The United States Senate

Committee on the Judiciary

 

 

 

Hearing

"FBI Oversight"

May 2, 2006

 

Member Statements:

 

The Honorable Patrick Leahy

United States Senator

Vermont

 

The Honorable Charles Grassley

United States Senator

Iowa

 

Panel I

 

The Honorable Robert S. Mueller, III

Director

Federal Bureau of Investigation

US Department of Justice

Washington, DC

 

Panel II

 

The Honorable Glenn A. Fine

Inspector General

US Department of Justice

Washington, DC

 

Linda M. Calbom

Director, Financial Management and Assurance

Government Accountability Office

Washington, DC

 

John Gannon, Ph.D

Vice President for Global Analysis

BAE Systems Information Technology

former Staff Director of the House Homeland Security Committee

McLean, VA

 

 

The Honorable Patrick Leahy

 

Mr. Chairman, thank you for convening today's FBI oversight hearing. This is another opportunity to continue our efforts to remake the FBI into a modern domestic intelligence and law enforcement agency.

 

As you know, oversight of the FBI to help make the Bureau as good as the American people need it to be was one of my highest priorities when I chaired the Committee in the period just before, and then in the wake of, the attacks of 9/11. After the attacks, Congress acted quickly to address the new challenges facing the Bureau, by giving it new tools to combat terrorism, by funding information technology, and by pushing to correct institutional and management flaws that prevented FBI field agents from operating at their full potential. As recognized by Inspector General Fine, the Government Accountability Office, and others, the FBI has improved. Yet we continue to see some of the same problems that this Committee identified years ago in those earlier hearings, and that we and the 9/11 Commission sought to correct. Today, four-and-a-half years after 9/11, it troubles me deeply that the FBI is still not as strong and as equipped as it must be to fulfill its core missions.

 

Director Mueller, you, your leadership team and the hard-working men and women of the FBI deserve -- and have -- the constant appreciation of all of us as Americans, for all that you do and for the sacrifices that you make. For decades -- and especially since 9/11 -- the men and women of the FBI have toiled tirelessly, while under great pressure, to carry out the Bureau's duties. Constructive oversight of the FBI's work by Congress is an invaluable tool to help keep moving us toward the goals that we all share for the Bureau. That is why you and we are here today.

 

Domestic Surveillance

 

Since 9/11, the Bureau has made great strides in enhancing its intelligence gathering capabilities. I was disappointed to learn, however, that the FBI has been using that capability to conduct domestic surveillance on law-abiding American citizens, simply because they happen to oppose the government's war policy in Iraq. In March, the Seattle Post-Intelligencer reported that federal antiterrorism agencies, including the FBI, conducted surveillance on longtime Quaker peace activist Glen Milner during the 2003 Seafair festival. A Freedom of Information Act lawsuit recently filed by the ACLU has also revealed communications between the FBI and other law enforcement agencies about the surveillance of several other domestic peace groups. The FBI cannot simply dismiss these very serious concerns by citing Inspector General Fine's recent report on the Bureau's conduct during the 2004 nation political conventions. That report does not address these other incidents of domestic surveillance.

 

According to the documents obtained in that lawsuit, these are not isolated events. The documents show that the FBI has infiltrated political, environmental, antiwar and faith-based groups elsewhere across the country.

 

The FBI's participation in domestic spying -- at the expense of the privacy and civil liberties interests of our citizens -- is also evident in a recent report on the Bureau's surveillance activities. According to a recent report by Inspector General Fine, the FBI reported more than 100 possible surveillance violations to the Intelligence Oversight Board during the past two years. These violations included cases in which FBI agents tapped the wrong telephone, intercepted the wrong emails or continued to listen to conversations more than a year after a warrant had expired.

 

Now we learn that the FBI wants to search the personal records of prominent Washington reporter Jack Anderson, just a few months after his death, to look for documents that may have been classified at some distant point in time.

 

All of this should concern all who value privacy rights and the free exchange of ideas in our society.

 

Information-Sharing, Terrorist Screening Center, And Terrorist Watchlist

 

I have closely followed the FBI's challenges in analyzing and disseminating the intelligence data in its possession. The failure of our intelligence and law enforcement agencies to share information that might have warned of a pending terrorist attack was cited as a key problem in the investigations that followed the 9/11 attacks. Last month, the GAO issued a report finding that, despite more than four years of legislation, Executive Orders and presidential directives, the Bush Administration has yet to comprehensively improve the sharing of counterterrorism information among dozens of federal agencies -- including the FBI. In fact, numerous deadlines set by both President Bush and by Congress to better coordinate information sharing have not been met.

 

According to the GAO's report, the FBI does have several initiatives underway to promote information sharing, including the establishment of 103 joint terrorism task forces around the country. While commendable, this effort is not fully effective because, as the GAO found, there are no government-wide standards on how to handle the sensitive counterterrorism information that the FBI must share with its law enforcement partners.

 

The Terrorist Watchlist produced and disseminated by the FBI's Terrorist Screening Center has been plagued by too many entries and inaccurate and incomplete information. Earlier this year, the Washington Post reported that the National Counterterrorism Center, which provides data for the watchlist, maintains a central repository of 325,000 names of international terrorist suspects. The Terrorist Screening Center provides these names to the Transportation Security Agency for its no-fly list, the State Department for its visa program, the Department of Homeland Security for border crossings, and the National Crime Information Center for distribution to police.

 

If being placed on a list means in practice that you will be denied a visa, barred entry, put on the no-fly list, or targeted for prosecution, then the sweep of this list and the apparent absence of any way to clear oneself certainly raises privacy concerns as well as law enforcement problems. The FBI must take steps to better ensure the accuracy of the watchlist and to protect the privacy of the growing number of law-abiding Americans who names have been improperly listed there.

 

Virtual Case File And Sentinel

 

It is no secret that I, like many Americans, am greatly concerned about the FBI's handling of the now defunct Trilogy project and the prospects for its replacement -- the Sentinel project. The sad saga of the Trilogy project is well known to everyone in this room. The project, which was intended to modernize the FBI's information technology infrastructure, was plagued by numerous schedule delays and cost increases B from an estimated $380 million to an estimated $458 million to upward of $596 million, before it was finally scrapped last year.

 

In March, the GAO issued its report to Congress on the Trilogy case management project. That report found that weak controls on the parts of the FBI and the General Service Administration resulted in the Bureau paying more that $10.1 million in unallowable costs and in the FBI being unable to account for more than 1,400 pieces of missing equipment, valued at about $8.6 million. The GAO also cautioned in its report that if these control weaknesses go uncorrected, future contracts, including those related to Sentinel, will be highly exposed to improper payments and similar problems.

 

As the Director knows from the recent Appropriations subcommittee hearing, I find it intolerable that Congress, and this Committee in particular, was not given the full story on Trilogy until the entire project collapsed under its own weight. Taxpayers are out millions of dollars, and we have lost several crucial years in getting this essential task completed.

 

In March, we learned that Sentinel will cost the American taxpayers $425 million to complete and that this system will not be fully operational until 2009. The GAO's recommendations will be critical as we move forward with the Sentinel project and attempt to manage the already skyrocketing costs of that replacement program. I remain very concerned about this project. This time around, I expect transparency and accountability. The Bureau's effectiveness hangs in the balance, and the American people cannot afford another fiasco.

 

Counterintelligence And Counterterrorism

 

There are also other weaknesses in the Bureau's critical counterintelligence and counterterrorism efforts. I continue to be troubled by the relatively low level of counterterrorism experience of some of the FBI's mid-level and senior counterterrorism officials. Director Mueller recently told us that candidates for mid-level Special Agent positions within the FBI are vetted through a process in which subject matter expertise is considered and preferred, but is not mandatory. In other words, counterterrorism experience is not a prerequisite to promotion to managerial positions within the Bureau.

 

Given that the FBI's top priority since 9/11 is to protect the United States from terrorist attacks, I believe that is critical that we have managers within the FBI who have significant counterterrorism experience. The FBI simply cannot continue to foster a culture that places a lower value on intelligence functions than investigative efforts.

 

Conclusion

 

Since 9/11, the FBI has made significant strides to adjust to the threats and challenges of our time. I commend Director Mueller and the Bureau for all that they have accomplished, but there is much more work to do. I look forward to engaging our witnesses on how best to move forward.

 

 

The Honorable Charles Grassley

 

Mr. Chairman, thank you for holding this FBI oversight hearing today. While the FBI has made significant progress since 9/11, its transformation into an effective domestic intelligence service is far from complete. We will hear from the Government Accountability Office (GAO) today about a review of the FBI's computer modernization effort known as Trilogy. The GAO identified approximately $10 million in questionable or undocumented costs and recommended that the FBI retain an independent third-party to do a more comprehensive audit and determine whether certain contractors ought to return millions of dollars to the taxpayers.

 

The barriers to the transformation of the FBI go far beyond its troubled efforts to upgrade its computers. Last Thursday, after only eight months on the job, the FBI announced that the head of the FBI's newly created National Security Branch is retiring. The previous Director of Intelligence at the FBI stayed for less than two years. Consistent, long-term leadership in its senior management positions is critical to the FBI's success. The Bureau needs to find a way to recruit and retain senior managers with extensive counterterrorism and counterintelligence experience to set priorities and provide rank-and-file agents with steady, knowledgeable guidance.

 

That sort of leadership is essential if the FBI is going to change the negative aspects of its culture. Since 9/11, it has been clear that the FBI culture much change in order to effectively combat terrorism. The time of the old FBI has past. America can no longer tolerate an FBI that prizes loyalty above all else, hands out plum assignments based on personal relationships rather than merit, and emphasizes being "in charge" at the expense of cooperation with other government agencies.

 

Jurisdictional Pac-Man / Lack of Coordination

 

These old ways of thinking no longer serve to protect the American people. For far too long, the obsolete FBI culture has been a barrier to information sharing and coordination. The FBI gobbles up the jurisdiction, cases, and resources of other agencies like Pac-Man. Too many federal, state, and local law enforcement agencies view the FBI with disdain because it demands access to their intelligence, their informants, their evidence, and their resources while rarely returning the favor. Too many law enforcement officers no longer trust the FBI to deal fairly with them. One particularly disturbing example of this is the sabotaging by the FBI of a terrorism financing case that was developed in 2003 by agents of the Houston office of U.S. Immigration and Customs Enforcement (ICE). This March, former ICE Special Agent in Charge Joe Webber testified to a House Committee that the FBI hindered the processing of a wiretap request in a terrorism financing case, causing the government to miss an opportunity to capture communications between the target of a criminal investigation and a Specially Designated Global Terrorist. Webber said he was told by friends within the FBI that if the case had been developed by the FBI instead of ICE, the wiretap would have sailed through the process. It is past time for this type of turf warfare to end. The Inspector General has just issued a report on this case, but it remains classified "secret." I have concerns that the classification decisions may have been influenced more by a desire to protect the FBI from public scrutiny than by legitimate concerns about national security.

 

Double Standards in Internal Discipline

 

The FBI culture contributes to internal problems as well, such as double standards in the FBI disciplinary process. Any perception that internal discipline is unfair can be devastating to the morale and effectiveness of FBI field agents. For far too long, rank and file agents have believed that management looks out for management. One example of preferential treatment can be found in the case of Cecilia Woods, who reported that her supervisor had engaged in illicit sexual activities with a paid informant. Rather than being rewarded for being concerned about the integrity of the Bureau, Woods says she was subjected to two investigations resulting in suspensions and a retaliatory transfer.

 

More recently we have learned of the case of Jennifer Smith-Love. Smith-Love was the Acting Special Agent in Charge of the FBI office in Baltimore, Maryland, during an investigation into the death of former Assistant U.S. Attorney Jonathan Luna. Smith-Love and two agents acting under her direction were the subject of allegations that they conducted an unauthorized search of another agent's laptop computer. Smith-Love's conduct during the investigation became the subject of an investigation by the FBI's Internal Investigations Section (IIS) of the FBI's Inspection Division and a review by the Inspector General's Office. The I.G. was critical of the FBI for classifying Love's conduct as a performance issue rather than as a matter of misconduct. Even though other agents contradicted Love's statements to IIS investigators, she received a promotion to a counterterrorism position in headquarters while the issues were pending. On first blush, this appears to be another case where a senior manager may have received lenient treatment. However, we need to learn more about what happened and why.

 

Inequities in the FBI disciplinary process destroy confidence in FBI leadership and should be unacceptable the Director, the Inspector General, and the Justice Department.

 

Support for Former FBI Agent Charged with Murder

 

In March, a New York grand jury indicted retired FBI agent Lin DeVecchio on four counts of murder. DeVecchio allegedly accepted bribes from a mob boss and supplied him with inside information that led to the deaths of at least four people. This case sounds disturbingly familiar. The allegations are similar to those that surfaced a few years ago out of the Boston office, which led to two retired FBI agents being charged with crimes involving collusion with their high-level mafia informants.

 

Current and former FBI officials have been publicly raising money for DeVecchio's legal defense and more than forty agents appeared at his bond hearing to show support. According to the website maintained by DeVecchio's supporters in the FBI, the agents helped post a one million dollar bond to secure his release, and after the hearing, the agents surrounded DeVecchio "in a human blanket" as he left the courtroom so that he could not be questioned by reporters. One agent wrote, "it might even be said that a few reporters received a few body checks out on the sidewalk" and that he "was never prouder to be an FBI Agent."

 

Obviously, Mr. DeVecchio is innocent until proven guilty, and an indictment is just an allegation until proved in court. However, I am concerned about the public perception created by such aggressive and broad support of DeVecchio by current and former FBI personnel. It could leave the impression that the FBI as an institution is circling the wagons to defend itself as well as DeVecchio against the charges. I am interested in hearing Director Mueller's reaction to these events.

 

The Moussaoui Case and Charges of Careerism

 

Protecting careers has to take a back seat to protecting the American people. Unfortunately, we have seen examples where those priorities aren't in order. A few weeks ago, Minneapolis FBI agent Harry Samit testified during the sentencing hearing for Zacharias Moussaoui. What he said was startling. Agent Samit said that he warned his FBI supervisors more than 70 times before 9/11 that Moussaoui was a terrorist. He said that Supervisory Special Agent Michael Maltbie had failed to support his efforts to obtain warrants to search Moussaoui's apartment and laptop computer. Maltbie reportedly removed from a search warrant application crucial information indicating that Moussaoui had been a recruiter for a Muslim group in Chechnya linked to Osama Bin Laden. In his sworn testimony Agent Samit described the failures of FBI management as "obstructionism, careerism, and criminal negligence." As a result, Agent Samit was unable to obtain the warrants he sought. Moussaoui's computer and apartment were not searched until after 9/11. We can only guess whether 3,000 victims could have been spared by a more aggressive investigation of Moussaoui pre-9/11. However, it is certain that those who blocked the Moussaoui investigation have been rewarded rather than held accountable. The supervisor who failed to support Agent Samit's Moussaoui investigation is now in charge of the Joint Terrorism Task Force in one of our nation's largest cities.

 

Whistleblower Protections

 

The FBI's emphasis on loyalty is devastating to whistleblower protections. I continue to be concerned about whether the FBI makes any real attempt to prevent retaliation against whistleblowers. Director Mueller has often said that he will not tolerate retaliation, but actions speak louder than words.

 

Earlier this year, the Inspector General found that FBI Undercover Operations Unit Chief Jorge Martinez retaliated against Special Agent Michael German for raising concerns about unauthorized surveillance in a Florida terrorism investigation. After German wrote a letter outlining his concerns, Martinez said that he would never again work another undercover case and would never again be selected as an instructor at the FBI's undercover schools. Now that the IG has confirmed this key aspect of German's allegations, the question becomes whether the FBI is capable of holding its own accountable.

 

Another example is Bassem Youssef, the FBI's highest ranking Arab-American agent. Youssef is a native Arabic speaker and has extensive counterterrorism experience. He raised concerns after 9/11 that the FBI wasn't taking advantage of his expertise. After he made no progress internally, Youssef contacted his congressman who then contacted the Director. Youssef has now learned that he was about to receive a transfer to the International Terrorism Operations Section (ITOS) where he could have a more valuable asset to the FBI. But, after he contacted Congress, his transfer was never completed. That creates an appearance of retaliation. Chairman Specter, Senator Leahy, and I have jointly asked that these circumstances be investigated.

 

Trilogy / Sentinel

On our second panel today, we will hear from GAO, which found in its recent report that the FBI may have overpaid one contractor, on its Trilogy computer modernization project by $2.1 million. The report describes how another contractor on the project could not support almost $3 million that it paid to an event planning company. GAO recommended that GSA and the FBI (1) further investigate whether contractors were was overpaid, (2) determine whether other questionable costs in the report, which total more than $10 million, should be reimbursed, and (3) engage an independent third party to conduct further follow-up audit work.

 

The FBI has had the draft of this GAO report for months, so it knew about the millions in questionable payments Trilogy contractors identified in the report. Now two of these contractors are part of the Lockheed Martin team that was just awarded the contract the FBI's case management system, Sentinel. What assurances do the taxpayers have that the FBI will be able to recover any funds these companies owe to the government before we start paying them millions more for work on Sentinel? GAO's recommendation that there be further audit work on the Trilogy project should be taken seriously, as there may be even more taxpayer money to recover.

 

Conclusion

 

The FBI's culture limits its potential for success by putting too much emphasis on protecting its own jurisdictional turf, protecting management from allegations of misconduct, and protecting individual careers. Instead, the FBI should be focusing more on protecting the American people. We've been calling for changes in the FBI for long enough. I hope that we are going to start seeing some results.

 

 

STATEMENT OF

ROBERT S. MUELLER, III

DIRECTOR OF THE FEDERAL BUREAU OF INVESTIGATION

 

Good morning, Mr. Chairman, Senator Leahy, and Members of the Committee. I am pleased to appear before you today to update you on the current state of the FBI, as well as our plans for the near future. I would also like to thank the Committee for your continued oversight of the Bureau and your efforts to ensure our success as we pursue the shared goal of making America safer, while preserving our civil liberties.

 

As this Committee knows, much of the last year has been devoted to a national discussion about the tools that should be afforded to the men and women engaged in the fight against terrorism, both at home and abroad. I want to thank the Committee for your work in producing a balanced law reauthorizing the USA PATRIOT Act. Through your efforts, our Agents will retain the tools necessary to wage an effective fight against terrorism, within a framework that ensures important safeguards for civil liberties and enhanced judicial and congressional oversight.

 

For the FBI, the primary tools used in our efforts to detect, disrupt and prevent acts of terrorism continue to be those included in, or enhanced by, the USA PATRIOT Act and related laws, including: the court authorized surveillance of international terrorists; the sharing of key intelligence information; and the collection of relevant documents pursuant to court orders or through National Security Letters. Of course, as I have explained to this Committee before, we still believe that administrative subpoenas -- such as those available in narcotics and health care fraud cases -- would be appropriate in the counterterrorism arena. Accordingly, it is my hope that the forthcoming review of the FBI's use of National Security Letters -- which is being conducted by the Department of Justice (DOJ) Office of Inspector General (OIG) pursuant to the reauthorized PATRIOT Act -- will underscore the FBI's responsible use of such authorities.

 

As this Committee may recall, shortly after the Republican and Democratic National Conventions in the Summer of 2004, media reports stated that the FBI had questioned political demonstrators across the country in advance of the conventions, leading civil liberties groups to allege that the FBI was attempting to chill protestors from exercising their First Amendment rights. At the request of Congress, the DOJ-OIG conducted an investigation and, last week, released its final report on this matter. The OIG did not substantiate the allegations and concluded that all interviews conducted by the FBI of potential convention protestors were conducted "for legitimate law enforcement purposes" and were conducted consistent with the Attorney General Guidelines. I am pleased, but not surprised, by the OIG's findings. The men and women of the FBI understand and appreciate the power entrusted to them and are vigilant in their efforts to protect the country while respecting civil liberties.

 

I would like to take the opportunity this morning to update you on three areas of ongoing interest to the Committee: our progress in establishing a vigorous intelligence service within the FBI; developments in our efforts to modernize the FBI's Information Technology program, especially the recent award of a contract to Lockheed Martin in connection with the Sentinel program; and the latest results of our efforts to reshape the FBI's human resources function.

 

NATIONAL SECURITY BRANCH

 

I last appeared before the Committee just one month after the President approved the recommendations of the Commission on the Intelligence Capabilities of the United States Regarding Weapons of Mass Destruction, commonly known as the WMD Commission. These included a recommendation regarding the establishment of an intelligence service within the FBI. I am pleased to report that FBI's National Security Branch (the "NSB") has been established to ensure the integration of the FBI's primary national security programs under the leadership of a single Executive Assistant Director, and to implement policies and initiatives designed to enhance the capability of the entire FBI to support its national security mission.

 

Although still relatively new, the NSB is making significant progress in integrating the missions, capabilities, and resources of the Counterterrorism, Counterintelligence, and Directorate of Intelligence programs. The FBI is currently working with the Department of Justice and the Administration to ensure that the NSB meets the directives set forth by the President and is responsive to the Office of the Director of National Intelligence (ODNI).

 

While I am optimistic about the new NSB, I am aware that some harbor doubts about the FBI's ability to transform itself into a leading intelligence agency. Such critics often cite the mistaken belief that the intelligence mission and the law enforcement mission are inherently incompatible. They also contend that the FBI is reluctant to share information with its partner agencies.

 

I believe it is important to note that both 9/11 Commission and the WMD Commission found that the intelligence and law enforcement functions should not be separated. They understood that intelligence developed in criminal investigations could be relevant to ongoing intelligence matters. In addition, many of the skills necessary to a successful criminal investigation are mirrored in the intelligence arena. The need to cultivate confidential informants and build rapport with cooperating witnesses, the ability to follow complex money trails, the ability to decipher the coded language of gang members or drug dealers, and the know-how to extract meaning from a collection of seemingly unrelated clues are all skills that can be -- and are -- applied to intelligence matters.

 

 

With regard to information sharing, we have doubled the number of intelligence analysts, and in every field office we have established Field Intelligence Groups, or FIGs -- agents and analysts working together with one shared mission -- to leverage intelligence to protect our nation. From January 2004 through January 2006, Intelligence Analyst staffing increased on the FIGs by 61 percent, from 617 to 995. This increase in analysts has helped to fuel our sharing of intelligence products. Since September 11th, we have disseminated more than 20,000 intelligence reports, assessments, and bulletins to our partners.

 

While our national security efforts remain our top priority, we continue to fulfill our crime-fighting responsibilities as well. Public corruption is the top criminal priority for the FBI. Over the last two years, our investigations have led to the conviction of over 1,000 government employees involved in corrupt activities, to include 177 federal officials, 158 state officials, 360 local officials, and more than 365 police officers.

 

We also continue to focus on implementing the National Gang Strategy, along with ATF. This strategy is designed to identify the prolific and violent gangs in the United States and to aggressively investigate, disrupt, and dismantle their criminal enterprises through prosecution under appropriate laws.

 

INFORMATION TECHNOLOGY

 

When it comes to analyzing information, technology is crucial. As this Committee knows, on March 16, 2006, we announced the award of the contract for development of the Sentinel program to Lockheed Martin. Under the terms of the $305 million contract, Lockheed Martin and its industry partners will use proven commercial off-the-shelf technologies to produce an integrated system that supports processing, storage and management of the FBI's current paper-based records system. The program includes an incremental development and delivery of Sentinel capabilities, including $73 million for operations and maintenance activities.

 

Now that the contract has been awarded, we are moving forward with phase one of the development process. Each of the four phases will introduce new stand-alone capabilities and will be user-focused. As each phase is implemented, existing information will be transferred to new systems and old legacy systems will be retired.

 

I want to emphasize that the Sentinel program is not a reincarnation of the Virtual Case File. Not only will Sentinel provide greater capabilities, it will be deployed on an incremental basis over four years. And, to prevent any missteps, each phase of the Sentinel contracting process is being closely scrutinized by a team of FBI technical experts, the Government Accountability Office, the Office of Management and Budget, and the Department of Justice's Chief Information Office and Inspector General. Furthermore, at the urging of Congress, we have also engaged outside experts to help us review and assess the implementation of Sentinel.

 

Significantly, the FBI also has established contractual mechanisms to monitor contractor performance, and has structured the program so that all, or portions, of the effort can be terminated upon identification of poor performance, including:

 

¥ A scheduled control and monitoring system that will identify variances in the contractor's schedule every two weeks.

 

¥ Imposition of the requirement on both the prime contractor and the Sentinel Program Management Office to use a certified Earned Value Management ("EVM") System, as well as the requirement to report on EVM status on a monthly basis. Certification of these EVM Systems includes Independent Validation and Verification by an independent entity.

 

¥ And, establishment of an award fee structure tied to contract performance measurements.

 

I have met with the CEO of Lockheed Martin and we are committed to working together to ensure successful deployment of each phase of Sentinel. We will also continue to update this Committee on the progress of Sentinel and will ensure that the Committee staff receives briefings throughout the development process.

 

Without minimizing the challenges we have had in the past, I think it is also important to underscore the improvements that have already been achieved in our efforts to modernize the FBI's Information Technology.

 

Today, when an FBI agent sits down at her desk and logs on to the computer, she is connected at the "secret" level to a fast, secure system that allows her to send e-mails, photographs and documents to any other agent or analyst in the Bureau -- across the country and around the world. Agents also have direct access to the FBI's internal "Intranet," which can be searched via a Google-based search engine. Through this Intranet, agents can receive online training, watch streaming video of meetings or conferences, download investigative guidelines, or even review the latest congressional testimony of FBI Executives.

 

For "top secret" communications, we have deployed the Top Secret/Sensitive Compartmented Information Operational Network, or SCION. Nearly 4,000 personnel have been trained on the SCION and associated Intelligence Community systems. This system is the backbone for FBI personnel to coordinate, collaborate, disseminate and conduct research on analysis with the Intelligence Community.

 

Additionally, other technology initiatives, such as the Investigative Data Warehouse ("IDW"), have surpassed our expectations. As this Committee knows, the IDW is a centralized repository for relevant counterterrorism and investigative data that allows users to query the information using advanced software tools. IDW now contains over 560 million FBI and other agency documents from previously stove-piped systems. Nearly 12,000 users can access it via the FBI's classified network from any FBI terminal throughout the globe. And, nearly thirty percent of the user accounts are provided to task force members from other local, state and federal agencies.

 

Finally, we have established an interface whereby FBI Field Offices can access the data mart of the Foreign Terrorist Tracking Task Force, or FTTTF. This access allows FTTTF analysts to use both government and commercial data to assist those evaluating whether a foreign individual suspected of terrorist activity or support should be denied entry into the United States or, if already in this country, to help them locate, detain, prosecute, or deport these individuals, as appropriate.

 

We have worked hard to build a solid foundation for the successful implementation of major Information Technology investments and these are just a few examples of proven success. We have instituted strong, centralized management of IT assets, including strategic planning, portfolio management, and enterprise architecture, and we require compliance with disciplined policies, procedures, and business practices that govern the management of IT projects from "cradle to grave."

 

HUMAN RESOURCES

 

While technology is critical to our mission, the men and women of the FBI remain our most important asset. Their talent, creativity, and commitment to the public good are the true keys to our success. Accordingly, we continue to reshape our human resources program to recruit, hire, train, and retain quality individuals for our expanding human capital needs.

 

When I last testified before the Committee, I informed you that we had hired an executive search firm to identify a Chief Human Resources Officer for the FBI with significant experience in transformation of human resources in a large organization. At the conclusion of this search, on October 11, 2005, we appointed Don Packham as the FBI's Chief Human Resources Officer. Mr. Packham has served in a number of senior human resources roles, most recently with the British Petroleum Corporation. In his last position with BP, Mr. Packham was the Senior Vice President of Human Resources for the Americas, where he oversaw human resources for 50,000 employees spread across more than 50 business units in North and South America.

 

I am confident that Don Packham is the right person to help us continue the transformation of our workforce. Many changes are already underway. Last year, Congress provided the FBI with the legislative authority and resources to help us compete with other homeland security and Intelligence Community organizations which often recruited employees away from the FBI. The funding allowed us to provide recruitment bonuses for potential new hires, retention and relocation bonuses to existing employees with job offers from other government entities, and increased funding for our University Education Program and student loan repayments.

 

Of course, human resources programs do not exist in a vacuum. They must be integrated with our larger mission. For this reason, we have sought to include entities like the NSB in the process of improving our human resources. The human resources initiatives the NSB is undertaking include defining core national security competencies and revising recruiting practices to target applicants with those competencies, and implementing a four-stage national security career path that will result in career-long specialization for Intelligence Analysts and Special Agents.

 

Finally, I know that one area of concern for this Committee has been the rate of turnover among the FBI's leadership ranks. As recognized by the National Academy of Public Administration, we have launched a number of initiatives to address this issue. Representatives of the FBI's Executive Development and Selection Program are working with the RAND Corporation to develop a database designed to assist in Senior Executive Service (SES) succession planning. In addition, the FBI's Training and Development Division is formulating an "FBI Leadership Training Framework" that will provide the basis for a comprehensive leadership development program.

 

Another piece of the FBI's leadership development strategy is the Strategic Leadership Development Plan, which will provide techniques for identifying leadership needs and problems, articulate a program designed to enhance leadership knowledge, skills, and abilities throughout an employee's career, and relate leadership development to the FBI's strategic mission in its top priority programs. The FBI is evaluating several possible measures to lengthen tenure in SES positions, particularly at FBI Headquarters, including the increased use of retention bonuses and other incentives to encourage SES employees to remain in these positions longer. With strong, steady leadership, we will be better poised to achieve our mission of protecting America.

 

CONCLUSION

 

Mr. Chairman, Senator Leahy, and Members of the Committee, today's FBI is part of a vast national and international campaign dedicated to defeating terrorism. Working hand-in-hand with our partners in law enforcement, intelligence, the military and diplomatic circles, the FBI's primary responsibility is to neutralize terrorist cells and operatives here in the United States and help dismantle terrorist networks worldwide. Although protecting the United States from terrorist attacks is our first priority, we remain committed to the defense of America against foreign intelligence threats as well as the enforcement of federal criminal laws, all while respecting and defending the Constitution.

 

This year will mark the five-year anniversary of September 11th. The FBI has changed dramatically since the terrorist attacks and we will continue to evolve to meet the emerging threats to our country. We have expanded our mission, radically overhauled our intelligence programs and capabilities, and have undergone tremendous personnel growth. I thank you for your consistent support of the FBI as we continue this transformation, and I am happy to answer any questions you may have.

 

 

Statement of Glenn A. Fine

Inspector General, U.S. Department of Justice,

 

Mr. Chairman, Senator Leahy, and members of the Committee on the Judiciary:

 

Thank you for inviting me to testify about the Office of the Inspector General's (OIG) oversight work related to the Federal Bureau of Investigation (FBI). As the FBI continues its transformation after the September 11 attacks, the OIG continues to devote extensive resources to examining FBI programs and operations. We have conducted many reviews in critical areas, including the FBI's efforts to upgrade its information technology systems (IT); its hiring, training, and retention of critical employees; its efforts to share information with its federal, state, and local law enforcement and intelligence partners; its allocation of investigative resources; its counterespionage and internal security challenges; and its management of the FBI laboratories. In addition, we continue to review allegations of civil rights and civil liberties abuses involving FBI and Department employees.

 

In this written statement, I first will make several general comments on the key challenges that the FBI continues to face. I will then describe in more detail reviews the OIG has conducted related to these issues. I base my general comments on the numerous FBI reviews conducted by the OIG, as well as my more than 11 years in the OIG reviewing FBI programs, the last 51Ú2 during which I have served as the Inspector General.

 

When assessing the FBI, I believe it is important first to acknowledge the dedication and talent of its employees. The FBI attracts patriotic individuals who are committed to the FBI's important mission. These employees deserve recognition for the sacrifices they make in carrying out their critical responsibilities.

 

Their task is difficult, and the FBI is under regular and probing scrutiny by Congress, the OIG, and other oversight entities. That is as it should be. Given the importance of its mission and the impact the FBI has on safety, security, and civil rights in the United States, such scrutiny is warranted. But I have found that its leaders, particularly Director Mueller, understand the value of such independent scrutiny.

 

In general, I believe the FBI has made some progress in addressing some of its critical challenges, but more progress is clearly needed. The first area where additional progress is needed is the ongoing effort to upgrade the FBI's information technology systems. For too long the FBI has not had the modern IT systems it needs to perform its mission as efficiently and effectively as it should. The FBI's IT systems must give its employees the ability to effectively analyze, share, and act on the vast amount of information the FBI collects. However, the FBI's failed Virtual Case File effort was a major setback Ð in both time and money Ð with regard to the FBI's urgent need for IT modernization.

 

While the FBI has made progress in other IT areas, as Director Mueller has pointed out in his written statement, the FBI still does not have a modern, effective case management and records system. As I discuss in more detail below, the OIG believes the FBI has learned painful and expensive lessons from its setbacks on the Virtual Case File as it works to develop a new case management system in the Sentinel project. As of now, Sentinel appears to be on the right track, although we have identified several important issues the FBI needs to address as it moves from pre-acquisition planning to development of the Sentinel system. The OIG plans to aggressively monitor the Sentinel project, and we will raise any additional concerns with the FBI and this Committee as the project moves forward.

 

A second challenge for the FBI is to aggressively pursue its law enforcement and intelligence-gathering missions while at the same time safeguarding civil rights. Pursuant to the OIG's responsibilities under Section 1001 of the Patriot Act, the OIG has investigated allegations of civil rights and civil liberties abuses, and we have also performed various reviews to assess whether the FBI is complying with guidelines that regulate its investigative activities. Examples of recent OIG reviews touching on civil rights and civil liberties include our review of the FBI's compliance with the Attorney General's investigative guidelines, our review of reports of possible intelligence violations forwarded to the President's Intelligence Oversight Board, and our review of the FBI's interviews of protesters connected to the 2004 Democratic and Republican National conventions. Currently, we are conducting other reviews relating to civil rights issues, including the FBI's use of National Security Letters and subpoenas for records under Section 215 of the Patriot Act.

 

A third critical challenge for the FBI is to recruit, train, and retain skilled individuals in its many critical occupations. The FBI has little difficulty attracting talented special agents. But its success in recruiting, training, and retaining individuals in other positions, such as intelligence analysts, linguists, and technology positions, is mixed. Moreover, the FBI also has continuing challenges with turnover in key management positions at FBI Headquarters and in the field. In my view, rapid turnover in these critical positions reduces the FBI's effectiveness.

 

Fourth, in large part the FBI's success depends on its ability to share information, both internally within the FBI and externally with its federal, state, and local partners. The FBI is part of the larger intelligence and law enforcement community, and it must share and receive information from its partners in an effective and efficient manner. The ongoing challenge is to ensure that the right people have access to the right information. Without effective information sharing, the FBI's impact in its counterterrorism, counterintelligence, and criminal missions will be reduced.

 

Fifth, while there is little dispute that the FBI must transform itself to place counterterrorism as its highest priority, the FBI cannot neglect other investigative areas where it has a critical and unique role to play. In this regard, the OIG has conducted a series of reviews analyzing the FBI's allocation of investigative resources after the September 11 terrorist attacks. We have identified areas where the FBI has reduced its investigative efforts and where other federal, state, and local law enforcement agencies have been able to step into the gap. Yet, in other areas Ð such as financial institution fraud, telemarketing fraud, and drug cases outside metropolitan areas Ð we found that investigative gaps remain. We believe the FBI and the Congress need to continually monitor the FBI's allocation of resources to ensure that important investigative areas are not unduly affected by the FBI's reallocation of resources.

 

Sixth, as the Robert Hanssen case demonstrated so tragically, the FBI must remain vigilant in its internal security and counterespionage efforts. It would be folly for the FBI to believe that the Hanssen case was a unique event that is unlikely to ever occur again. After the Hanssen case, the OIG and the Webster Commission made numerous recommendations to improve the FBI's internal security. The OIG is now conducting a follow-up review to assess the FBI's progress in improving its internal security. Certainly, the FBI must balance security measures with the need to share information efficiently. But the FBI can never afford to become complacent about the continuing threat of espionage, from both inside and outside the FBI.

 

Seventh, the FBI is a leader in a variety of forensic science disciplines, and its Laboratory is world-renowned. But mistakes in the FBI Laboratory can have dramatic consequences, as demonstrated by the Laboratory's fingerprint misidentification in the Brandon Mayfield case. The Mayfield matter highlighted the fact that the FBI faces a continuing challenge to ensure the reliability of its scientific methods. The OIG has performed various audits to monitor quality control issues in the Laboratory, including its DNA analysis and management of Combined DNA Index System (CODIS). The FBI must be vigilant to ensure that Laboratory is not vulnerable to mistakes or willful abuse.

 

Based on the many reviews of the FBI conducted by the OIG, I believe these issues represent some the most critical challenges confronting the FBI.

In the remainder of this statement, I discuss OIG reviews in these general areas and describe in more detail what they found.

 

I. FBI INFORMATION TECHNOLOGY

 

Over the years, the OIG has reviewed and monitored the FBI's efforts to upgrade its information technology systems. The most recent effort is the FBI's Sentinel program, a project to replace the FBI's antiquated Automated Case Support (ACS) system with a modern case management system.

 

In March 2006, the OIG released the first in a series of audits that will monitor the FBI's development and implementation of the Sentinel project. Sentinel is the successor to the $170 million Virtual Case File project that the FBI ended unsuccessfully after 3 years. Reviews by the OIG found that the Virtual Case File project failed for a variety of reasons, including poorly defined and slowly evolving design requirements, weak information technology investment management practices, weaknesses in the way contractors were retained and overseen, the lack of management continuity at the FBI on information technology projects, unrealistic scheduling of tasks, and inadequate resolution of issues that warned of problems in project development.

 

In light of these issues, the OIG's March 2006 audit evaluated the FBI's progress on the Sentinel project. We assessed the FBI's pre-acquisition planning for Sentinel, including the approach, design, cost, funding sources, time frame, contracting vehicle, and oversight structure. The OIG found that the FBI has taken important steps to help prevent the types of problems encountered in the Virtual Case File project. In reviewing the management processes and controls the FBI has applied to the pre-acquisition phase of Sentinel, the OIG found that the FBI has developed information technology planning processes that, if implemented as designed, can help the FBI successfully complete Sentinel.

 

In particular, the OIG found that the FBI has made improvements in its ability to plan and manage a major IT project by establishing Information Technology Investment Management processes, developing a more mature Enterprise Architecture, and establishing a Program Management Office dedicated to the Sentinel project.

 

However, the OIG identified several continuing concerns about the FBI's management of the Sentinel project: (1) the incomplete staffing of the Sentinel Program Management Office, (2) the FBI's ability to reprogram funds to complete the second phase of the project without jeopardizing its mission-critical operations, (3) Sentinel's ability to share information with external intelligence and law enforcement agencies and provide a common framework for other agencies' case management systems, (4) the lack of an established Earned Value Management process, (5) the FBI's ability to track and control Sentinel's costs, and (6) the lack of complete documentation required by the FBI's Information Technology Investment Management processes.

 

The OIG's prior reviews of the Trilogy IT project found that the FBI lacked an effective, reliable system to track and validate the project's costs. In our March 2006 review of Sentinel, we noted that although the FBI stated that it is evaluating a tool to track Sentinel project costs, potential weaknesses in cost control is a continuing project risk for Sentinel.

 

In addition, while the FBI has considered its internal needs in developing Sentinel's requirements, the OIG review expressed concerned that the FBI had not yet adequately examined or discussed Sentinel's ability to connect with external systems in other Department of Justice components, the Department of Homeland Security, and other intelligence community agencies. If such connectivity is not built into Sentinel's design, other agencies could be forced into costly and time-consuming modifications to their systems to allow information sharing with the Sentinel system.

 

The OIG will continue to monitor and periodically issue audit reports throughout the FBI's development of the Sentinel project in an effort to track the FBI's progress and identify any emerging concerns related to the cost, schedule, technical, and performance aspects of the project. Last week, the OIG initiated its second audit of the Sentinel project. This review will examine the $305 million contract recently announced with Lockheed Martin to determine, among other things, if the FBI has established the necessary work requirements, benchmarks, and other provisions to help ensure the success of the project.

 

II. CIVIL RIGHTS AND CIVIL LIBERTIES

 

In a recent speech, Director Mueller rightly stated that "As we recognize the necessity of intelligence gathering, we must also recognize the need to protect our civil rights. It has always been my belief, that in the end, we will be judged not only on whether we win the war against terrorism, but also on how we protect the civil rights we cherish." During the past year, the OIG completed a series of reviews that either directly or indirectly examined the impact of FBI activities on civil rights and civil liberties issues.

 

1. Section 1001 Responsibilities: Section 1001 of the USA PATRIOT Act (Patriot Act) directs the OIG to undertake a series of actions related to claims of civil rights or civil liberties violations allegedly committed by Department of Justice (DOJ) employees. In March 2006, the OIG released its eighth semiannual report to Congress required by Section 1001. The report described the OIG's activities during the last 6 months related to civil rights and civil liberties complaints and the status of OIG and DOJ investigations of allegations of civil rights and civil liberties abuses by Department employees.

 

In addition to summarizing investigations and reviews undertaken by the OIG in furtherance of our Section 1001 responsibilities, the March Section 1001 report described the results of an OIG review of the FBI's reporting to the President's Intelligence Oversight Board (IOB) of possible intelligence violations. Our report detailed the types and percentages of violations reported by the FBI to the IOB in fiscal years (FY) 2004 and 2005, and the process used by the FBI to report such violations. Under the FBI's process, FBI employees self-report potential violations to the FBI's Office of the General Counsel, which reviews the possible violations to determine whether reporting to the IOB is required. Among the authorities the FBI used during this period that prompted reports to the IOB were the Foreign Intelligence Surveillance Act of 1978 (FISA), including FISA authorities that were expanded by the Patriot Act; the Attorney General's Guidelines for FBI National Security Investigations and Foreign Intelligence Collection; and various statutory authorities used to issue National Security Letters to obtain information from third parties.

 

Examples of the violations that the FBI reported to the IOB in FYs 2004 and 2005 include FBI agents intercepting communications outside the scope of the order from the FISA Court; FBI agents continuing investigative activities after the authority for the specific activity expired; and third parties providing information that was not requested by the National Security Letter. Not all possible violations were attributable solely to FBI conduct. According to the data we reviewed, third parties such as telephone companies were involved in or responsible for the possible violations in approximately one-quarter of the cases in both years we examined. The OIG's Section 1001 report also provided detailed information that summarized the percentages of possible violations reported to the IOB, broken down by specific intelligence activity. We intend to continue to review these potential IOB violations and report on our findings in future reports.

 

2. FBI Interviews of Potential Protesters at the 2004 Democratic and Republican National Conventions: Last Friday, the OIG completed a review that examined the FBI's investigative activities concerning potential protesters at the 2004 Democratic and Republican national political conventions. The OIG initiated this investigation in response to reports that dozens of potential protesters had been interviewed prior to the conventions, including past protesters and their friends and family members, and that anarchist groups reported being "harassed" by federal agents.

 

The OIG review did not substantiate allegations that the FBI improperly targeted protesters for interviews in an effort to chill the exercise of their First Amendment rights at the 2004 Democratic and Republican national political conventions. The report concluded that the FBI's interviews of potential convention protesters and other related interviews, together with its related investigative activities, were conducted for legitimate law enforcement purposes and were based upon a variety of information related to possible bomb threats and other violent criminal activities.

 

The OIG found that nearly all of the FBI's protester-related investigative activity was devoted to addressing 17 distinct threats to the conventions falling within the FBI's domestic terrorism program. The nature of these threats varied. For example, in four cases the FBI received information indicating that persons who intended to demonstrate in Boston or New York also were planning on bombing sites at the conventions. The FBI also was made aware that a group with an extensive criminal history was known to be planning violent confrontations with police in one of the convention cities. In another matter, a convicted domestic terrorist was believed to be attempting to obtain a dangerous chemical, potentially for use against the police. The report concluded that the FBI addressed each threat in accordance with the Attorney General Guidelines, whether in the course of checking initial leads or conducting preliminary inquiries or full investigations.

 

In addition, the review identified seven terrorism enterprise investigations not initiated in connection with the 2004 conventions that generated convention-related criminal intelligence. As to these seven investigations, the OIG concluded that the investigative techniques utilized to obtain this intelligence were a logical outgrowth of the underlying investigations and that the investigative activity was undertaken in a manner consistent with the requirements of the General Crimes Guidelines.

 

3. The FBI's Compliance With Attorney General Investigative Guidelines: Since the Committee's last FBI oversight hearing, the OIG also completed its examination of the FBI's compliance with four sets of Attorney General Guidelines that govern the FBI's principal criminal investigative authorities with respect to investigations of individuals and groups, and its use of confidential informants, its undercover operations, and its warrantless monitoring of verbal communications (also known as consensual monitoring). The Attorney General Guidelines provide guidance on the opening of FBI investigations, the permissible scope of investigations, and the law enforcement techniques the FBI may use. The Guidelines were last revised in May 2002.

 

In sum, while the OIG found many areas in which the FBI complied with the Attorney General Guidelines, the OIG also found significant non-compliance with the Guidelines governing the operation of confidential informants, failure to notify FBI Headquarters and DOJ officials of the initiation of certain criminal intelligence investigations, and failure to consistently obtain advance approval prior to the initiation of consensual monitoring.

 

Specifically, the OIG found one or more Guidelines violations in 87 percent of the confidential informant files we examined. The OIG review determined that required approvals for the use of informants were not always obtained, assessments designed to assess the suitability of individuals to serve or continue as confidential informants were not made or were incomplete, documentation of required instructions to informants were missing, descriptions of "otherwise illegal activity" by informants were not sufficient, and required notifications to FBI Headquarters or U.S. Attorneys' Offices were not made or documented. The OIG report noted that Guidelines violations can jeopardize DOJ prosecutions of criminals and also can lead to civil liability claims against the government.

 

The OIG review found, in contrast to the FBI's non-compliance with the Confidential Informant Guidelines, the FBI generally was compliant with the Undercover Guidelines, and the Headquarters unit supporting undercover operations was well managed and effective. The FBI also generally adhered to the provisions of the General Crimes Guidelines and the Consensual Monitoring Guidelines, although the OIG identified several deficiencies, particularly with regard to the Guidelines' requirements for supervisory authorization of the consensual monitoring.

 

The OIG report offered 47 recommendations designed to promote greater accountability for Guidelines violations by field supervisors; to use existing technology to track Guidelines violations; to enhance training on Guidelines requirements and the consequences of Guidelines violations to FBI investigations and DOJ prosecutions; to require supervisory approval and more systematic recordkeeping on the FBI's use of new authorities to visit public places and attend public events for the purpose of detecting and preventing terrorist activities; and to prepare a comprehensive implementation strategy for the next Guidelines revisions. The FBI concurred with 43 of the 47 recommendations, and concurred partially with the 4 remaining recommendations.

 

4. Terrorism Screening Center: Within the past 11 months, the OIG completed two reviews examining various aspects of the Terrorist Screening Center (TSC), a multi-agency effort to consolidate the federal government's terrorist watch lists and provide 24 hour, 7 day-a-week responses for screening individuals against the consolidated watch list. Prior to establishment of the TSC, the federal government relied on multiple separate watch lists maintained by a variety of agencies to search for terrorist-related information about individuals who, among other things, apply for a visa, attempt to enter the United States through a port of entry, travel internationally on a commercial airline, or are stopped by a local law enforcement officer for a traffic violation.

 

As part of our reviews, the OIG examined the accuracy of the TSC's watchlists and the TSC process for correcting erroneous entries on the watch lists. The OIG concluded that the TSC had not ensured that the information in that database is complete and accurate. For example, the OIG found instances where the consolidated database did not contain names that should have been included on the watch list and inaccurate or inconsistent information related to persons included in the database.

 

The OIG's June 2005 report offered 40 recommendations to the TSC to address areas such as database improvements, data accuracy and completeness, call center management, and staffing. The TSC generally agreed with the recommendations and in some cases provided evidence that it has taken action to correct the weaknesses that the audit identified.

 

Since issuance of the audit, the TSC has initiated a record-by-record review of the terrorist screening database to ensure accuracy, completeness, and consistency of the records. TSC staff informed the OIG it is focusing first on the records deemed most important. According to the TSC, review of the entire database, which contains more than 235,000 records, will take several years.

 

Ongoing reviews

 

5. FBI Observations of and Reports Regarding Detainee Treatment at Guantanamo Bay and other Military Facilities: The OIG currently is examining FBI employees' observations and actions regarding alleged abuse of detainees at Guantanamo Bay, Abu Ghraib, Afghanistan, and other venues controlled by the U.S. military. The OIG is investigating whether FBI employees participated in any incident of detainee abuse in military facilities at these locations, whether FBI employees witnessed incidents of abuse, how FBI employees reported observations of alleged abuse, and how those reports were handled by the FBI.

 

As part of this ongoing review, the OIG has interviewed detainees, FBI employees, and military personnel at Guantanamo. In addition, the OIG has administered a detailed questionnaire to approximately 1,000 FBI employees who served assignments at military detention facilities. The questionnaire requested information on what the FBI employees observed, whether they reported observations of concern, and how those reports were handled.

 

6. The FBI's Use of Certain Patriot Act Authorities: As required by the USA Patriot Improvement and Reauthorization Act of 2005 (Reauthorization Act), the OIG is reviewing the FBI's use of two authorities amended by the Patriot Act: (1) the FBI's authority to issue National Security Letters to obtain certain categories of records from third parties, including telephone toll and transactional records, financial records, and consumer reports; and (2) the FBI's authority to obtain business records from third parties by applying for ex parte orders issued by the Foreign Intelligence Surveillance Court pursuant to Section 215 of the Patriot Act.

 

The Reauthorization Act directs the OIG to review the extent to which the FBI has used these authorities; any bureaucratic impediments to their use; how effective these authorities have been as investigative tools and in generating intelligence products; how the FBI collects, retains, analyzes, and disseminates information derived from these authorities; whether and how often the FBI provided information derived from these authorities to law enforcement entities for use in criminal proceedings; and whether there has been any improper or illegal use of these authorities. See Sections 106A and 119 of the Conference Report No. 109-333 (December 8, 2005). Our reviews, which we have recently begun, will include examination of FBI investigative files, interviews of FBI and other DOJ officials, and visits to FBI field offices.

 

7. Review of the Filiberto Ojeda Rios Shooting in Puerto Rico: At the request of the FBI Director, the OIG initiated an investigation of an FBI shooting incident in Puerto Rico that resulted in the death of Filiberto Ojeda Rios. Ojeda was a founder and leader of Los Macheteros, a pro-independence organization in Puerto Rico. Ojeda was arrested in 1985 in connection with a major bank robbery in Connecticut, but had been a fugitive since fleeing in 1990 while released on bail. During the FBI's attempt to arrest Ojeda at a rural residence in western Puerto Rico on September 23, 2005, an FBI agent was wounded and Ojeda was shot and killed. The OIG examined the circumstances surrounding the shooting and the FBI's entry into the residence, and we are in the process of drafting our report of investigation.

 

III. FBI HUMAN CAPITAL

 

The FBI faces continuing challenges to attract, train, and retain employees in some FBI positions, such as analysts, translators, IT specialists, scientists, and other support staff. Moreover, in various OIG reviews and investigations in the FBI, the OIG has witnessed significant turnover in supervisory employees. For example, the OIG's review of the FBI's Trilogy IT project found that the FBI had 15 different key IT managers, including 5 CIOs or acting CIOs and 10 individuals serving as project managers for various aspects of the project, which undermined the FBI's ability to successfully complete the Trilogy project. We also witnessed rapid turnover in important Headquarters and field supervisors' positions. As a recent NAPA report described, turnover in FBI leadership positions is extensive, with a median tenure of 15 months for Special Agents-in-Charge and 13 months for senior executives at Headquarters.

 

Reducing the turnover in key supervisory positions, and effective hiring, training, and retaining of FBI employees in key positions are some of the most important challenges facing the FBI. Without more stability, the FBI's effectiveness is diminished.

 

The OIG has conducted a series of reviews over the past several years that examine various aspects of this human capital issue. Two of those, with regard to intelligence analysts and linguists, are briefly discussed below.

 

1. Intelligence Analysts: In May 2005, the OIG issued an audit report that examined FBI efforts to hire, train, and retain intelligence analysts. After the September 11 terrorist attacks, the FBI focused on hiring, training, and retaining more fully qualified intelligence analysts. Yet, the OIG report found that while the FBI had made progress in hiring and training intelligence analysts, the FBI fell short of its hiring goals. Although the audit found that the analysts that the FBI hired generally were well qualified, the FBI has made slow progress toward developing a quality training curriculum for new analysts. The initial basic training course offered to analysts was not well attended and received negative evaluations, and the FBI replaced it with a revised 7-week training course.

 

FBI analysts who responded to an OIG survey indicated that generally they were satisfied with their work assignments, believed they made a significant contribution to the FBI's mission, and were intellectually challenged. However, newer and more highly qualified analysts were more likely to respond negatively to OIG survey questions on these issues. For example, 27 percent of the analysts hired within the last 5 years reported dissatisfaction with their work assignments, compared to 13 percent of the analysts hired more than 5 years ago.

 

Further, the intelligence analysts reported on the survey that work requiring analytical skills accounted for about 50 percent of their time. Many analysts reported performing administrative or other non-analytical tasks, such as escort and phone duty. In addition, some analysts said that not all FBI Special Agents, who often supervise analysts, understand the capabilities and functions of intelligence analysts.

 

The OIG report made 15 recommendations to help the FBI improve its efforts to hire, train, and retain intelligence analysts, including recommenda-tions that the FBI establish hiring goals for intelligence analysts based on the forecasted need for intelligence analysts and projected attrition; implement a better methodology for determining the number of intelligence analysts required and for allocating the positions among FBI offices; and assess the work done by intelligence analysts to determine what is analytical in nature and what general administrative support of investigations can more effectively be performed by other support or administrative personnel. The FBI agreed with the OIG recommendations.

 

Last month, the OIG initiated a follow-up review to examine the progress made by the FBI since completion of our last review.

 

2. The FBI's Foreign Language Translation Program: The OIG also has examined the FBI's progress in improving its ability to translate foreign language materials. Two OIG reviews, issued in 2004 and 2005, found that the FBI's collection of material requiring translation had outpaced its translation capabilities, and the FBI could not translate all its foreign language counterterrorism and counterintelligence material. The audits also found that the FBI had difficulty in filling its need for additional linguists. The audits also concluded that the FBI was not in full compliance with the standards it had adopted for quality control reviews of the work of newly hired linguists, as well as for annual reviews of permanent and contract linguists.

 

IV. INFORMATION SHARING

 

The need for effective information sharing among intelligence and law enforcement entities has been a key finding of several national reviews convened after the September 11 terrorist attacks. Consequently, the OIG continues to review FBI's efforts to enhance information sharing and coordination with its law enforcement and intelligence partners. However, several reviews completed during the past year highlight the gaps that remain.

 

1. Seaport Security: Last month the OIG released an audit report that examined the FBI's efforts to protect U.S. seaports from terrorism. The United States has more than 360 seaports, and 95 percent of overseas trade flows through these ports or inland waterways, which often are located near major population centers. The protection of U.S. seaports is a shared responsibility among the Department of Homeland Security's (DHS) U.S. Coast Guard, the U.S. Customs and Border Protection, and the FBI. The Coast Guard protects and enforces laws at seaports while the Customs and Border Protection enforces import and export laws and inspects cargo at seaports. The FBI, as the lead federal agency for preventing and investigating terrorism, has an overarching role in protecting the nation's seaports, which includes gathering intelligence on maritime threats and maintaining well-prepared tactical capabilities to prevent or respond to maritime-based terrorism. Because of the number of different agencies involved with the nation's seaport security efforts, the issue of efficient and effective information sharing takes on vital importance.

 

The OIG review of the FBI's efforts to protect the nation's seaports found that since the September 11 attacks, the FBI has taken steps to enhance its capability to identify, prevent, and respond to terrorist attacks at seaports. For example, the FBI has created a centralized maritime security program at FBI Headquarters and, in addition to its counterterrorist tactical teams, has placed enhanced maritime SWAT teams in the FBI field offices closest to 14 of the nation's strategic seaports. Further, most of the FBI's 56 field offices have Maritime Liaison Agents responsible for coordinating with other federal agencies on maritime security.

 

However, we found that the FBI does not always assign these agents according to the threat and risk of a terrorist attack on a given seaport. For example, an FBI field office with six significant seaports in its territory has only one maritime liaison agent while another FBI field office with no strategic ports in its area has five maritime liaison agents.

 

Furthermore, the OIG review found that the FBI and the Coast Guard have not yet resolved issues regarding their overlapping responsibilities, jurisdictions, and capabilities to handle a maritime terrorism incident.

We believe a lack of jurisdictional clarity could hinder the FBI's and the Coast Guard's ability to coordinate an effective response to a terrorist threat or incident in the maritime domain. Specifically, the report expressed concern about how confusion over authorities will affect the two agencies' ability to establish a clear and effective incident command structure in response to a terrorist attack on a seaport. In our judgment, unless such differences over roles and authorities are resolved, the response to a maritime incident could be confused and potentially disastrous.

 

The OIG report made 18 recommendations that focus on specific steps that the FBI should take to improve its counterterrorism efforts regarding seaport and maritime activities, including resolving overlapping responsibilities with the Coast Guard before a terrorist incident occurs; leading more interagency maritime-related exercises involving likely terrorism scenarios; preparing and using after-action reports after these exercises in order to identify lessons learned; and assessing the threat and risk of maritime terrorism compared to other threats and assigning resources accordingly.

 

2. Department of Justice Counterterrorism Task Forces: In a 2005 report, the OIG examined the operation of DOJ Counterterrorism task forces and assessed whether gaps, duplication, or overlap existed in the task forces' work. Three of the five groups we examined Ð the Joint Terrorism Task Forces (JTTFs), the National Joint Terrorism Task Force, and the Foreign Terrorist Tracking Task Force Ð are led by the FBI.

 

The OIG review concluded that the terrorism task forces generally functioned well, without significant duplication of effort, and that they contributed significantly to the Department's goal of preventing terrorism. However, the OIG review identified a series of management and resource problems affecting the operation of the task forces. These included the need for more stable leadership among the task forces, better training for participants, and additional resources. For example, many JTTF members stated that frequent turnover in leadership of the JTTFs affected the structure and stability of the JTTFs and their terrorism investigations. We also found that the FBI has not defined the roles, responsibilities, and information-sharing protocols with all of the agencies participating on the task forces.

 

The OIG report provided 28 recommendations to help the FBI and the Department improve the operations of its various counterterrorism task forces. The FBI generally agreed with the recommendations and agreed to take corrective action.

 

Ongoing reviews

 

3. Status of IDENT/IAFIS Integration: The OIG is completing a sixth review that examines efforts to integrate the federal government's law enforcement and immigration agencies' automated fingerprint identification databases. Our reviews concluded that fully integrating the automated fingerprint system operated by the FBI (IAFIS) and the system operated by the DHS (IDENT) would allow law enforcement and immigration officers to more easily identify known criminals and known or suspected terrorists trying to enter the United States, as well as identify those already in the United States. The current OIG review is assessing the actions the FBI and DOJ have taken since the December 2004 report to achieve full interoperability of the FBI and DHS fingerprint systems.

 

4. Criminal Task Force Coordination: Another ongoing OIG review is examining, among other issues, information-sharing efforts among four DOJ task forces: the FBI's Safe Streets Task Forces, ATF's Violent Crime Impact Teams, the DEA's Mobile Enforcement Teams, and the USMS's Regional Fugitive Task Forces. In addition to assessing information sharing among the task forces, the review will evaluate whether investigations conducted by these DOJ task forces are well coordinated; whether they avoid duplication of effort; and whether they assist state, local, and tribal efforts to reduce crime.

 

V. ALLOCATION OF FBI INVESTIGATIVE RESOURCES

 

While the FBI has worked to transform itself after the September 11 attacks from a reactive law enforcement agency into an agency whose top priority is protecting the United States against terrorist attacks, the FBI maintains responsibilities for investigating criminal conduct. Given finite resources, striking an appropriate balance between its law enforcement and counterterrorism intelligence missions is a continuing challenge for the FBI.

 

The Effects of the FBI's Reprioritization Efforts: The OIG has issued several reviews that examined various aspects of the changes in the FBI's alloÂcation of its investigative resources since the September 11 terrorist attacks. The most recent review, issued in September 2005, assessed how the FBI's reprioritization efforts and the shift of resources from more traditional criminal investigative areas, such as drugs and white collar crime, to counterterrorism has affected other federal, state, and local law enforcement organizations. We determined that between FY 2000 and FY 2004, the FBI had formally reallocated 1,143 field agent positions away from investigating traditional criminal matters and placed these resources primarily in terrorism-related programs. In addition to the formal reallocation of positions, we found that the actual number of agents used to investigate criminal matters was significantly less than the FBI had allocated. The FBI actually utilized almost 2,200 fewer field agents to investigate these more traditional criminal matters in FY 2004 than it had in FY 2000. According to FBI officials, the additional agents were reassigned from criminal investigative areas to terrorism-related matters as needs arose.

 

The OIG review also found that the FBI opened 28,331 fewer criminal cases in FY 2004 than it had in FY 2000, a 45 percent reduction. Furthermore, we found that the FBI reduced the number of criminal-related matters referred to U.S. Attorneys' Offices by 6,151, or 27 percent, between FYs 2000 and 2004.

 

Our interviews and surveys of federal, state, and local law enforcement officials regarding the impact of the FBI's changes in their jurisdictions found that, overall, the effects of the FBI's shift in priorities and resources on other law enforcement agencies' operations varied from agency to agency, and often from crime area to crime area. Most law enforcement agencies had not been significantly affected by the FBI's shift in investigative resources, although their caseloads had increased. But our review identified specific crime areas, such as financial institution fraud, in which other law enforcement officials said the FBI's reduced investigative activity has hurt their ability to address the crime problem in their area and has left an investigative gap. Our review also recommended that the FBI seek a more coordinated approach with other law enforcement agencies in certain investigative areas, including identity theft and human trafficking.

 

VI. FBI INTERNAL SECURITY

 

Ongoing Reviews

 

1. Follow-up Review of the FBI's Response to the Robert Hanssen Case: The espionage case of Robert Hanssen exposed long-standing problems with the FBI's internal security efforts. Hanssen was the most damaging spy in FBI history, and he betrayed some of this nation's most important counter-

intelligence and military secrets, including the identities of dozens of human assets, at least three of whom were executed. The OIG review of the FBI's performance in detecting, deterring, and investigating the espionage activities of Hanssen was issued in August 2003. Our report concluded that Hanssen escaped detection for so long not because he was extraordinarily clever and crafty, but because of long-standing systemic problems in the FBI's counterintelligence program and a deeply flawed internal security program. We found that there was little deterrence to espionage at the FBI, and the FBI's personnel and information security programs presented few obstacles to Hanssen's espionage.

 

We concluded that what was needed at the FBI is a wholesale change in mindset and approach to internal security. We recommended that the FBI recognize and take steps to account for the fact that FBI employees have committed espionage in the past and will likely do so in the future. We recommended that a unit at the FBI must be responsible for asking every day whether there is evidence that the FBI has been penetrated, and the FBI's internal security program must shift from a program relying on trust to a program based on deterrence and detection. We made 21 recommendations to the FBI to improve its internal security and its ability to deter and detect espionage in its midst.

 

The OIG is now conducting a follow-up review to assess the FBI's progress in implementing the recommendations contained in the OIG's report on Hanssen.

 

2. The FBI's Handling of Chinese Intelligence Asset Katrina Leung: Another matter that exposed weaknesses in the FBI's handling of counterintelligence operations was the case of Katrina Leung, an asset in the FBI's Chinese counterintelligence program who had a long-term intimate relationship with her FBI handler, former Special Agent James J. Smith. At the request of the FBI Director, we are assessing the FBI's performance in connection with the handling of Leung. Our review is examining a variety of performance and management issues related to the FBI's handling of Leung, and whether there were problems in the way she was handled that the FBI should have acted upon sooner. The OIG is in the process of completing a classified report outlining the findings in this case. In addition, the OIG will attempt to create an unclassified executive summary of the report that can be publicly released.

 

VII. FBI LABORATORY

 

The FBI's forensic laboratories process a wide range of evidence ranging from DNA to firearms, and the work of the laboratories is critical to the successful investigation of a variety of crimes. Because of the increasing reliance law enforcement places on forensic laboratories, particularly DNA testing to solve crimes, and the increasing sophistication of the science involved, the OIG has focused on quality control and procedural issues in the FBI Laboratory to help ensure the reliability of its scientific methods and to guard against abuse.

 

1. FBI's Handling of the Brandon Mayfield Matter: In March 2006, the OIG released a 273-page report that examined the FBI's handling of the Brandon Mayfield case. Mayfield, a Portland, Oregon, attorney, was arrested by the FBI in May 2004 as a material witness after FBI Laboratory examiners identified Mayfield's fingerprint as matching a fingerprint found on a bag of detonators connected to the March 2004 terrorist attack on commuter trains in Madrid, Spain, that killed almost 200 people and injured more than 1,400 others. Mayfield was released 2 weeks later when the Spanish National Police identified an Algerian national as the source of the fingerprint on the bag. The FBI Laboratory subsequently withdrew its fingerprint identification of Mayfield.

 

We found several factors that caused the FBI's fingerprint misidentification. The unusual similarity between Mayfield's fingerprint and the fingerprint found on the bag confused three experienced FBI examiners and a court-appointed expert. However, we also found that FBI examiners committed errors in the examination procedure, and the misidentification could have been prevented through a more rigorous application of several principles of latent fingerprint identification. For example, the examiners placed excessive reliance on extremely tiny details in the latent fingerprint under circumstances that should have indicated that these features were not a reliable support for the identification. The examiners also overlooked or rationalized several important differences in appearance between the latent print and Mayfield's known fingerprint that should have precluded them from declaring an identification. In addition, we determined that the FBI missed an opportunity to catch its error when the Spanish National Police informed the FBI on April 13, 2004, that it had reached a "negative" conclusion with respect to matching the fingerprint on the bag with Mayfield's fingerprints.

 

2. DNA Reviews: Within the past 2 years, the OIG completed two reviews examining various aspects of DNA issues. In the first review, completed in May 2004, the OIG examined vulnerabiliÂties in the protocols and practices in the FBI's DNA Laboratory. This review was initiated after it was discovered that an examiner in a DNA Analysis Unit failed to perform negative contamination tests, and the Laboratory's protocols had not detected these omissions. The OIG's review found that certain of the FBI Laboratory's DNA protocols were vulnerable to undetected, inadvertent, or willful non-compliance by DNA staff, and the OIG report made 35 recommendations to address these vulnerabilities. The FBI agreed to amend its protocols to address these recommendations and to improve its DNA training program.

 

In addition, the OIG continues to audit laboÂratories that participate in the FBI's Combined DNA Index System (CODIS), a national database maintained by the FBI that allows law enforcement agencies to search and exchange DNA information. The OIG's CODIS audits identified concerns with some participants' compliance with quality assurance standards and with their uploading of unallowable and inaccurate DNA profiles to the national level of CODIS. The OIG currently is analyzing findings from DNA laboratory audits Ð both OIG-conducted audits and external quality assurance audits Ð to determine if they reveal global trends and vulnerabilities. We also are assessing the adequacy of the FBI's administration of CODIS, including its oversight of the national DNA database, and evaluating its implementation of corrective actions in response to the original report.

 

VIII. CONCLUSION

 

In sum, while the FBI has made progress in addressing its changed priorities since the September 11 terrorist attacks, significant challenges and deficiencies remain, as various OIG reports have found. The FBI needs more improvement in critical areas such as upgrading its IT systems; balancing aggressive pursuit of its law enforcement and intelligence-gathering missions while safeguarding civil rights; hiring, training, and retaining skilled employees in a variety of critical occupations; sharing information effectively within and outside the FBI; monitoring its allocation of resources between its law enforcement and intelligence functions; maintaining vigorous internal security and counterespionage efforts; and ensuring the reliability of its scientific methods. These are not easy tasks, and they require constant attention and oversight. To assist in these challenges, the OIG will continue to attempt to conduct vigorous oversight of FBI programs and provide recommendations for improvement.

 

This concludes my prepared statement, and I would be pleased to answer any questions.

 

 

Ms. Linda M. Calbom

Director, Financial Management and Assurance , Government Accountability Office

 

Mr. Chairman and Members of the Committee:

 

Thank you for the opportunity to discuss the results of our audit of the Federal Bureau of Investigation's (FBI) internal controls over contract payments related to the Trilogy project and safeguarding assets purchased with Trilogy funds. Our recently issued report, [GAO, Federal Bureau of Investigation: Weak Controls over Trilogy Project Led to Payment of Questionable Contractor Costs and Missing Assets, GAO-06-306 (Washington, D.C.: Feb. 28, 2006)], developed at the request of this committee, identifies weaknesses in FBI's ability to establish and implement controls that reasonably ensure, among other things, that goods and services billed were actually received and that the amounts billed were appropriate. Further, our report also discusses how FBI failed to establish controls to maintain accountability over equipment purchased for the Trilogy project. These weaknesses resulted in payment of millions of dollars in questionable contractor costs and missing assets. It is imperative that FBI correct these weaknesses in order to avoid similar outcomes for its Sentinel and other information technology (IT) projects.

 

Before I get into our audit findings, let me first provide some brief background on the Trilogy project. For several years, FBI's IT systems were considered archaic and inadequate for efficiently and effectively investigating criminal and other cases. Initiated in mid-2001, TrilogyÑFBI's largest IT upgrade to dateÑwas intended to modernize FBI's IT infrastructure and systems and provide needed applications to help FBI agents, analysts, and others do their jobs. The Trilogy project consisted of two primary effortsÑupgrades to FBI's IT infrastructure [The IT infrastructure portion of Trilogy consisted of two parts: (1) upgrades to FBI's computer hardware and software and (2) upgrades to FBI's communication network.] and development of an investigative application system to more efficiently access case files, which became known as the Virtual Case File (VCF) system. FBI entered into an interagency agreement with the General Services Administration (GSA), which served as the contracting agency to acquire the services of two primary contractors to carry out the Trilogy project. DynCorpÑnow Computer Services Corporation (CSC)Ñwas responsible for the IT infrastructure upgrade, while Science Applications International Corporation (SAIC) was responsible for development of the VCF system. In addition, FBI contracted with Mitretek to assist in the administration and oversight of the project.

 

Although the original scheduled completion date for the overall Trilogy project was June 2004, after September 11, 2001, FBI instituted an accelerated deployment plan. The targeted completion date for the portion of Trilogy related to FBI's IT infrastructure was accelerated from May 2004 to July 2002. However, after several delays the upgrade was completed in April 2004, only a month before the "pre-accelerated" due date.

 

While the scheduled completion date for the VCF system was originally June 2004, the due date for the first VCF deliverable was accelerated to December 2003. However, in July 2004, the VCF portion of the Trilogy project was scaled back after the completion of the first phase of the project was determined to be infeasible and cost prohibitive as originally envisioned. The scaled back VCF effort was recast as a pilot that ended in March 2005, and was to be used by FBI to help develop requirements for a successor information management system initiative, referred to as Sentinel. The overall cost of the Trilogy project, originally estimated at approximately $380 million, ultimately escalated to approximately $537 million.

 

The Department of Justice Office of Inspector General has reported on numerous issues that contributed to the cost increases and delays, including poorly defined and slowly evolving design requirements, contracting weaknesses, unrealistic task scheduling, and lack of management continuity and oversight for tracking and overseeing costs effectively.[ Department of Justice, Office of the Inspector General, The Federal Bureau of Investigation's Management of the Trilogy Information Technology Modernization Project, Report No. 05-07 (Washington, D.C.: February 2005)] We also earlier reported on weaknesses in FBI's IT systems development and management capabilities, including contractor oversight. [See for example, GAO, Information Technology: FBI Is Building Management Capabilities Essential to Successful Systems Deployments, but Challenges Remain, GAO-05-1014T (Washington, D.C.: Sept. 14, 2005)] Because of these issues, you asked us to audit the costs of the Trilogy project, the majority of which represented the purchase of goods and services from contractors. Our objectives were to determine whether (1) FBI's internal controls provided reasonable assurance that payment of unallowable contractor costs would not be made or would be detected in the normal course of business, [Unallowable costs are contractor costs that are not allowed under a term or condition of the contract or pursuant to applicable regulations.] (2) FBI's payments to contractors were properly supported as a valid use of government funds, and (3) FBI maintained proper accountability for assets purchased with Trilogy project funds.

 

We performed our work in accordance with generally accepted government auditing standards in Washington, D.C., and at two FBI field sites and various other GSA and contractor locations in Virginia. The complete scope and methodology of our review is discussed in appendix II of our report. [GAO-06-306]

Today, I will summarize the results of our work with respect to (1) weaknesses in FBI's internal controls that made it highly vulnerable to payment of unallowable or questionable contractor costs with Trilogy funds, (2) certain payments for questionable contractor costs that we identified, and (3) FBI's inadequate accountability for assets purchased with Trilogy project funds.

 

FBI's review and approval process for Trilogy contractor invoices, which was carried out by a review team consisting of officials from FBI, GSA, and Mitretek, did not provide an adequate basis for verifying that goods and services billed were actually received by FBI or that payments were for allowable costs. This occurred in part because responsibility for the review and approval of invoices was not clearly defined or documented. In addition, contractor invoices frequently lacked detailed information required by the contracts and other additional information that would be needed to facilitate an adequate review process. Despite this, invoices were paid without requesting additional supporting documentation necessary to determine the validity of the charges. These weaknesses in the review and approval process made FBI highly vulnerable to payment of unallowable or questionable contractor costs.

 

Insufficient Invoice Review and Approval Process Increased FBI's Vulnerability to Payment of Unallowable Contractor Costs

 

While the invoice review and approval process differed for each contractor and type of invoice charge, in general the process carried out by the review team lacked key procedures to reasonably ensure that goods and services billed were actually received by FBI or that the amounts billed and paid were for allowable costs. For example, the review team did not have a systematic process for verifying that the individuals listed on labor invoices actually worked the number of hours billed or that the job classification and related billing rates were appropriate. Further, there was no documented assessment of whether overall hours billed for a particular activity were in line with expectations. In addition, the review team paid contractor invoices for subcontractor labor charges without any attempt to assess the validity of the charges. The GSA official responsible for paying the invoices stated that the review team relied on the contractors to properly bill for costs related to subcontractors and to validate the subcontractor invoices. However, the review team had no process in place to assess whether the contractors were properly validating their subcontractor labor charges or to assess the allowability of those charges.

 

The insufficient invoice review and approval process was at least in part the result of a lack of clarity in the interagency agreement between FBI and GSA as well as in FBI's oversight contract with Mitretek. We have identified the management of interagency contracting as a high-risk area, in part because it is not always clear with whom the responsibility lies for critical management functions in the interagency contracting process, including contract oversight. [GAO, High-Risk Series: An Update, GAO-05-207 (Washington, D.C.: January 2005)] For example, the terms and conditions of the interagency agreement with GSA only vaguely described GSA's role in contract administration. In particular, the agreement did not specify the invoice review and approval steps to be performed or who would perform them. Likewise, the Mitretek contract provided a general description of Mitretek's oversight duties, but did not specifically mention its responsibilities related to the invoice review and approval process. Additionally, the lack of clarity in roles and responsibilities was evident in our interviews with the review team, where each party indicated that another party was responsible for a more detailed review.

The failure to establish an effective review process was compounded by the fact that not all invoices provided the type of detailed information required by the contracts and other information that would be needed to validate the invoice charges. For example:

¥ CSC labor invoices did not include information related to individual labor rates or indicate which overhead rates were applicable to each employeeÑinformation needed to verify mathematical accuracy and to determine that the components of the labor charges were valid.

¥ CSC invoices provided a summary of travel charges by category (e.g., airfare and lodging), but did not provide required information related to an individual traveler's trip costs. The travel invoices also did not provide cost detail by travel authorization number. Therefore, there was no way to determine that the trips billed were approved in advance or that costs incurred were proper and reasonable based on the location and length of travel.

¥ CSC and SAIC invoices for the other direct costs (ODC) provided a summary of charges by category (e.g., shipping and office supplies); however, CSC did not provide required cost detail by transaction. In some cases, the category of charges was not even identified. For example, as shown in figure 1, on the ODC invoice, a category entitled "Other Direct Costs" made up $1.907 million of the $1.951 million invoice current billing total. No additional information was provided on the invoice to explain what made up these costs.

 

Figure 1: Example of CSC ODC Invoice

 

Even though contractor invoices, particularly those from CSC, frequently lacked key information needed for reviewing charges, we found through inquiries with the review team and the contractors that invoices were generally paid without requesting additional supporting documentation.

 

We further found that invoices for equipment did not individually identify each asset being billed by bar code, serial number, or some other identifier that would allow verification of assets billed to assets received. This severely impeded FBI's ability to determine whether it had actually received the assets included on invoices and to subsequently track individual accountable assets on an item-by-item basis.

 

Because of the lack of fundamental internal controls over the process used to pay Trilogy invoices, FBI was highly vulnerable to payment of unallowable contractor charges. In order to assess the effect of these vulnerabilities, we used forensic auditing techniques to select certain contractor costs for review. We identified about $10.1 million in questionable contractor costs paid by FBI. These costs included payments for first-class travel and other excessive airfare costs, incorrect billings for overtime hours worked, potentially overcharged labor rates, and other questionable costs. Given FBI's poor control environment over invoice payments and the fact that we reviewed only selected FBI payments to Trilogy contractors, other questionable costs may have been paid that have not been identified.

 

Some Payments Made to Contractors Were for Questionable Costs

 

First-class Travel and Other Excessive Airfare Costs

 

During our review of CSC's supporting documentation for selected travel charges, we found 19 first-class airline tickets costing a total of $20,025. The CSC contract called for travel to be reimbursed to the extent allowable under the Joint Travel Regulations, which state that travelers must use basic economy or coach class unless the use of first-class travel is properly authorized and justified. Because the documentation provided by CSC for these first-class tickets we identified did not contain the required authorizations or justifications, we consider the cost of this travel in excess of coach-class fares as potentially unallowable. [The determination of unallowable costs is made by the contracting agency. Therefore, until such determination is made, we have categorized these costs as potentially unallowable.]

 

Also during our review of travel charges, we noted several instances of unusually expensive coach-class tickets, which we also considered to be questionable. Upon further inquiry with several airlines, we determined that most of these were for "full fare" coach-class tickets. We noted that the airlines used most often by the contractors indicated that it is possible to obtain a free upgrade to first class with the purchase of the more expensive full-fare coach ticket. In fact, we found that in some instances, the current price of a full-fare coach ticket was higher than the current price of a first-class ticket. We noted 62 full-fare coach tickets billed by CSC for $85,336. In contrast, we estimated that basic coach-class fares would have cost $41,978. SAIC and Mitretek also billed FBI for excessive airfare costs, but to a lesser degree. In total, we identified 75 unusually expensive tickets costing $100,847, which exceeded our estimate of basic coach-class fares by approximately $49,848. Table 1 provides examples of the first-class and excessive airfare travel costs we identified.

 

Table 1: Examples of First-class and Excessive Airfare Travel Costs

Contractor

Itinerary

Ticket class

Actual cost of ticket

Estimated cost of basic coach-class ticket [Because historical costs for coach-class tickets were not available, we estimated the costs of coach-class tickets based on an average of current prices for a similar itinerary purchased 3 days in advance (which was the average based on the trips we reviewed) and adjusted for inflation applicable to airfare.]

Percentage that full-fare coach exceeded basic coach cost

CSC

Chicago, IL to Pittsburgh, PA and back

First-class

$926

$197

370

Mitretek

Washington, DC to Phoenix, AZ and back

First-class upgrade [The fare basis code for this ticket indicated that a first-class upgrade was obtained. We could not verify whether this ticket was purchased as a full-fare coach or some other class of travel that exceeded the basic coach-class fares.]

2,051

480

327

CSC

One-way from Los Angeles, CA to Philadelphia, PA

Full fare

1,253

307

308

CSC

One-way from Las Vegas, NV to Washington, DC

Full fare

1,171

304

285

CSC

One-way from San Francisco, CA to Cleveland, OH

Full fare

1,049

290

262

Mitretek

Washington, DC to Portland, OR and back

First-class upgrade [The fare basis code for this ticket indicated that a first-class upgrade was obtained. We could not verify whether this ticket was purchased as a full-fare coach or some other class of travel that exceeded the basic coach-class fares.]

1,850

643

188

CSC

One-way from San Diego, CA to Baltimore, MD

Full fare

1,128

413

173

CSC

Wichita, KS to Washington, DC and back

First-class

1,984

732

171

CSC

Atlanta, GA to Los Angeles, CA and back

Full fare

2,121

851

149

SAIC

Denver, CO to Washington, DC and back

Not determinable [We could not determine the airfare class of the ticket purchased because the supporting documentation provided did not include the fare basis code.]

1,570

1,037

51

 

Source: GAO analysis of supporting documentation provided by contractors.

 

Excess Overtime Charges

 

Our review also showed that FBI may have paid SAIC for incorrectly billed overtime charges. The task order for SAIC work stated that the government would not object to SAIC employees working hours in excess of 40 per week if necessary. In March 2003, SAIC implemented a policy that FBI agreed to, which decreased the amount of hours that would be billed to FBI. This policy stated that contractor staff would be compensated for hours worked that exceeded 90 hours in a 2-week pay period, and established a ceiling of 120 hours per pay period. We found, however, that SAIC employees frequently charged for all hours worked beyond 80 in a pay period and noted some instances where employees charged hours beyond the 120-hour ceiling. The costs of these hours were billed to and paid by FBI. SAIC management acknowledged that billings were not consistent with the March 2003 policy and indicated that it would research the issue further to determine whether corrections are necessary. [SAIC officials indicated that in June 2003 a waiver of the 10 hours of uncompensated time associated with the overtime policy was implemented for select teams. However, SAIC could not provide us information on which teams, tasks, or employees the waiver applied to or the length of time the waiver covered. Therefore, we were not able to consider this waiver in our analysis.] Based on our review of the labor charges, FBI may have overpaid for more than 4,000 hours. Using average, fully burdened labor rates for employees who billed incorrectly, we estimated that FBI may have overpaid these overtime costs by as much as $400,000.

 

Questionable Labor Rates

 

We also found that CSC/DynCorp may have charged labor rates that exceeded ceiling rates that GSA asserts were established pursuant to a DynCorp task order. In short, GSA and CSC disagree on whether ceiling rates for a CSC/DynCorp subcontractor, DynCorp Information Systems (DynIS), were ever established. When DynCorp entered into the contractual agreement with GSA, it agreed to ceiling rates for various labor categories and agreed to negotiate subcontractor ceiling rates separately for each task order. The May 2001 DynCorp task order award document stated that ceilings were in place on all DynIS labor category and indirect rates, subject to negotiation pending the results of a Defense Contract Audit Agency [DCAA is responsible for performing all contract audits for the Department of Defense. They also provide contract audit services to other government agencies when hired to do so. Page 10 GAO-06-698T

established, the DynCorp proposal indicated that the Trilogy project would be charged a maximum of $68.73 per hour for a senior IT analyst working in the field or $96.24 per hour for a senior IT analyst working at headquarters during 2001. If ceiling rates were established, we estimated that FBI overpaid CSC/DynCorp by approximately $2.1 million for DynIS labor costs.] audit. GSA officials told us they believed that DynIS labor category rates in DynCorp's Trilogy proposal represented established ceilings, and that they negotiated DynIS labor category ceiling rates with DynCorp. However, CSC stated that it never negotiated labor category ceiling rates with GSA.

Based on our review of DynCorp's labor invoices, we noted that several of DynIS's rates charged exceeded the labor rates that GSA contended were ceiling rates. For example, CSC/DynCorp billed over 14,000 hours for work performed by senior IT analysts during 2001 on the Trilogy project based on an average hourly rate of $106.14. However, if ceiling rates were

 

Other Questionable Costs

 

We also identified about $7.5 million in other payments to contractors that were for questionable costs. In most cases, these costs were not supported by sufficient documentation to enable an objective third party to determine if each payment was a valid use of government funds. For example, CSC did not provide us adequate supporting documentation for almost $2 million of subcontractor labor charges and about $5.5 million of ODC charges we selected to review.

 

Because $4.7 million of these inadequately supported ODC costs were for training charges from one subcontractor, CACI Inc. Ð Federal (CACI), we subsequently requested supporting documentation from the subcontractor for selected charges for training costs totaling about $3.5 million. We found that CACI could not adequately support charges to FBI totaling almost $3 million that CACI paid to one event planning company (another subcontractor). CACI stated that supporting documentation was not applicable because its agreement with the event planner was "fixed priced." However, CACI's assertion was not supported by the terms of the purchase order and related statement of work that specifically required documentation to support costs claimed by the event planner and to charge only for services rendered.

 

CSC was also unable to provide us adequate supporting documentation for $762,262 in equipment disposal costs billed by two subcontractors. The documentation provided consisted of a spreadsheet that summarized costs of the subcontractors, but did not include receipts or other support to prove that these costs were actually incurred.

 

Our review of SAIC's subcontractor labor charges found that FBI was billed twice for the same subcontractor invoice totaling $26,335. SAIC officials agreed that they double billed and stated that they would make a correction.

 

Our audit also disclosed that FBI did not adequately maintain accountability for equipment purchased for the Trilogy project. FBI relied extensively on contractors to account for Trilogy assets while they were being purchased, warehoused, and installed. However, FBI did not establish controls to verify the accuracy and completeness of contractor records it was relying on. Moreover, once FBI took possession of the Trilogy equipment, it did not establish adequate physical control over the assets. Consequently, we found that FBI could not locate over 1,200 assets purchased with Trilogy funds, which we valued at approximately $7.6 million. Because of the significant weaknesses we identified in FBI's property controls, the actual amount of missing equipment could be even higher.

 

Major Lapses in Accountability Resulted in Millions of Dollars of Missing Trilogy Equipment

 

FBI relied on contractors to maintain records related to the purchasing, warehousing, and installation of about 62 percent of the equipment purchased for the Trilogy project. [This includes Trilogy equipment purchased by CSC and SAIC and equipment purchased directly by FBI that was delivered to CSC for the IT infrastructure portion of the project.] FBI's primary contractor responsible for delivering computer equipment to FBI sites was CSC. FBI officials told us they met regularly with CSC and its subcontractors to discuss FBI's equipment needs and a deployment strategy for the delivery of equipment. Based on these meetings, CSC instructed its subcontractors to purchase equipment, which was subsequently shipped to and put under the control of those same subcontractors. Once equipment arrived at the subcontractors' warehouses, the subcontractors were responsible for affixing bar codes on accountable itemsÑall items valued above $1,000 and certain others considered sensitive that are required by FBI policy to be tracked individually. In addition, FBI directly purchased about $19.1 million of equipment for the Trilogy project that was shipped directly to either CSC or CSC subcontractors.

 

When equipment was shipped from a subcontractor warehouse to an FBI site, the subcontractor prepared a bill of lading that listed all items shipped. However, there was no requirement for FBI officials to verify that the items were actually received. The subcontractors also prepared a "Site Acceptance Listing" of equipment that had been installed at each FBI site. While an FBI official signed this listing, based on our inquiries at two field offices, we found the officials may not have always verified the accuracy and completeness of these lists. FBI did not prepare its own independent lists of ordered, purchased, or paid-for assets and did not perform an overall reconciliation of total assets ordered and paid for to those received. Such a reconciliation would have been made difficult by the fact that invoices FBI received from CSC did not include item-specific informationÑsuch as bar codes, serial numbers, or shipping location. However, failure to perform such a reconciliation left FBI with no assurance that it had received all of the assets it paid for.

 

In addition, equipment that was delivered to FBI sites was not entered into FBI's Property Management Application (PMA) in a timely manner, increasing the risk that assets could be lost or stolen without detection. We found that 71.6 percent of the CSC-purchased equipment that was recorded in PMA, representing 84 percent of the total dollar value, was entered more than 30 days after receipt, and nearly 17 percent of the equipment, representing 37 percent of the dollar value, was entered more than a year after receipt. When assets are not timely recorded in the property system, there is no systematic means of identifying where they are located or when they are removed, transferred, or disposed of and no record of their existence when physical inventories are performed. This severely limits the effectiveness of the physical inventory in detecting missing assets and in triggering investigation efforts as to the causes.

 

FBI also could not accurately identify all accountable assets because of improper controls related to its bar codesÑa key tool for maintaining accountability and control over individual assets. [The use of bar codes involves affixing a machine-readable bar code to a controlled item, which can then be scanned and compared to an equipment inventory listing as part of a periodic physical inventory.] FBI relied on contractors to affix the bar codes, yet did not track the bar code numbers given to contractors, the bar code numbers they used, or the bar code numbers returned. Moreover, FBI provided incorrect instructions to contractors, initially directing them to bar code certain types of lower cost equipment that did not need to be tracked. FBI's loss of control over its bar codes and failure to timely enter assets into its property tracking system seriously hampered its ability to maintain accountability for its Trilogy equipment. Accountability for equipment was further undermined by FBI's failure to perform sufficient physical inventory procedures to ensure that all assets purchased with Trilogy funds were actually located during the physical inventory.

 

Given the serious nature of these control weaknesses, we performed additional test work to determine whether all accountable assets purchased with Trilogy funds could be accounted for and found that FBI was unable to locate 1,404 of these assets. These were items such as desktop computers, laptops, printers, and servers. In written comments on a draft of our report, FBI told us that it had accounted for more than 1,000 of these items. During our agency comment period, FBI stated that it had found 237 items we previously identified as missing and provided us evidence, not made available during our audit, to sufficiently account for 199 of these items. We adjusted the missing assets listing in our report to reflect 1,205 (1,404 Ð 199) assets as still missing. FBI later informed us that the approximately 800 remaining items noted in its official agency response included (1) accountable assets not recorded in PMA because they were either incorrectly identified as nonaccountable assets or mistakenly omitted, (2) defective accountable assets that were never recorded in PMA and subsequently replaced, and (3) nonaccountable assets or components of accountable assets that were incorrectly bar coded.

 

We considered these same issues during our audit and attempted to determine their impact. For example, as stated in our report, FBI told us that components of some nonaccountable assets that were part of a larger accountable item may have been mistakenly bar coded. Using FBI guidance on accountable property, we determined that 103, or about 11 percent, of the 926 missing assets purchased by CSC may have represented nonaccountable components. Because FBI could not provide us with the location information, we could not definitively determine whether the items were accountable assets. During the course of our audit, FBI was not able to provide us with any evidence to support its other statements regarding the reasons the assets could not be located.

 

While we are encouraged by FBI's current efforts to account for these assets, its ability to definitively determine their existence has been compromised by the numerous control weaknesses identified in our report. Further, the fact that assets have not been properly accounted for to date means that they have been at risk of loss or misappropriation without detection since being delivered to FBIÑin some cases, for several years.

 

FBI's Trilogy IT project spanned 4 years and the reported costs exceeded $500 million. Our review disclosed that there were serious internal control weaknesses in the process used by FBI and GSA to approve contractor charges related to Trilogy, which made up the majority of the total reported project cost. While our review focused specifically on the Trilogy program, the significance of the issues identified during our review may indicate more systemic contract and financial management problems at FBI and GSA, in particular when using cost-reimbursable type contracts and interagency contracting vehicles. These weaknesses resulted in the payment of millions of dollars of questionable contractor costs, which may have unnecessarily increased the overall cost of the project. Unless FBI strengthens its controls over contractor payments, its ability to properly control the costs of future projects involving contractors, including its new Sentinel project, will be seriously compromised. Further, weaknesses in FBI's controls over the equipment acquired for Trilogy resulted in millions of dollars in missing equipment and call into question FBI's ability to adequately safeguard its equipment, as well as confidential and sensitive information that could be accessed through that equipment from unauthorized use.

 

Concluding Comments

 

Our companion report includes 15 recommendations to help improve FBI's and GSA's controls over their invoice review and approval processes and to address questionable billing issues we identified. It also includes 12 recommendations to help improve FBI's accountability for assets. FBI concurred with our recommendations and outlined actions under way and further planned actions to address the weaknesses we identified. FBI also provided additional information related to Trilogy assets we identified as missing. While GSA accepted our recommendations, it did not believe that one of them was needed, and described some of the improvements to its internal controls and other business process changes already implemented. GSA also expressed concern with some of our observations and conclusions related to the invoice review and approval process and our analysis of airfare costs. We continue to believe that our report is accurate and that all recommendations should be implemented.

We understand that FBI has outlined actions to implement our recommendations. While we are encouraged by these efforts, let me just emphasize the importance of continually monitoring the implementation of corrective actions to ensure that they are effective in helping to avoid the types of control lapses that we identified throughout the Trilogy project. Without such vigilant monitoring, Sentinel and other efforts will be greatly exposed to similar questionable or inappropriate payments and lack of accountability over assets.

Page 15 GAO-06-698T

Mr. Chairman and members of the committee, this concludes my prepared statement. I would be pleased to answer any questions that you may have.

For more information regarding this testimony, please contact Linda M. Calbom at (202) 512-9508 or calboml@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this testimony. Individuals making key contributions to this testimony included Steven Haughton (Assistant Director), Ed Brown, Marcia Carlsen (Assistant Director), Lisa Crye, and Matt Wood. Numerous other individuals contributed to our audit and are listed in our companion report.

 

 

Statement

of

John C. Gannon

 

 

Good morning, Mr. Chairman, and members of the committee. Thank you for the opportunity to participate in this important hearing on the FBI. I have great respect for the Bureau as a Federal law enforcement agency, and strong admiration for FBI officers with whom I have worked over the years. FBI officers are working hard today in the most challenging environment they have ever faced under an able Director of legendary energy, dedication, and integrity. They are not helped by outside carping. I am sensitive to this. But the debate about a domestic intelligence capabilityÑanalysis and collectionÑis important to our national security, and I believe the core of that debate should be public.

 

This written statement to the committee draws heavily on input I made to a recent Century Foundation task force. The views expressed are my own. They are shaped by my professional experience working with the FBI during a 24-year career at CIA, during a brief stint as the team leader for intelligence in the Transition Planning Office for the Department of Homeland Security (2002-2003), and during a two-year tour as the first Staff Director of the House Homeland Security Committee (2003 to 2005). They also are influenced my long experience building and managing analytic programs in the Intelligence Community, where I served as CIA's Deputy Director for Intelligence, as Chairman of the National Intelligence Council, and as Assistant Director for Analysis and Production.

 

I should point out that I have been working in the private sector for the past year, and have not had the close contact with the Bureau that I previously enjoyed. I concede that my perspective, therefore, is not as fresh on every point as I would like. In drafting this paper, I have opted for candor over caution and have some critical things to say. I do this as a former insider who is open to the charge that I could have done better at my series of jobs at CIA, the White House, and on the Hill. I accept this.

 

The salient fact is that, approaching five years after 9/11, we still do not have a domestic intelligence service that can collect effectively against the terrorist threat to the homeland or provide authoritative analysis of that threat. It is not enough to say these things take time. It could not be clearer from the Intelligence Community's experience over the past 25 years that it is extraordinarily difficult to blend the families of intelligence and law enforcement, and that the Bureau's organizational bias toward the latterÑfor deep-seated historic reasons--is powerful and persistent.

 

¥ Looking at where we are, we should be asking why it is so hard for the FBI to develop a national intelligence capability, and opening ourselves to the possibility that we have asked too much of an otherwise capable criminal-investigation agency. We should be looking seriously at other options.

 

¥ Looking at where we want to be, we also should be viewing domestic intelligence in the much broader context of US intelligence transformation, of the growing interlinkage of all our intelligence agencies, and of the globalization of intelligence and the threats that drive it. All this calls for unprecedented collaboration across US government agencies and a commitment to state-of-the art information technology--neither of which, in my experience, is a strong suit of the FBI.

 

I argued for some time after 9/11 that the FBI was the appropriate agency to develop a domestic intelligence capability, partly because of my aversion toward a new domestic intelligence agency, but even more because of what I clearly saw as the growing interconnectedness of intelligence and law enforcement, especially in combating transnational issues. I still have trouble letting go of that notion. But, watching the FBI struggle with its new national intelligence mandate and recalling earlier interagency "culture wars" in my career, I have changed my mind. I now doubt that the FBI, on its present course, can get there from here.

 

My view today can be encapsulated in the following six points:

 

¥ First, the FBI has made some progress on intelligence. I distinguish between the Bureau's traditional law-enforcement mission and its new national intelligence mandate. In the first instance, I believe that the FBI is increasingly using intelligence collection and analysis, including in its new Field Intelligence Groups, against the increasingly complex issues associated with its criminal-investigation mission. The Bureau should be encouraged in this path--intelligence that benefits a Special Agent in Charge can also be useful at the national level.

 

¥ The FBI is unacceptably behind, however, in developing a national intelligence collection and analytic capability. The Bureau has not structured an intelligence collection requirements process that legitimate consumers can readily tap, and it is not, to my knowledge, producing, on any predictable basis, authoritative assessments of the terrorist threat to the homeland. These are serious gaps. It is a good thing that the Bureau's law-enforcement culture is being enriched by intelligence. It is not a good thing that law-enforcement continues to trump intelligence in the effort to build a domestic intelligence capability.

 

¥ Even if the FBI were doing better on this domestic intelligence mission, I believe we would find that the mission in today's information environment is much bigger than the FBI, and well beyond its resources and competence to carry out. Domestic intelligence today is about protecting the US homeland from threats mostly of foreign origin. It does involve the FBI's law-enforcement and counterterrorism work, but it relates more to the establishment of a national intelligence capability integrating Federal, state, and local government, and when appropriate, the private sector in a secure collaborative network to stop our enemies before they act and to confront all those adversaries capable of using global electronic and human networks to attack our people, our physical and cyber infrastructure, and our space systems. These adversaries include WMD proliferators, terrorists, organized criminals, narcotics traffickers, human traffickers, and countries big and smallÑworking alone or in combination against US interests. I see the FBI, on its present course, as a contributor to this vital effortÑbut not as the leader of a new model of collaborative effort in the information age. .

 

¥ Domestic intelligence, moreover, should be viewed as an integral part of US Intelligence Community reform. The connection between foreign and domestic intelligence must be seamless today because the threats we face know no borders. The challenge is government wide, has historic roots that long precede 9/11, and must be concerned, as I have suggested, with a range of deadly threats to our national security largely from abroad and not restricted to international terrorism. The domestic piece must be an essential part of the transformation of US intelligence driven by the Directory of National Intelligence (DNI), the Secretary of Defense, the Attorney General, and the Secretary of homeland Security. That coordinated effort todayÑwhich, in my view, needs stronger, sustained direction from the White House and the Congress--should be moving, as a top priority, to unify strategies, to clarify roles and responsibilities across competing agencies, and to reduce the IC's bloated bureaucracyÑwhich is today larger than ever.

 

¥ The status quo is unacceptable. The two courses I suggest to get us moving forward, neither an easy fix, would require some shift of Federal Government resources and authorities and strong leadership from the Executive and Legislative branches.

 

o First, if the FBI is to remain the agency of choice in developing a domestic intelligence capability, it will need much stronger and clearer direction and much closer oversight from the Executive and Legislative branches on the much bigger and faster structural steps it needs to take. The urgent objective must be to develop an intelligence capability that is not subordinated to the Bureau's criminal investigation mission and that is based on a level of collaborationÑincluding with non-government experts--unprecedented in FBI history. I will not say that it cannot be done, but the evidence to date suggests otherwise.

 

o The second suggestion, which takes some explaining, is to give the lead on domestic intelligence to a resuscitated and revitalized Department of Homeland Security (DHS) with the resources and authorities that the Homeland Security Act of 2002 intendedÑbut were never provided. That Act, I believe, rightly recognized that the domestic intelligence mission requires a new collaborative model, not just new rules for old games among legacy agencies. DHS's small and under-resourced Office of Intelligence is, by design, a collaborative enterprise involving multiple Federal, state, and local agencies. DHS itself has the mandate for outreach to the private sector and to non-government sources of information and expertiseÑwhich is made easier because the larger Department is neither a law-enforcement nor an intelligence agency. Conceptually, I believe DHS could succeed as the coordinator of domestic intelligence. And its prospects for success would increase significantly if the Department established regional organizations across the countryÑwhich are essential to the collaborative model I describe. But this will never happen unless the White House and Congress, altering their current posture, push hard for it.

 

¥ Finally, I would argue strongly against the creation of a new, stand-alone domestic intelligence agency. When asked why we have not had a terrorist attack on US soil since 9.11, I give three reasons. First, the President's early decision to go after the terrorists wherever they could be found in the world weakened their capabilities and served as a powerful disincentive to strike us again. Second, the preventative and protective security measures taken by our Federal, state, and local governmentsÑcoordinated and notÑhave made it harder for terrorists to operate here. And, third, I believe that the hard-won Constitutional freedoms enjoyed by Americans, along with our unparalleled commitment to civil liberties embedded in law, work against the development of domestic terrorist networks that could be exploited by foreigners. In this context, America stands in marked and magnificent contrast to many of the regimes I covered daily and experienced on the ground as a CIA analyst. When I think through the implications of a nation-wide domestic intelligence service under the control of the Executive Branch, I conclude that it is neither needed nor desirable in our society. At best, the proposal is premature.

 

The Changing Threat

 

Today, the threat to the US homeland is global in nature and our response must integrate foreign and domestic intelligence as never before. Al Qaeda's attacks in New York, Pennsylvania, and Washington on 9/11 revealed that Osama bin Laden had developed-- below the radar of US intelligence--a human and electronic network across some sixty countries, spanning from the pre-modern world of Afghanistan to the post-modern world of Europe and the United States. Al Qaeda's flat network defeated a vast US government hierarchy that was not networked, including both our foreign and domestic intelligence agencies. The terrorists knew more about our world, and how to train and operate in it, than we did about theirsÑthe classic recipe for an intelligence failure. By any reckoning, the US government was not prepared to protect its people, not only against international terrorism but against the potential exploitation by any of our adversaries of global, IT-driven networks.

 

Domestic intelligence today must be global in perspective, collaborative to the core, and thoroughly networked to bring together the most reliable information, the best expertise, and the most advanced capabilitiesÑin real timeÑto deal with today's dynamic, distributed, and dangerous threat environment. It must have state-of-the-art, multi-level-security communications to support a broad range of activities from assisting a big-city police officer to pursue sketchy intelligence leads in a gritty subway to helping expert analysts to track potential cyber attacks in a chrome-plated, plasma-screened national center. Domestic intelligence, in this context, should be seen as a critical element of the US Government's long-term transformation driven by the geopolitical and technological revolutions of the post-Cold War period.

 

Antecedents

 

The domestic intelligence challenge is not new, a critical point that both the 9/11 Commission and the WMD Commission missed in their failure to provide balanced historical perspective. The challenge long predates 9/11. It relates to the three distinct but intersecting revolutions faced by the Intelligence Community-- including the FBI--over the past twenty years, which have encouraged trends that continue today. I focus briefly on this because I believe these revolutions, with or without 9/11, demand dramatically new and different models for US intelligenceÑnot legacy makeovers.

 

The first revolution was geopolitical. It swept away the Soviet Union, transformed the face of Europe, and forced the Intelligence Community to confront a new, dispersed global threat environment in which non-state actors, including conventional and cyber terrorists, narcotics traffickers, and organized criminals, operated against US interests across national borders, including our own. The second revolution involves technology, primarily information technology, but also the rapidly advancing biological sciences, nanotechnology, and the material sciencesÑall bearing good news and "dual-use" bad news for America and mankind. The third revolution relates to homeland security. This is not just about the alarming proximity of the threat, but even more about the new national security stakeholders it brought to the fore, "first-responders" with a legitimate need and justifiable demand for intelligence support.

 

The IC, the policy community, and the Congress actually began to respond to this new, distributed threat environment in the mid 1980s, with the pace picking up dramatically in the ensuing decade. The FBI was involved at every turn. The DCI established the Counterterrorism Center (CTC) at CIA in 1986, followed thereafter by the Counternarcotics Center and several iterations of a counter-proliferation centerÑall mandated to focus collection, integrate analysis, and promote information sharing. Both CIA and DIA reorganized their intelligence units to meet new threats and enable technology in the mid 1990s. The FBI took similar steps later in the decade. The White House in 1998 established the position of National Coordinator for Security, Infrastructure Protection, and Counterterrorism.

 

Advancing technology drove the controversial creation of the National Imagery and Mapping Agency (NIMA) in 1996. NIMA(later named National Geospatial-Intelligence AgencyÑNGA) launched a major push to get ahead of the geospatial technology curve, while the National Security Agency (NSA) began a fundamental transformation to adapt to the global revolution in communications technology. In 1998, the Ballistic Missile Commission, headed by Donald Rumsfeld, included with its report a "sideletter" critiquing IC analytic performance that was an impressive blueprint for reform. The FBI significantly increased its overseas presence and, prodded by the Webster Commission, developed a five-year strategic plan in the late 1990s that included goals to develop a comprehensive intelligence collection and analytic capability. Late in the decade, it established separate counterterrorism and counterintelligence centers.

 

The point I want to emphasize is that the FBI, as I observed it first hand, was acutely aware of an intelligence world turning upside down. It was closely involved in the establishment of the IC centers. DCI William Webster came from the FBI to CIA in 1987, where he issued a forward-looking Ðand, I believe, historic--directive that prohibited analysts who were directly supporting operations from providing the authoritative assessment on the impact of such operations. FBI leaders persuasively argued for the development of analytic capability in the Bureau during a strategic planning process in the late 1990s about the same time FBI launched its counterterrorism and counterintelligence divisions. The FBI also participated with IC analytic units in the work of the Community-side National Intelligence Producers Board, which did a baseline assessment of IC analytic capabilities and followed it up early in 2001 with a strategic investment plan for IC analysis.

 

The investment plan flagged to Congress the alarming decline in investment in analysis across the Community and the urgent need to build or strengthen interagency training, database interoperability, IC collaborative networks, a system for issue prioritization, links to outside experts, and an effective open-source strategy. The consensus, which included FBI, was strong that the IC needed to transform, and it was transformingÑbut neither fast enough nor in alignment with the unfocused and fast-changing priorities of the White House and Congress.

 

The FBI's leadership, as I saw it, was committed to transformation but its commitment seemed to flag over time. Its early post-war determination to share information and push the "wall" on information sharing between intelligence and law enforcement was set back by the sensational Ames, Nicholson, and Hanson espionage cases. And, to a large extent, I understood and accepted the reasons for this. In the larger culture war, however, I believe that change agents simply lost out to classic agents who successfully resisted reform to Bureau policies and practices. The need to transform against a new threat environment was well recognized, but the goal of establishing a distinct intelligence career service for analysts and collectors, with their own budgets and chains of command, did not get off the ground. To enhance collaboration, a small handful of Terrorism Task Forces (JTTFs) in the early 1990s grew to over 120 today, but I heard complaints that they, with some notable exceptions, were inadequate because they" served up" in the Federal bureaucracy much better than "down" into vulnerable localities where vital intelligence needed to be collected.

 

Pre 9/11 Trends

 

Four trends were clear as the IC entered the twenty-first century, and they all appear irreversible today. In one way or the other, they relate to America's current efforts to reform its intelligence services and to the particular challenge of domestic intelligence.

 

First, agencies were beginning seriously to respond to the growing impact of globalization. GlobalizationÑthe interconnectedness of networks moving information, culture, technology, capital, goods, and services with unprecedented speed and efficiency around the world and across the homelandÑcame to be seen not as a passing phenomenon but as the defining reality of our age. In a shrinking world of communications, foreign and domestic intelligence know no borders. This is not to say the whole Community wholeheartedly embraced technology to enable transformation nor that the White House or Congress made this a priority. But the direction was set. And the glaring technological shortcomings of HUMINT collection, the FBI, and local law enforcement came into sharp relief.

 

Second, pressures within the IC increasingly were toward decentralization, not the centralized, "one-stop-shopping" modelsÑincluding some ambitious interpretations of the National Counterintelligence Center (NCTC)--generally favored by Washington. The demand grew among diplomats and "warfighters" for a distributed model of collection management and analysis, because they were dealing increasingly with diverse transnational threats close to their locations. And they were aware that technology existed to reduce dramatically the "distance" between the producers and users of intelligence Combatant commanders, often playing the diplomat's role, demanded real-time intelligence support and insisted that they have their own analysts in place. While Federal agencies moved slowly and the FBI lagged behind, the defense community accelerated its transformation with the same determination that would later be shown after 9/11 by homeland "first responders."

 

-- Third, DoD, in this environment, gained increasing influence in IC forums and debates, including on budget priorities. The Congress in the late 1990s created the positions of Deputy Director of Central Intelligence for Community Management (DDCI-CM), and assistant directors of collection and analysis and production, all of which were resisted by CIA and inexplicably underutilized by the DCI to run an increasingly complex Intelligence Community. By sharp contrast, the Secretary of Defense successfully lobbied, against surprisingly little IC resistance, for the creation of an Undersecretary of Defense for Intelligence position, which was approved in 2002, adding more heft to what already was the IC's thousand pound gorilla. Significantly, the defense community got out ahead of the national community in calling forÑand developingÑboth centralized and decentralized networks that would bring analysis and collection capabilities closer to military personnel on the front lines. The DoD turf grab further wounded a weakened CIA and eventually raised concerns about military involvement in domestic intelligence, but it also responded to real, unmet defense community requirements for improved analysis and collection management.

 

--Fourth, blue-ribbon commissions in the late 1990s, as well as the IC's own strategic work, recognized the growing need for a homeland security strategy, including for domestic intelligence, against catastrophic threats from terrorism, WMD proliferation, and cyberspace. It also stressed the vital role of the private sector as a source of critical information and solutions to hard security problems. Serious worries about the state of US homeland security long predated 9/11. In 1996, the Critical Infrastructure Commission pointed out how vulnerable we were to attack, and the Bremer, Gilmore, and Hart-Rudman Commissions were eloquent well before 9/11 in flagging our lack of preparedness for a terrorist attackÑincluding the glaring shortcomings of both foreign and domestic intelligence.

 

What have we done since 9/11?

 

Since 9/11, we have created a large Department of Homeland Security; a Terrorist Threat Integration Center, later transformed into a more muscular National Counterterrorism Center; an FBI Directorate of Intelligence to staff and train analysts, an FBI National Security Program integrating the Bureau's three intelligence divisions, a Bureau-controlled Terrorist Screening Center to integrate terrorist watch lists; and a Director of National Intelligence to restructure the ICÑan impressive array of new organizations. We have done more to protect our airspace, ports, and borders than at any time since World War II, though, in the absence of strategy, we have struggled to establish prioritiesÑas Hurricane Katrina revealed-- and to discipline spending. State and local governments have improved their security sometimes on a regional level, often in unprecedented collaboration across jurisdictions. On the offensive, we successfully pursued terrorists relentlessly at home and abroad, which is arguably a major reason why we have not had another attack to the homeland. The importance of these hard-won achievements should not be diminished

 

But in a period of extensive government restructuring, we have notÑnor could we have--hit the intended target every time. Small things have been neglected forgivably in an overly ambitious agenda, and so have some big things like adequately resourced programs for cybersecurity, biosecurity, critical infrastructure protection, government-wide information sharing, and domestic intelligence. And sometimes both the Administration and Congress have missed critical targets by a long shot, as Hurricane Katrina revealed in the fall of 2005. In New Orleans, DHS failed on its fundamental commitmentÑwhich I now believe exaggerated its potential from the get-go-- to coordinate Federal, State, and local preparedness. And the Congress, in a bloated 2005 Transportation bill larded with pork, completely missed the glaring infrastructure vulnerabilities in the Gulf. Before Katrina, we knew we were not where we should be in protecting America. Katrina showed we were much worse off than we thought.

 

Since I am prepared to argue that DHS could be the hub of a collaborative domestic intelligence service, I need to explain why the Department has been such a disappointment thus far. DHS, whatever its shortcomings, was the first answer of the Administration and Congress to the question of how to construct an overarching structure to integrate and focus government on homeland security. The Homeland Security Act of 2002 positioned DHS to play a leading role in enhancing US counterterrorism capabilities and in establishing the architecture for domestic intelligence. While not collecting intelligence, DHS would fuse terrorism-related intelligence from all sources in its mission to integrate foreign and domestic analysis of the terrorist threat. It would provide threat information to the twenty-two agencies integrated into the Department; to state and local governments; and, when appropriate, to the private sector. It would collect actionable information from them, and would produce integrated threat analysis to help prioritize the protection of America's critical infrastructure. It would be a key leader in promoting information sharing across the US Government. It would be the Federal coordinator of critically needed programs to address the threats of cyber- and bio-terrorism.

 

The core mission of DHS was to develop new capabilities to prevent another catastrophic attack on the homeland, to prioritize the protection of our critical infrastructure, and to improve our nationalÑFederal, state, and local governmentÑresponse if an attack should occur. Making America safer through new capabilities took precedence over the merger-and-acquisition questions related to standing up a 180,000-member department in the largest US Government restructuring in half a century. FBI would collect intelligence within the homeland, while the Department would be the primary integrator of intelligence from all sources and the primary analyzer of the terrorist threat to the homeland. It would also serve the IC, President, and the Congress as an indispensable evaluatorÑan upscale "team B"--of all intelligence inputs into its terrorism threat analysis. The DHS intelligence organization would compete with other agencies in senior expertise, not in numbers. With a broad information-sharing mission well beyond intelligence, it would be uniquely positioned to collaborate with non-government experts anywhere in the world.

 

While the design may have been imperfect, the execution was surely flawed. DHS stumbled from the start and, after three years of trying, has not achieved compliance with the Homeland Security Act. Congressional oversight has been uneven and largely unfocused. Both House and Senate committees, including the intelligence overseers, generally have fought harder to strengthen their own fractured jurisdiction than to coordinate a constructive approach to DHS and its vital national security mission.

 

We now have abundant data to assess DHS's and the IC's performance since 9/11. These include multiple Congressional hearings and investigations, reports from the the Office of management and Budget, the General Accountability Office, the Congressional Budget Office, the Congressional Research Staff, various Inspectors General, think tanks of every political persuasion, and the media with its growing access to former Administration officials. The IC story is disappointing but still with hope under the DNI. For DHS, it is largely a chronicle of a few victories made hard to achieve and many failures that should have been avoided.

 

President Bush's surprising announcement in his January 2003 State of the Union address of the creation the Terrorism Threat Integration Center (TTIC) was a well-intentioned and legally defensible initiative to promote sensitive intelligence sharing among key intelligence agencies. And it had immediate political appeal, including among leading Democrats as well as Republicans in the Congress. But it also was an alarming rejection of an urgently needed, overarching model for interagency collaboration that would not be easily replacedÑand, in fact, never was. In resource terms, it was a body blow to the not-yet-functioning DHS, which had just been given comparable responsibilities for fusing intelligence and integrating foreign and domestic analysis under the freshly minted Homeland Security Act. Agencies that had committed to provide detailees to the fledgling Department backed off to husband scarce resources. Congress was surprised and confused and found many other reasons to be disappointed by White House restraints on the Department, especially its reluctance to provide DHS's intelligence component with the facilities, infrastructure, connectivity, and personnel it need to do its job. But, with some exceptions, its own oversight rarely approached a rigorous standard.

 

Since 9/11, Congress has consistently favored creating new "boxes" rather than fixing or eliminating the old onesÑwithout seriously assessing the cost to existing critical programs. Structure itself, in my experience in the IC, is rarely either the cause or the remedy for performance problems. In the effort to stand up new structures after 9/11, Congress did not baseline existing IC resources. It created new centers while pulsing up rather than consolidating old ones It unintentionally encouraged the stretching of scarce analytic resources literally to the breaking point, the dispersal of valuable expertise, and an unprecedented reliance on the contracting community for analytic staffing, workforce management, and training. When I left the Hill over a year ago, a significant majority of the analysts assigned to the NCTCÑour new gold standard in counterterrorism--were contractors.

 

The expansion, as I saw it first hand, increased production while reducing authoritative analysisÑor quality controlÑacross these units. This has produced the first generation of intelligence analysts without adequate numbers of experienced managers to train them. I once argued, and the intelligence oversight committees agreed, that it takes the better part of a decade to bring a new IC analyst to peak performance. Today, the majority of analysts in many units have less than five years experience.

 

While the current situation is correctable, Post-9-11 restructuring has dividedÑnot concentratedÑaccountability for threat assessments across a larger number of analytic units at CIA, FBI, DHS, and NCTC. It has confused civilian and military roles and raised alarms about military involvement domestic intelligence in the emergence the powerful and effective Northern Command, in the expansion of DoD's Counterintelligence Field Activity (CIFA) that protects US military facilities, and in NSA's "warrentless" surveillance of US citizens' communications. FBI has fallen short in developing analytic and collection capabilities, and DHS is way behind in building the necessary relationship with the private sector to counter serious and growing threats from cyber- and bioterrorists. If the FBI were to be placed in the IC penalty box, it would have plenty of company.

 

Our record since 9/11, then, is a mixture of notable successes, commendable but stalled efforts, and significant failures Much of what we have done has been understandably reactive and uncoordinatedÑoften resulting from conflicting priorities and unfocused interplay of the Executive and Legislative branches in an atmosphere of crisis. Current approaches, as a whole, are not cost effective as a blueprint for the future. America needs a comprehensive strategy for national securityÑincluding homeland security and domestic intelligenceÑand bold leadership to implement it.

 

What do we need to do?

 

The hastily drafted Intelligence Reform and Terrorism Prevention Act of 2004 created opportunities but no guarantees for enhancing our national security, and it left a lot of holes that only smart leaders can fill. In moving forward, the Executive Branch, in close collaboration with Congressional Committees of jurisdiction, needs to develop a strategic reform agenda with clear reform goals and metrics. We should see this not as an option on a healthy progression on homeland security and intelligence reform but as an imperative on a troubled journey in which too many opportunities have been missed and too many mistakes have been madeÑand not admitted let alone addressed. And there is nothing self-correcting about many of the alarming trends we observe today.

 

It is normally a feckless exercise to recommend that a President take direct charge of a government program. But Intelligence transformation, in my view, is not simply another government program. It is the epic mission of our generation, with major implications for the future security of our country. As matters stand today, the President's leadership will be essential to get the government on the right course and to reverse the effects of high-level bureaucratic gamesmanship and, in some cases, failed, unaccountable leadership at lower levels. What follows are my own recommendations intended to help focus a needed debate. I know well that I am open to challenge. And, I am glad to say, on several issues, my mind can be changed.

 

Recommendation 1-- Restore Accountability: The President should establish by executive order an Intelligence Transformation Group (ITG)Ñor its functional equivalent--of the National Security Council, chaired by the President with delegation to the National Security Adviser, to include the Secretary of Defense, the Secretary of Homeland Security, the Attorney General, and the DNI. The mandate should be to develop and implement a strategic plan for IC reform, based on agreed-upon priorities consistent with the Intelligence Reform and Terrorism Prevention Act of 2004, led by the President in close collaboration with the major agencies affected. The organization need not be so formal, if the President so chooses, but his strong hand must be evident in making relevant agency heads responsible and accountable for implementation of his agenda and for presenting a unified front in dealing with the Congress.

 

Recommendation 2ÑResist Structural Buildup: The Administration and the Congress need to restrain their longstanding tendency to adopt structural solutions to functional problems. It is politically more difficult to make leadership accountable for fixing existing organizations, including streamlining them, but it is ultimately less costly and more effective in implementing real reform. In any restructuring, we need to balance better than we have the competing needs for centralized and decentralized models for analysis and collection. The hasty establishment of the TTIC and NCTC taught us that the resistance encountered to these centralized models was in part the result of legitimate leadership concern about degrading critical capabilities needed in an increasingly decentralized Intelligence Community. Structure, by itself, is no panacea.

 

¥ Whatever the merits that some see to a new, stand-alone domestic intelligence service (including on the UK or Canadian models), the proposal is premature. I believe it is a bad idea in the first place. If adopted, however, the original vision of its proponents would likely be significantly altered in the counterproductive interplay between the Administration and the Congress. The journey would be painful and protracted, and the destination would not be what its proponents planned, which was surely the case with DHS.

 

Recommendation 3ÑStrengthen DHS and Give it an Overarching Domestic Intelligence Role The President should publicly, as well as in his leadership of the ITG, make clear his support for a strong DHS--with the capabilities the Homeland Security Act intended--to coordinate the programs and prioritize the activities of Federal, state, and local governments to prevent man-made (e.g. terrorism) and natural disasters, to protect our people and critical infrastructure, and to respond effectively if such disasters should occur. DHS was designed in statute to be an independent agency to nurture new capabilities to protect America against information-age threats. If properly resourced and supported by the White House, it would be well positioned to be America's focal point for domestic intelligence.

 

Recommendation 4ÑEstablish DHS Domestic Regions: The DHS second-phase review should be revised to give the Secretary responsibility for assuring a two-way intelligence exchange with state and local governmentsÑas well as with the 22 agencies incorporated into DHS. As a matter of priority, it should call for the development of strong regional organizationsÑindispensable to a national intelligence system as well as to effective DHS preparedness and response--to help fulfill this mission.

 

¥ While the Federal Government in recent years has fallen short in delivering threat-based information to enable state and local governments and the private sector to prioritize critical infrastructure protection, regions around the country have taken impressive steps largely on their own to improve their counterterrorism capabilities across jurisdictions. Obvious examples are New York City (with Northern New Jersey), the District of Columbia (with Baltimore and Richmond), Miami, Houston, Los-Angeles-Long Beach, Seattle-Tacoma, Chicago, and Detroit.

 

¥ These regions should have unfettered access to all Federal intelligence agencies, not just the FBI or the NCTC. The Federal Government has protested that it cannot grant security clearances to 13,000 police departments across the country. But it can clear selected officials in these eight regions as a start toward a reliable and sustainable national intelligence system.

 

Recommendation 5ÑClarify FBI's Particular Role in Domestic Intelligence: The FBI, its fifty-six field stations, and its growing network of over 120 Joint Terrorism Task Forces (JTTFs) have a part to play in the development of a national intelligence capability but, as we have argued, it should be a collaborative, not a leading role. We should, once and for all, lower expectations of a dominant role for the Bureau in domestic intelligence. The FBI, unless the White House and Congress are prepared to push a fundamental FBI restructuring in favor of intelligence, should not be expected to produce either the authoritative analysis of the terrorist threat to the homeland or a national collection requirements system. The President and the ITG should make FBI accountable only for developing an intelligence collection system to support law enforcement and a limited analytic capability in collaboration with state and local governmentsÑboth of which the Bureau is pursuing now.

 

Recommendation 6: Clarify Departmental Roles and Responsibilities: The President and the ITG should work urgently to clarify roles and responsibilities of key agencies with responsibilities for intelligence and homeland security missions. The NCTC, DHS, DoD (especially the Northern Command), CIA, and FBI, while understandably enlarging their missions, are bumping into each other in the integration of foreign and domestic intelligence, and colliding in establishing working relationships with state and local governments. This is a manageable problem if caught early, a serious issue with implications for preparedness, response, and civil liberties if ignored. Recent press reports of military involvement in domestic intelligence collection may or may not turn out to be serious concerns for the protection of civil liberties. They are, however, clear indications of a Federal Government and Congress that have failed to clarify roles and responsibilities in a new threat environment.

 

Recommendation 7ÑPromote Government-wide Information Sharing: This goes to the heart of reform that will enable us to fight tomorrow's war, not yesterday's. The Program Director for Information Sharing, a position given government-wide authorities by statute, should be placed preferably in the National Security Council or otherwise in an invigorated DHS, not under the DNI where the White House recently has placed it at least partly on the misguided recommendation of the WMD Commission. The effect of the White House action, which will be felt across the Federal Government as well as in a jurisdiction-focused Congress, will be to foster the backward-looking impression that information sharing is just an intelligence issue. It also will take pressure off other agenciesÑincluding the Department of JusticeÑto play seriously in this top-priority effort, and it will guarantee the perpetuation of "legacy" behavior over the long term. It lessons the probability that an effective, government-wide information-sharing network, such as the Markle Trusted Network, will be implemented any time soon.

 

Recommendation 8ÑBack the DNI, but Hold Him Accountable: The President and the ITG should actively support and carefully monitor the implementation of the DNI's agenda to reform IC management, to professionalize the intelligence service, and to improve intelligence collection and analysis. The DNI's agenda should include priorities of common concern to DoD, DHS, and the Attorney General: improving HUMINT capabilities to steal secrets (with less public exposure), enhancing technical collection, and open-source capabilities; upgrading analysis (with greater outside exposure); establishing a cross-agency program evaluation capability; developing interagency professional and technical training programs in a National Intelligence University; building a user-friendly collection management system capable of responding to real-time requirements in the field as well as in Washington; and forging enduring relationships with outside experts, especially with the global scientific community. The high expectations on the DNI, of course, will only be realized if he has the backing of the White House.

 

Recommendation 9ÑClarify CIA's Role Under the DNI: The advent of the DNI has ruptured CIA's 57-year special relationship with the President. CIA analysts and HUMINT officers were directly responsible through their Director to the President as IC coordinators rather than to a cabinet-level policymaker. The recent placement in CIA of the new National HUMINT Service, with IC-wide coordinating responsibilities, is a good step. The Agency's unique analytic capabilities need to be recognized and fostered in a similar fashion. They are an invaluable asset to the DNI and the President that should not be squandered.

 

Recommendation 10ÑPush Congressional Reform: The Executive Branch should continue to press for the reform of Congressional jurisdiction. The 9/11 Commission rendered a serious and damning critique of Congressional oversight. Both the House and Senate have commendably created committees to consolidate some of the far-flung jurisdiction on homeland security, though jurisdiction still is scattered over multiple committees and subcommittees. None of this, moreover, has changed the inadequate oversight of the intelligence agencies or otherwise gone far enough to align, in any lasting way, Executive and Legislative branch priorities for IC reform. Reform of Congressional oversight will be a continuous work in progress for the indefinite future.

Improving our intelligence capabilities is today an imperative, not an option, if we are to confront the complicated, globally distributed, and increasingly lethal national-security threats of the 21st century.

 

Conclusion

 

The US Intelligence Community today is much more than technical collection agencies in league with an espionage service. It is one of the world's largest information companies, which is directly challenged by the IT revolution to exploit the glut of open-source information; to access the best sources of expertise on national security issues, wherever they may reside; and to make the operational focus globalÑincluding for domestic intelligence. The IT revolution has literally transformed the IC workplace, significantly raised its customers' expectations in Washington and in the field, and fast-forwarded the movement of the complicated and dangerous world it covers.

 

Transformation affects all players in the IC, who must see intelligence more as a collaborative and less as a competitive business. Technical collectors, primarily the National Security Agency and the National Geospatial-Intelligence Agency, are challenged as never before to combine resources, to exploit together technologies of common application, and to integrate their collection strategies. And the espionage service, in its mission to "steal secrets," is impelled to blend foreign and domestic perspectives, to fuse classified and unclassified information, and to collaborate with other collection disciplines in the difficult effort to penetrate evasive, fast-moving targets.

 

On domestic intelligence, we are challenged to build a national collaborative networkÑincluding Federal, state, and local governments, and the private sectorÑthat can bring together in real time the best information, the foremost experts, and well trained first responders to meet any threat to the homeland. This is the goal. Achieving it is a long-term proposition in which we must confront the twin obstacles of smarter, more capable adversaries and of persistent, change-resistant US bureaucracies. We know there will be no easy fixes. The core challenge for the Executive Branch and the Congress is to set the right direction and stick with it.

 

 

SOURCE:

http://judiciary.senate.gov/hearing.cfm?id=1858