is also charged   
   with, and funded for, training and exercise support. Therefore, the     
   committee believes the DSPO training and exercise support funding is no 
   longer required and recommends no authorization for this purpose.       
                        TACTICAL INTELLIGENCE AND RELATED ACTIVITIES              
           Tactical exploitation of national capabilities, -$4.6 million           
      The budget request contained $44.7 million in PE 64766A for Army     
   tactical exploitation of national capabilities (TENCAP).                
      The committee notes that the amount requested represents nearly a    
   $26.0 million increase from the level approved for fiscal year 1998. The
   committee is concerned that the Army may be using the TENCAP program as 
   a means for bypassing the ``normal'' acquisition process allowing it to 
   procure and operate combat systems associated with space sensors. The   
   committee is supportive of TENCAP efforts for short-term, high-pay      
   concepts and initiatives that improve the use of national space sensors 
   and systems. The committee will not, however, support TENCAP funded     
   development and production of entire weapons systems. Therefore, the    
   committee directs that future TENCAP requests be limited to space       
   exploitation initiatives and projects that are of short-duration and    
   high payoff.                                                            
      The committee recommends $40.1 million for the Army's TENCAP program 
   in fiscal year 1999, a reduction of 4.6 million in PE 64766A.           
           Ground based common sensor (GBCS), -$9.7 million                        
      The budget request contained $25.4 million for the GBCS-Light system,
   of which $1.5 million is for the Common Module Electronics Intelligence 
   System (CMES).                                                          
      The committee notes that $1.5 million for CMES procurement is        
   requested twice. Consequently, the committee recommends a reduction of  
   $1.5 million.                                                           
      Additionally, the committee notes that the GBCS-L system has had     
   numerous technical difficulties and experienced a fielding delay as a   
   result of a two-year slip in initial operational test and evaluation    
   (IOT&E). This delay has resulted in the Department twice having used    
   GBCS as a source of funds for reprogramming requests.                   
      Just as the committee was marking up the fiscal year 1999 request, it
   learned that, due to continuing integration problems, the GBCS-L IOT&E  
   will not be conducted again in fiscal year 1998. This third and latest  
   slip is very disturbing and signals to the committee that there are more
   problems with this system than the Army is admitting. As a result of the
   program's past and current performance, it believes that all of the     
   requested funding will not be executable in fiscal year 1999 and it     
   recommends a reduction of $9.7 million for GBCS-L hardware. Finally, the
   committee notes that the Department of Defense has requested nearly $500
   million for this relatively small and low complexity program. This      
   committee finds this cost excessive for the capability required, and    
   therefore requests the Secretary of Defense to conduct an Inspector     
   General audit of the GBCS program; its costs, its technical approach,   
   and management.                                                         
           All source analysis system (ASAS), +$2.0 million                        
      The budget request contained $28.1 million in PE 64321A for the ASAS 
   intelligence support system.                                            
      The committee recommends $30.1 million, an increase of $2.0 million  
   in PE 64321A, to continue the development of situation display fusion   
   algorithms, to transfer these algorithms to the other service           
   intelligence support systems, and to achieve ASAS Block II              
   interoperability with the Defense Intelligence Agency's Modernized      
   Integrated Data Base.                                                   
           Distributed surveillance system, +$6.7 million                          
      The budget request contained $42.0 million in PE 64784N for advanced 
   deployable system (ADS) engineering and manufacturing development.      
      The committee recommends $48.7 million, including an increase of $6.7
   million to continue the planned introduction of automation and data     
   fusion capability for the ADS demonstration system.                     
                      Navy joint surveillance and target attack radar system       
           (JSTARS), +$3.0 million                                                 
      The budget request included no funding for completing the            
   developments for integrating a capability on U.S. Navy surface vessels  
   to receive processed JSTARS MTI data over UHF satellite communications  
   and Link 16.                                                            
      In the National Defense Authorization Act for Fiscal Year 1998,      
   Congress provided $5.0 million for the Navy to begin integrating the    
   Link 16 data into the Joint Maritime Command and Control System (JMCIS) 
   and the Global Command and Control System (GCCS). The committee has     
   learned that the Link 16 integration into GCCS will satisfy many DoD    
   data dissemination requirements, including the JSTARS. Therefore, the   
   committee recommends an additional $3 million for these purposes within 
   the Navy's JMCIS line.                                                  
      Also, as noted elsewhere in this report, the committee is convinced  
   that the Navy will require access to the full range of JSTARS'          
   capabilities to support Navy targeting requirements. Such full access   
   will require a wide-band data link capability between the aircraft and  
   the surface vessels. The wide-band Common Data Link (CDL) is DoD's      
   standard, high-rate data link that will be installed on nearly thirty   
   Navy aircraft carriers, amphibious, and command ships early in the next 
   decade. The committee believes that it would be illogical for the Navy  
   to install another expensive, unique data link such as the low data rate
   Secure Common Data Link (SCDL), currently employed on the JSTARS, on its
   major combatants. Instead, the committee believes it is necessary to add
   as soon as possible a data broadcast capability based on the CDL        
   standard to the JSTARS fleet. Also as noted elsewhere, the Navy clearly 
   needs a CDL capability on the P-3 fleet to take full advantage of the   
   range of radar, SIGINT, and imagery capabilities planned or programmed  
   for the various elements of that fleet.                                 
      If the Navy's requirement for CDL-compatible wide-band airborne data 
   links turns out to be the recently demonstrated Tactical CDL (TCDL), the
   committee believes it would be wise for the Navy to consider modifying  
   its currently planned CDL installations, to be compatible with both the 
   CDL and TCDL, before or as they are installed. The committee will be    
   reluctant to approve purchase of TCDL ground stations without first     
   receiving a solid Navy commitment to modify all of its shipboard CDL    
   systems to be compatible with both.                                     
      Based on the above, the committee directs the Secretary of the Navy  
   to report to the congressional defense and intelligence committees, by  
   March 1, 1999, on the Navy's requirements and plans for                 
   CDL/TCDL-compatible data links.                                         
           Fleet air reconnaissance, -$5.2 million                                 
   The budget request contained $5.2 million for ES 3A modification kits.  
      The Navy has informed the committee that it intends to terminate the 
   ES 3 program in fiscal year 2000. Based on this decision, the committee 
   sees no need for modifying these aircraft prior to their removal from   
   the fleet. The committee, therefore, recommends no funding for these    
   modifications.                                                          
           Marine Corps electronic warfare support system, Fence $16.4 million     
      The budget request contained $16.4 million for acquiring two Marine  
   Corps Electronic Warfare Support Systems (MEWSS).                       
      The committee directs that none of the authorized and appropriated   
   funding be obligated or expended until completion of a successful       
   initial operational test and evaluation (IOT&E). The committee          
   understands the development and IOT&E of the MEWSS is directly tied to  
   the Army' Ground-Based Common Sensor (GBCS) system. The committee       
   believes, however, that IOT&E success or failure, and, therefore,       
   subsequent procurement decisions, should be based on the individual     
   system merits based on their operational concepts. Therefore, the       
   committee does not see a specific need to make a successful IOT&E of    
   MEWSS contingent on a successful IOT&E of GBCS.                         
           Marine Corps tactical intelligence equipment, +$1.0 million             
      The budget request contained no funds for purchasing and evaluating  
   commercial imagery display tools, or modern printer technologies.       
      The committee is aware of the highly successful Marine Corps use of  
   the Remote Replication System (RRS). The RRS allows the Marine          
   Expeditionary Force (MEF) to deploy with automated equipment that       
   provides the capability to ``reach back'' to National Imagery and       
   Mapping Agency data bases and ``pull forward'' data in order to         
   construct mapping and imagery products. The committee believes this     
   concept has the potential to reduce drastically the paper products with 
   which the MEF currently deploys. Despite the success of the RRS concept,
   however, the committee understands that there has been little attention 
   paid to providing modern display and printing technologies. Therefore,  
   the committee recommends $1.0 million in procurement, Marine Corps, for 
   purchasing and evaluating commercial imagery manipulation tools,        
   state-of-the-art display devices, and high quality large format printers
   for field use.                                                          
           Air Force/NRO partnership, -$2.6 million                                
      The budget request contained $17.6 million in research and           
   development, Air Force, for the joint Air Force, National Reconnaissance
   Office, and Defense Advanced Research Projects Agency advanced space    
   technology demonstrator.                                                
      The partnership funding for this demonstration is an equal share of  
   one third each. The fiscal year 1999 Air Force request exceeds its      
   share. Therefore, the committee recommends an authorization of $15      
   million, or a reduction of $2.6 million.                                
           Joint tactical terminal, +$8.0 million                                  
      The budget request contained $6.5 million in other procurement, Army,
   and $4.2 million in other procurement, Air Force, for the Joint Tactical
   Terminal intelligence broadcast transceivers.                           
      These radios are an integral part of the Integrated Broadcast Service
   that the committee fully supports. The committee is concerned that,     
   because of contract protests that have resulted in delays in final      
   contract award, the fielding of these radios has slipped, leaving       
   operational users without the ability to receive tactical intelligence  
   data broadcasts. In order to correct this problem, the committee        
   recommends $11.5 million and $7.2 million, an increase of $5.0 million  
   for the Army and $3.0 million for the Air Force, respectively, for      
   accelerating the purchase and fielding of these radios.                 
           ``Senior Scout,'' No budgetary change                                   
      The budget request contained $14.3 million in operations and         
   maintenance, Air National Guard, partially for the continued operation  
   of the Senior Scout tactical reconnaissance system. Senior Scout is a C 
   130-employed, roll-on/roll-off, reconnaissance capability operated by   
   the Air National Guard. It provides an airborne reconnaissance          
   collection capability that is complementary to other airborne collection
   systems operated by the active component.                               
      The committee perceives a lack of direction and support for Senior   
   Scout, noting that on several occasions, the Air Force has nearly       
   terminated the program, that the system has not been well supported in  
   terms of upgrades or sensor improvements, and that it has certainly not 
   maintained technological pace with the RC 135 Rivet Joint aircraft or   
   other similar reconnaissance platforms. Consequently, the committee does
   not believe continuing the Senior Scout to be either cost or mission    
   effective. The committee believes, however, that the Air National Guard 
   linguists currently operating the Senior Scout are vital to the overall 
   national                                                                
                    reconnaissance effort. The committee perceives a critical need
          to retain these Guard reconnaissance personnel and training them on more
          modern equipment.                                                       
      In fiscal year 1997, Congress authorized and appropriated funding for
   two additional RC 135 Rivet Joint aircraft. The committee has learned   
   that the Air Force is having difficulty fully manning these aircraft.   
   The committee believes that since the Guard personnel are currently     
   tasked to supplement active component RC 135 operations, providing at   
   least one of these aircraft on a rotational basis to the Air National   
   Guard would both resolve the manpower problem and take greater advantage
   of an available resource.                                               
      Therefore, the committee directs the Secretary of the Air Force to   
   provide the congressional defense and intelligence committees a plan for
   phasing out the Senior Scout reconnaissance system and replacing it with
   an RC 135 alternative no later than October 1, 1999.                    
           ``Pacer Coin,'' -$2.4 million                                           
      The budget request contained $2.4 million in aircraft spares and     
   repair parts for the transfer of mission equipment from retiring Pacer  
   Coin aircraft to the non-dedicated, follow-on C 130 reconnaissance      
   aircraft. The committee notes that a fiscal year 1998 reprogramming     
   action stated that all funds for the C 130 follow-on program were       
   included in that request.                                               
      Furthermore, the committee does not agree that $2.4 million of       
   procurement funding is required to transfer equipment from one aircraft 
   to another. Therefore, the committee recommends no funding for this     
   purpose.                                                                
           Joint surveillance and target attack system, Fence $40.2 million        
      The budget request included $123.8 million in research and           
   development for the Joint Surveillance and Target Attack System         
   (JSTARS), including $5.6 million for studies and miscellaneous efforts. 
   The committee recommends a total of $118.2 million for these purposes.  
      The committee is concerned by the extraordinary costs of the JSTARS  
   program. The committee understands each aircraft must undergo a         
   forty-one month, $110 million, refurbishment effort to restore the old  
   707-based airframes to flying condition before the aircraft begins its  
   modification to JSTARS configuration. This is more than triple what the 
   aircraft cost new, and is more expensive than purchasing a new 757      
   aircraft. Further, current projections show that the JSTARS latest      
   improvement program will cost the U.S. taxpayer well in excess of a     
   billion dollars to upgrade only a limited number of the thirteen JSTARS 
   aircraft. While the committee may fully support necessary upgrades to   
   this important system, there needs to be a significant effort to curb   
   costs.                                                                  
      Therefore, the committee requests the Secretary of the Air Force to  
   provide a report of audit on the costs of the JSTARS aircraft: the basic
   airframe costs, the modification costs, and the costs of the upgrade    
   programs. This audit should be provided to the defense and intelligence 
   committees no later than 31 March 1999.                                 
      Finally, the committee has been asked in the President's budget      
   request to authorize the full request of the radar technology           
   improvement program. The Department of Defense has not agreed to brief  
   Members of the committee on all aspects of this upgrade, or even on how 
   the requested funding will be spent. Therefore, the committee directs   
   that no funding for the RTIP upgrade be obligated or expended until the 
   committee is fully briefed on this program.                             
           Special operations intelligence systems, +$5.0 million                  
      The budget request contained $1.8 million in PE 1160405BB for the    
   special operations systems development.                                 
      The committee notes that the special operations forces intelligence  
   vehicle (SOF IV) is an evolutionary ongoing effort that requires        
   additional funding to complete development. The committee recommends    
   $6.8 million, an increase of $5.0 million for SOF IV in PE 1160405BB.   
                    SECTION-BY-SECTION ANALYSIS OF THE BILL AS REPORTED           
           INTELLIGENCE AUTHORIZATION ACT FOR FISCAL YEAR 1999           
           Title I: Intelligence activities                                        
            Section 101--Authorization of appropriations                            
      Section 101 lists those elements of the United States Government for 
   whose intelligence and intelligence-related activities the Act          
   authorizes appropriations for fiscal year 1999.                         
      The Drug Enforcement Administration (DEA) has been listed in section 
   101 of past Intelligence Authorization Acts. The DEA, however, does not 
   receive appropriations authorized by this legislation. Thus, the        
   committee does not include DEA in section 101.                          
      The fact that DEA is no longer included, however, should not be      
   understood by either the DEA or any element of the intelligence         
   community as a reason to reduce the level of cooperation that currently 
   exists between the DEA and the various elements of the community. The   
   committee expects and demands a continuation of the very beneficial     
   working relationship that has developed between the community and the   
   DEA. The committee recognizes the efficacy of the DEA's partnership with
   the intelligence community on the extremely serious national security   
   issue of international drug trafficking. It is the committee's          
   expectation, in spite of the removal of the DEA from section 101 of the 
   Intelligence Authorization Act for Fiscal Year 1999, that this          
   partnership will remain solid and continue to develop in the best       
   interests of the people of the United States.                           
      The committee similarly insists upon a continuation of the level of  
   close communication between the committee and the DEA, with respect to  
   notification of developments, successes, failures, or compromises of the
   foreign counternarcotics activities of the United States. The committee 
   will not countenance any attenuation of its ability to ensure that the  
   intelligence community is working together with law enforcement, where  
   necessary and appropriate, to advance our national security interests.  
            Section 102--Classified schedule of authorizations                      
      Section 102 incorporates by reference the classified Schedule of     
   Authorizations. That schedule sets forth the specific amounts authorized
   to be appropriated for specific intelligence and intelligence-related   
   activities and personnel ceilings for fiscal year 1999 for those United 
   States government elements listed in section 101. The details of the    
   Schedule are explained in the classified annex to this report. The      
   Schedule of Authorizations correlates to the President's budget request,
   which was submitted to Congress, and remains, in classified form.       
            Section 103--Personnel ceiling adjustments                              
      Section 103 authorizes the Director of Central Intelligence, with the
   approval of the Director of the Office of Management and Budget (OMB),  
   in fiscal year 1999, to exceed the personnel ceilings applicable to the 
   components of the intelligence community under section 102 by an amount 
   not to exceed two percent of the total of the ceilings otherwise        
   applicable under section 102. The Director may exercise this authority  
   only when necessary to the performance of important intelligence        
   functions. Any exercise of this authority must be reported to the two   
   intelligence committees of the Congress.                                
      The committee emphasizes that the authority conferred by section 103 
   is not intended to permit the wholesale raising of personnel strength in
   any intelligence component. Rather, the section provides the Director of
   Central Intelligence with flexibility to adjust personnel levels        
   temporarily for contingencies, and for overages caused by an imbalance  
   between hiring of new employees and attrition of current employees. The 
   committee does not expect the Director of Central Intelligence to allow 
   heads of intelligence components to plan to exceed levels set in the    
   Schedule of Authorizations, except for the satisfaction of clearly      
   identified hiring needs that are consistent with the authorization of   
   personnel strengths in this legislation. In no case is this authority to
   be used to provide for positions otherwise denied by Congress.          
            Section 104--Community management account                               
      Section 104 details the amount and composition of the Community      
   Management Account (CMA) of the Director of Central Intelligence.       
      Subsection (a) of section 104 authorizes appropriations in the amount
   of $139,123,000 for fiscal year 1999 for the staffing and administration
   of various components under the CMA. Subsection (a) also authorizes     
   funds identified for the Advanced Research and Development Committee and
   the Environmental Intelligence and Applications Program to remain       
   available for two years.                                                
      Subsection (b) authorizes a total of 283 full-time personnel for     
   elements within the CMA for fiscal year 1999 and provides that such     
   personnel may be permanent employees of the CMA element or detailed from
   other elements of the United States Government.                         
   Subsection (c) explicitly authorizes the classified portion of the CMA. 
      Subsection (d) requires that personnel be detailed on a reimbursable 
   basis, with certain exceptions.                                         
      Subsection (e) authorizes $27,000,000 of the amount authorized for   
   the CMA under subsection (a) to be made available for the National Drug 
   Intelligence Center (NDIC) in Johnstown, Pennsylvania. Subsection (e)   
   requires the Director of Central Intelligence to transfer the           
   $27,000,000 to the Department of Justice to be used for NDIC activities 
   under the authority of the Attorney General, and subject to section     
   103(d)(1) of the National Security Act.                                 
      Subsection (f) earmarks funds that are allocated for the CMA under   
   subsection (a) and authorizes those funds to be made immediately        
   available to the Department of State for the express purpose of         
   supporting intelligence community requirements related to the security  
   of overseas facilities. This subsection authorizes a one-time-only      
   immediate transfer of funds by the Director of Central Intelligence from
   the CMA's Center for Security Evaluation to the Department of State to  
   ensure that architectural and engineering services related to several   
   overseas locations in fiscal year 1999 can begin immediately. These     
   funds shall only be available for the same purposes, and subject to the 
   same terms and conditions, as the funds in the appropriation accounts to
   which these funds will be transferred.                                  
      The committee understands that an agreement among the departments or 
   agencies affected has been reached with respect to the specific amounts 
   and locations involved.                                                 
           Title II: Central Intelligence Agency retirement and disability system  
            Section 201--Authorization of appropriations                            
      Section 201 authorizes appropriations in the amount of $201,500,000  
   for fiscal year 1999 for the Central Intelligence Agency Retirement and 
   Disability Fund.                                                        
           Title III: General provisions                                           
                        Section 301--Increase in employee compensation and benefits 
            authorized by law                                                       
      Section 301 provides that appropriations authorized by this Act for  
   salary, pay, retirement and other benefits for federal employees may be 
   increased by such additional or supplemental amounts as may be necessary
   for increases in such compensation or benefits authorized by law.       
            Section 302--Restriction on conduct of intelligence activities          
      Section 302 provides that the authorization of appropriations within 
   the Act does not constitute authority for the conduct of any            
   intelligence activity that is precluded by the Constitution or other    
   laws of the United States.                                              
                        Section 303--Extension of application of sanctions laws to  
            intelligence activities                                                 
      Section 303 amends section 905 of the National Security Act of 1947, 
   which authorizes the President to delay the imposition of an economic,  
   cultural, diplomatic, or other sanction upon a foreign government based 
   on his determination that proceeding with such sanction could compromise
   an ongoing criminal investigation or an intelligence source or method.  
   Section 905 was first enacted as part of the Intelligence Authorization 
   Act for Fiscal Year 1996. This authority has been extended every year   
   since for one year intervals.                                           
      Section 303 extends this authority until January 6, 2000. The        
   committee finds that there is a continuing need for this authority      
   because the immediate imposition of sanctions, without some delay,      
   could, in particular cases, seriously jeopardize a criminal             
   investigation or sources and methods of intelligence collection.        
      The committee reaffirms, without restating here, the position        
   asserted in its report accompanying the Intelligence Authorization Act  
   for Fiscal Year 1998 (Rpt. No. 105 135, part I), with respect to this   
   section.                                                                
                        Section 304--Sense of Congress regarding intelligence       
            community contracting                                                   
      Section 304 expresses the sense of Congress that the DCI should      
   continue to direct elements of the intelligence community to award      
   contracts in a manner that would maximize the procurement of products   
   produced in the United States, when such action is compatible with the  
   national security interests of the United States, consistent with       
   operational and security concerns, and fiscally sound.                  
           Title IV: Central Intelligence Agency                                   
                        Section 401--Extension of the CIA Voluntary Separation of   
            Pay Act provisions                                                      
      Section 401 amends section 2(f) of the Central Intelligence Agency   
   Voluntary Separation Pay Act (P.L. 103 36)(50 U.S.C. 403 4 note) to     
   extend the Agency's authority to offer ``early-out'' incentives until   
   September 30, 2001. Without this amendment, the Agency's authority to   
   offer such incentives would expire on September 30, 1999.               
      Although, CIA's ``early out'' incentive has been an effective        
   workforce reduction tool, the Agency must continue to address skills mix
   issues, and ensure that personnel reductions are not undertaken simply  
   for the sake of reduction. The net impact of the six CIA early-out      
   exercises thus far, along with normal attrition and reduced hiring, has 
   been a significant drop in the Agency's on-duty strength since the      
   separation incentive program began in fiscal year 1993. The committee is
   concerned that such reductions could result in gaps of coverage,        
   especially in critical areas.                                           
      The committee acknowledges that the CIA has worked hard over the past
   decade to streamline and refocus its workforce to address critical,     
   cutting-edge national security issues. The Agency should be commended   
   for its efforts to reengineer its business processes, hire personnel    
   with new and vital skills, expand the capabilities and experiences      
   within the Agency workforce, and acquire new technologies to meet the   
   demands of today's collection requirements.                             
      Voluntary Separation Incentive Pay authority should only be used for 
   specific, targeted populations and is intended to help the CIA achieve  
   its skill mix goals without resorting to involuntary separations in     
   certain occupational categories.                                        
      The committee believes that without this continued authority         
   separation rates would decline. This would limit the Agency's ability to
   keep pace with rapidly expanding technologies and the dynamic           
   geopolitical realities that we face. The ability to adapt to such       
   dynamic changes is central to the Agency's mission.                     
                        Section 402--Enhanced protective authority for CIA personnel
            and family members                                                      
      Section 402 of the Act amends section 5(a)(4) of the Central         
   Intelligence Agency Act of 1949 (``CIA Act''). This provision will      
   enable the Agency to use firearms to protect current and former Agency  
   personnel and their immediate families, as well as defectors and their  
   immediate families, who are in the United States. This authority is     
   granted for those situations when the Director of Central Intelligence  
   determines such protection is necessary for the performance of the      
   authorized functions of the Central Intelligence Agency.                
      Current Section 5(a)(4) of the CIA Act permits the CIA to use        
   firearms within the United States to protect only certain categories of 
   individuals limited to Agency personnel, defectors, and the families of 
   defectors, and other persons in the United States under Agency auspices.
   This provision does not limit or amend any aspect of this authority.    
      Protection may sometimes be appropriate for former Agency personnel  
   because the distinction between former and current CIA personnel will be
   of little consequence to terrorists seeking to harm CIA. In addition,   
   prudence dictates that if former or current CIA personnel are threatened
   with harm, the protection provided to them should, in appropriate       
   circumstances, be extended to their immediate families as well. The     
   committee intends that the authority provided by this amendment will be 
   used only when the Director determines that there are specific and      
   credible threats to the protectees while in the United States and that  
   those threats arise from the protectee's affiliation with the CIA. The  
   committee expects that the Director will advise the intelligence        
   committees when this authority is exercised.                            
      Similarly, the committee believes the Agency must advise the Attorney
   General when such specific and credible threats against a protected     
   individual occurs. In this way, the United States government's          
   prosecutorial rights that could result from such criminal activity will 
   be protected.                                                           
      The committee does not anticipate that the authority provided by     
   section 402 will be used to provide protectees with armed security      
   protection when threatened with harm that arises for reasons unrelated  
   to an individual's current or former affiliation with CIA (e.g.,        
   domestic violence or general threat of criminal violence in the area of 
   a CIA employee's residence in the United States).                       
      In the wake of the 1993 assassination of CIA employees, the CIA      
   discussed the protection issue with local jurisdictions. These local law
   enforcement agencies indicated that they did not have the resources,    
   training, or charter to provide such protection. More recently during   
   and after the trial of Mir Aimal Kasi, the need for this enhanced       
   authority was established. The immediate families of those killed or    
   injured provided a target for threats, causing additional anguish for   
   them.                                                                   
      The committee notes that this additional grant of protective         
   authority is not without precedent. The United States Marshals Service  
   (USMS) provides protection to the families of certain personnel under   
   certain circumstances. The USMS has the authority to provide protection 
   to any USMS employee, officer, or witness or anyone involved in judicial
   process who is deemed by the USMS Director to be under threat. Such     
   examples include federal judges, prosecutors, witnesses, jurors, and any
   of their family members against whom a threat has been directed.        
      The committee understands that the CIA is a target or recipient of a 
   large volume of unsolicited calls, letters, and visits by potentially   
   hostile individuals. Many of these contacts are the work of disturbed   
   individuals, some of whom make threats and then ``close the gap'',      
   actually appearing at the CIA Headquarters compound (or other Agency    
   facilities). Implicit in this kind of potential threat is the chance    
   that hostile or aggressive behavior may be directed against the families
   of CIA personnel.                                                       
      The amendment made by section 402 would not extend or expand, in any 
   way, the carefully limited law enforcement authority and jurisdiction   
   provided to the Agency in section 15 of the CIA Act. Simply put, it     
   authorizes the Agency to protect Agency employees, current and former,  
   and their families, in the United States, in the same manner as they are
   authorized to protect defectors in the United States.                   
            Section 403--Technical corrections                                      
      Section 403 makes technical corrections to section 5(a)(1) and       
   section 6 of the Central Intelligence Agency (CIA) Act of 1949 and      
   section 201(c) of the CIA Retirement Act. The cross-reference in section
   5(a)(1) of the CIA Act to subparagraphs (B) and (C) of section 102(a)(2)
   of the National Security Act is no longer current or accurate, and      
   should cite instead to subsections (a)(2) and (a)(3) of section 102.    
   Section 805(a) of the Intelligence Authorization Act for Fiscal Year    
   1997 (P.L. No. 104 293) changed what had been sections 102(a)(2) (B) and
   (C) of the National Security Act to sections 102(a)(2) and (a)(3) of    
   that Act. Similarly, the cross-references in section 5(a)(1) and section
   6 of the CIA Act to ``subsection (c)(5) of section 103'' and to         
   ``section 103(c)(5) of the National Security Act of 1947 (50 U.S.C. 403 
   3(c)(5))'', respectively, are no longer current or accurate. The        
   cross-reference in section 201(c) of the CIA Retirement Act to that same
   provision of the National Security Act is also outdated. Section        
   807(a)(2) of the Intelligence Authorization Act for Fiscal Year 1997    
   changed what had been section 103(c)(5) of the National Security Act (50
   U.S.C. 403 3(c)(5)) to section 103(c)(6) (50 U.S.C. 403 3(c)(6)).       
   Section 401 of the present legislation simply updates the               
   cross-references in section 5(a)(1) and section 6 of the CIA Act and    
   section 201(c) of the CIA Retirement Act to the pertinent provision of  
   the National Security Act.                                              
           Title V: Department of Defense                                          
                        Section 501-- Extension of authority to engage in commercial
            activities as security for intelligence collection activities           
      Section 501 amends section 431(a) of title 10 to continue current    
   Department of Defense authority to engage in commercial activities as   
   security for intelligence collection activities beyond December 31,     
   1999, which is the date on which the current statutory authorization    
   expires. The Committee has extended this provision for an additional    
   three years through and until December 31, 2002.                        
                                     COMMITTEE POSITION                           
      On April 29, 1998, in open session, a quorum being present, the      
   Permanent Select Committee on Intelligence, by a recorded vote of 12    
   ayes to 0 noes, approved the bill, H.R. 3694, as amended by an amendment
   in the nature of a substitute. By that vote, the committee ordered the  
   bill, as amended, reported favorably to the House. On that vote, the    
   Members present recorded their votes as follows:                        
      Mr. Goss (Chairman)--aye; Mr. Shuster--aye; Mr. McCollum--aye; Mr.   
   Castle--aye; Mr. Boehlert--aye; Mr. Bass--aye; Mr. Gibbons--aye; Mr.    
   Dicks--aye; Mr. Skaggs--aye; Ms. Harman--aye; Mr. Skelton--aye; Mr.     
   Bishop--aye.                                                            
          FINDINGS AND RECOMMENDATIONS OF THE COMMITTEE ON GOVERNMENT REFORM AND  
                                    OVERSIGHT                                     
      With respect to clause 2(l)(3)(A) of rule XI of the House of         
   Representatives, the committee has not received a report from the       
   Committee on Government Reform and Oversight pertaining to the subject  
   of this bill.                                                           
                                     OVERSIGHT FINDINGS                           
      With respect to clause 2(l)(3)(A) of rule XI of the Rules of the     
   House of Representatives, the committee held seven full-committee       
   hearings, as well as six full-committee briefings, on the classified    
   budgetary issues raised by H.R. 3694. Testimony was taken from the      
   Director of Central Intelligence, the Director of the National Security 
   Agency, the Director of the Defense Intelligence Agency, the Deputy     
   Director of Central Intelligence, the Deputy Directors for Operations   
   and Intelligence, numerous program managers, and various other          
   knowledgeable witnesses on the activities and plans of the intelligence 
   community covered by the provisions and authorizations, both classified 
   and unclassified, of the Intelligence Authorization Act for Fiscal Year 
   1999. The bill, as reported by the committee, reflects conclusions      
   reached by the committee in light of that oversight activity.           
                                FISCAL YEAR COST PROJECTIONS                      
      The committee has attempted, pursuant to clause 7(a) of rule XIII of 
   the Rules of the House of Representatives, to ascertain the outlays that
   will occur in fiscal year 1999 and the five years following if the      
   amounts authorized are appropriated. These estimates are contained in   
   the classified annex and are in accordance with those of the executive  
   branch.                                                                 
                           CONGRESSIONAL BUDGET OFFICE ESTIMATES                  
      In compliance with clause 2(l)(3)(B) and (C) of rule XI of the Rules 
   of the House of Representatives, and pursuant to sections 308 and 403 of
   the Congressional Budget Act of 1974, the committee submits the         
   following estimate prepared by the Congressional Budget Office:         
       U.S. Congress,                                                          
       Congressional Budget Office,                                            
       Washington, DC, May 5, 1998.                                            
          Hon.  Porter J. Goss,                Chairman, Permanent Select Committee on Intelligence,
       House of Representatives, Washington, DC.                               
       Dear Mr. Chairman: The Congressional Budget Office has prepared the 
   enclosed cost estimate for H.R. 3694, the Intelligence Authorization Act
   for Fiscal Year 1999.                                                   
      If you wish further details on this estimate, we will be pleased to  
   provide them. The CBO staff contact is Dawn Sauter.                     
   Sincerely,                                                              
         June E. O'Neill,  Director.                                            
   Enclosure.                                                              
           H.R. 3694--Intelligence Authorization Act for Fiscal Year 1999          
      Summary: H.R. 3694 would authorize appropriations for fiscal year    
   1999 for intelligence activities of the United States government, the   
   Community Management Account, and the Central Intelligence Agency       
   Retirement and Disability System (CIARDS).                              
      This estimate addresses only the unclassified portion of the bill. On
   that limited basis, CBO estimates that enacting H.R. 3694 would result  
   in additional spending of $139 million over the 1999 2003 period,       
   assuming appropriation of the authorized amounts. CBO believes that     
   section 401 of the bill, which would extend the authority of the CIA to 
   offer incentive payments to employees who voluntarily retire or resign, 
   would increase direct spending by $1 million or more in at least one    
   year during the 2000 2003 period. However, CBO cannot give a precise    
   estimate of the increase in spending because data to support a cost     
   estimate are classified. Because the bill would raise direct spending,  
   pay-as-you-go procedures would apply.                                   
      The Unfunded Mandates Reform Act of 1995 (UMRA) excludes from        
   application of the act legislative provisions that are necessary for the
   national security. CBO has determined that all of the provisions of this
   bill either fit within that exclusion or do not contain                 
   intergovernmental or private-sector mandates as defined by UMRA.        
      Estimated cost to the Federal Government: The estimated budgetary    
   impact of the unclassified portions of H.R. 3694 is shown in the        
   following table. CBO is unable to obtain the necessary information to   
   estimate the costs for the entire bill because parts are classified at a
   level above clearances held by CBO employees. The costs of this         
   legislation fall within budget function 050 (national defense).         
      The bill would authorize appropriations of $139 million for the      
   Community Management Account. In addition, the bill would authorize $202
   million for CIARDS to cover retirement costs attributable to military   
   service and various unfunded liabilities. The payment to CIARDS is      
   considered mandatory, and the authorization under this bill would be the
   same as assumed in the CBO baseline.                                    
      CBO believes that section 401 of the bill would increase direct      
   spending by $1 million or more in at least one year during the 2000 2003
   period. Section 401 would extend the authority of the CIA to offer      
   incentive payments to employees who voluntarily retire or resign. Under 
   current law this authority expires on September 30, 1999. Section 401   
   would extend this authority starting in fiscal year 2000 until September
   30, 2001. This extension would induce some employees to retire earlier  
   than under current law, thereby increasing federal outlays for          
   retirement benefits. CBO cannot give a precise estimate of the increase 
   in spending because data to support a cost estimate are classified.     
                                      [By fiscal year, in millions of dollars]
                                                                       1998      1999      2000      2001      2002      2003  
    SPENDING SUBJECT TO APPROPRIATION                                                                                               
Spending under current law for the community management account:          94         0         0         0         0         0  
Proposed changes:                                                          0       139         0         0         0         0  
Spending under H.R. 3694 for the community management account:            94       139         0         0         0         0  
    CHANGES IN DIRECT SPENDING
Estimated budget authority                                                 0         0     (\2\)     (\2\)     (\2\)     (\2\)  
Estimated outlays                                                          0         0     (\2\)     (\2\)     (\2\)     (\2\)  
\1\The 1998 level is the amount appropriated for that year. 
\2\CBO believes that H.R. 3694 would increase direct spending by $1 million or 
more in at least one year over the 2000 2003 period. However, CBO cannot give 
a precise estimate because data to support a cost estimate are classified.  
                    For purposes of this estimate, CBO assumes that H.R. 3694 will
          be enacted by October 1, 1998, and that the full amounts authorized will
          be appropriated for fiscal year 1999. Outlays are estimated according to
          historical spending patterns for intelligence programs.                 
      Pay-as-you-go considerations: Section 401 of the bill would affect   
   direct spending, and therefore the bill would be subject to             
   pay-as-you-go procedures. The estimated pay-as-you-go impact would be $1
   million or more in at least one year over the 2000 2003 period.         
      Intergovernmental and private-sector impact: The Unfunded Mandates   
   Reform Act of 1995 (UMRA) excludes from application of the act          
   legislative provisions that are necessary for the national security. CBO
   has determined that all of the provisions of this bill either fit within
   that exclusion or do not contain intergovernmental or private-sector    
   mandates as defined by UMRA.                                            
      Estimate prepared by: Federal costs: Dawn Sauter; Impact on State,   
   local and tribal governments: Teri Gullo; Impact on the private sector: 
   Bill Thomas.                                                            
      Estimate approved by: Robert A. Sunshine, Deputy Assistant Director  
   for Budget Analysis.                                                    
                                  COMMITTEE COST ESTIMATES                        
      The committee agrees with the estimate of the Congressional Budget   
   Office.                                                                 
           SPECIFIC CONSTITUTIONAL AUTHORITY FOR CONGRESSIONAL ENACTMENT OF THIS  
                                   LEGISLATION                                    
      The intelligence and intelligence-related activities of the United   
   States government are carried out to support the national security      
   interests of the United States, to support and assist the armed forces  
   of the United States, and to support the President in the execution of  
   the foreign policy of the United States. Article I, section 8, of the   
   Constitution of the United States provides, in pertinent part, that     
   ``Congress shall have power * * * to pay the debts and provide for the  
   common defence and general welfare of the United States; * * * ``; ``to 
   raise and support Armies, * * * ``; ``to provide and maintain a Navy; * 
   * * `` and ``to make all laws which shall be necessary and proper for   
   carrying into execution * * * all other powers vested by this           
   Constitution in the Government of the United States, or in any          
   Department or Officer thereof.'' Therefore, pursuant to such authority, 
   Congress is empowered to enact this legislation.                        
                   CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED          
     In compliance with clause 3 of rule XIII of the Rules of the House of
  Representatives, changes in existing law made by the bill, as reported, 
  are shown as follows (existing law proposed to be omitted is enclosed in
  black brackets, new matter is printed in italic, existing law in which  
  no change is proposed is shown in roman):                               
                          SECTION 905 NATIONAL SECURITY ACT OF 1947               
                               APPLICATION                               
     Sec. 905. This title shall cease to be effective on January 6, 1999  
  January 6, 2000 .                                                       
           SECTION 2 OF THE CENTRAL INTELLIGENCE AGENCY VOLUNTARY SEPARATION PAY  
                                       ACT                                        
          SEC. 2. SEPARATION PAY.                                                 
   (a) * * *                                                              
         * * * * * * *                                                           
     (f) Termination.--No amount shall be payable under this section based
  on any separation occurring after September 30, 1999 September 30, 2001 
  .                                                                       
         * * * * * * *                                                           
                           CENTRAL INTELLIGENCE AGENCY ACT OF 1949                
         * * * * * * *                                                           
                                    GENERAL AUTHORITIES                           
     Sec. 5. (a) In the performance of its functions, the Central         
  Intelligence Agency is authorized to--                                  
       (1) Transfer to and receive from other Government agencies such sums
   as may be approved by the Office of Management and Budget, for the      
   performance of any of the functions or activities authorized under      
   subparagraphs (B) and (C) of section 102(a)(2) paragraphs (2) and (3) of
   section 102(a) , subsections (c)(5) (c)(6) and (d) of section 103,      
   subsections (a) and (g) of section 104, and section 303 of the National 
   Security Act of 1947 (50 U.S.C. 403(a)(2), (3), 403 3 (c)(6), (d) , 403 
   4 (a), (g) , and 405), and any other Government agency is authorized to 
   transfer to or receive from the Agency such sums without regard to any  
   provisions of law limiting or prohibiting transfers between             
   appropriations. Sums transferred to the Agency in accordance with this  
   paragraph may be expended for the purposes and under the authority of   
   this Act                                                                
          without regard to limitations of appropriations from which transferred; 
         * * * * * * *                                                           
       (4) Authorize personnel designated by the Director to carry firearms
   to the extent necessary for the performance of the Agency's authorized  
   functions, except that, within the United States, such authority shall  
   be limited to the purposes of protection of classified materials and    
   information, the training of Agency personnel and other authorized      
   persons in the use of firearms, the protection of Agency installations  
   and property, and the protection of Agency personnel and of defectors,  
   their families and the protection of current and former Agency personnel
   and their immediate families, and defectors and their immediate families
   , and other persons in the United States under Agency auspices;         
         * * * * * * *                                                           
     Sec. 6. In the interests of the security of the foreign intelligence 
  activities of the United States and in order further to implement       
  section 103(c)(5) (c)(6) of the National Security Act of 1947 (50 U.S.C.
  403 3(c)(5) (c)(6) ) that the Director of Central Intelligence shall be 
  responsible for protecting intelligence sources and methods from        
  unauthorized disclosure, the Agency shall be exempted from the          
  provisions of sections 1 and 2, chapter 795 of the Act of August 28,    
  1935 (49 Stat. 956, 957; 5 U.S.C. 654), and the provisions of any other 
  laws which require the publication or disclosure of the organization,   
  functions, names, official titles, salaries, or numbers of personnel    
  employed by the Agency: Provided, That in furtherance of this section,  
  the Director of the Office of Management and Budget shall make no       
  reports to the Congress in connection with the Agency under section 607,
  title VI, chapter 212 of the Act of June 30, 1945, as amended (5 U.S.C. 
  947(b)).                                                                
         * * * * * * *                                                           
                SECTION 201 OF THE CENTRAL INTELLIGENCE AGENCY RETIREMENT ACT     
          SEC. 201. THE CIARDS SYSTEM.                                            
   (a) * * *                                                              
         * * * * * * *                                                           
     (c) Finality of Decisions of DCI. --In the interests of the security 
  of the foreign intelligence activities of the United States and in order
  further to implement section 103(c)(5) (c)(6) of the National Security  
  Act of 1947 (50 U.S.C. 403 3(c)(5) (c)(6) ) that the Director of Central
  Intelligence shall be responsible for protecting intelligence sources   
  and methods from unauthorized disclosure, and notwithstanding the       
  provisions of chapter 7 of title 5, United States Code, or any other    
  provision of law (except section 305(b) of this Act), any determination 
  by the Director authorized by this Act shall be final and conclusive and
  shall not be subject to review by any court.                            
                         SECTION 413 OF TITLE 10, UNITED STATES CODE              
                    431. Authority to engage in commercial activities as security 
          for intelligence collection activities                                  
     (a) Authority.-- The Secretary of Defense, subject to the provisions 
  of this subchapter, may authorize the conduct of those commercial       
  activities necessary to provide security for authorized intelligence    
  collection activities abroad undertaken by the Department of Defense. No
  commercial activity may be initiated pursuant to this subchapter after  
  December 31, 1998 December 31, 2001 .                                   
         * * * * * * *                                                           
                                                                        



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