C:\000TXT\ths01.htm

MEMBERS OF THE SUBCOMMITTEE ON TERRORISM AND HOMELAND SECURITY

Saxby Chambliss (R-GA), Jane Harman (D-CA),

Chairman Ranking Democrat

Jim Gibbons (R-Nv), Gary Condit (D-CA)

Vice-Chairman Tim Roemer (D-cA)

Peter Hoekstra (R-mi), Silvestre Reyes (D-TX)

Ray Lahood (R-p Robert (Bud) Cramer, Jr.

Richard M. Burr (R-NC) (D-AL)

Terry Everett (R-AL)

Porter J. Goss (R-FL), Nancy Pelosi ' (D-CA),

Ex Officio Ex Officio

Mgjoriiy Staff- Minority Staff:

Jay Jakub, Carolyn Bartholomew,

Subcommittee Staff Director Professional Staff Member

James Lewis, Beth Larson,

Professional Staff Member Professional Staff Member

Krister Holladay, Marcel Lcttre,

Staff Professional Staff Member

Diane Roark, Wyndee Parker, Counsel,

I JIM

Professional Staff Member Professional Staff Member

Riley Perdue, Professional Staff Member

Kevin Schmidt, Staff Assistant

UM CHAMBUSS. GEORG" CK44AMAN H-405. THE CAPITOL

AM GIBBONS. NEVADA NGTON. DC 20515

RAY LAHOOD. IUjIN= (202) 225-4121

KtER HOEKSTRA. MICH1GAN U.S. HOUSE OF REPRESENTATIVES

RICHARD BURR. NORTH CAR OLINA JAKUB, STAFF DIRECTOR

TERRY EVERETT. ALIAMMA PERMANENT SELECT COMMITTEE ON INTELLIGENCE

JANE HARMAN ' CAUFORKA. RANKING DEMOCRAT SUBCOMMITTEE ON TERRORISM AND HOMELAND SECURITY

GARY CONDIT, C~6FORNIIA

TIM ROEMEFL INDIANA

SILVESTRE REYES, TEXAS

ROBERT L (BUID) CRAMM At. N.ABAMA

PORM I G= FLOROk EX OFAW

NANCY P&M. CAPORNA. LK OMW

July 17, 2002

The Honorable J. Dennis Hastert Speaker of the House of Representatives United States Congress Washington, D.C. 20515

Dear Mi. Speaker:

In accordance with your instructions, and those of the Democratic Leader, ~e hereby submit this report of the Subcommittee on Terrorism and Homeland Security of t Permanent Select Committee on Intelligence.

The Subcommittee was established at your direction as a bi-partisan 'work ng group' in January 2001 with a mandate to make recommendations on how to improve Amer ca's counterterrorism and homeland security capabilities. It was later given the respon ibility to investigate the intelligence deficiencies that existed on September 11, 2001, and it status changed to that of a subcommittee of the Intelligence Committee.

We subsequently set about evaluating the performance of the three key ag cies charged with protecting America from the scourge of terrorism, the Central Intelligence A ency, the National Security Agency, and the Federal Bureau of Investigation. This report r resents our findings on the gaps in the aforementioned agencies counterterrorism capabilities prior to 9-11, and makes specific recommendations on how those gaps should be addressed. -Because of your expressed desire to improve Congressional oversight of counterterrorism and horn -land security, we have also included our assessment of the current oversight situation in the House on these issues, and have offered options for streamlining and enhancing the quality of ove -sight ' Additional information on terrorism and homeland security matters has been incl d to provide if u with a useful reference aid.

It has been our honor to serve in this bi-partisan capacity in support of the security of all Americans. We will continue to provide you and Leader Gephardt with our assessments, in various forms, of key issues related to the war on terrorism during the remainder f the 107 th Congress and for as long as our work remains useful to you.

uV ed,

k~n" .r C,

Respectfully s

)y Vai liss Ja e a

Chairma6' ankina, Democrat

- -------- -

i6MM

A Report to the Speaker of the House of Representatives and the Nlinoritv Lelder from the'lo

Subcommittee on Terrorism and Homeland Se!j~

House Permanent Select Committee on Intellip_ence

July 17, 2002

Executive Sumtfilf"y

The principal objective of this report and the work of the Subcommittee h been to

review the counterterrorism capabilities and performance of the Intelligence Com unity before

9-11 in order to assess intelligence deficiencies and reduce the risks from acts of te orism in the

future.

The terrorist attacks perpetrated on September 11, 2001 constituted a significant strategic

surprise for the United States. The failure of the Intelligence Community (IC) to plovide

adequate forewarning was affected by resource constraints and a series of questionable

management decisions related to funding priorities. Prophetically, IC leadership cc ncluded at a

high-level offsite on September 11, 1998 that "failure to improve operations management,

resource allocation, and other key issues within the [IC], including making substantial and

sweeping changes in the way the natiori collects, analyzes, and produces intelligen e, will likely

result in a catastrophic systemic intelligence failure."

The Subcommittee has found that practically every agency of the United St tes

Government (USG) with a counterterrorism mission uses a different definition of t( rrorism. All

USG agencies charged with the counterterrorism mission should agree on a single c efinition, so

that it would be clear what activity constitutes a terrorist act and who should be des gnated a

terrorist. Without a standard definition, terrorism might be treated no differently th?,n other

crimes. The Subcommittee supports a standard definition as follows: "Terrorism i~ the

illegitimate, premeditated use ofpolitically motivated violence or the threat of viAnce by a sub

national group against persons or property with the intent to coerce a governmen instilling

fear amongst thepopulace. " '1 0

The Subcommittee concludes its work for this report by reflecting on three key areas:

· Summary findings anllrecommenFalions across agencMies

· Recommendations for congressional activity

· Questions,for further focus in the future

~e,

t te

-A

Summary Findings and Recommendations Across Agencies

CIA

The summary finding regarding CIA is that CIA needs to illStitLitionalize its sharp re6rientation toward going on the offensive against terrorism. This report also arrived at the rind ings and recommendations that follow.

Keep HUMINT Nsslon Central. CIA is the government's national HUM T organization - it has to keep this mission at its center. CIA did not sufficientl penetrate the al-Qa'ida organization before September I Vh. Because of the perceived reduction in the threat environment in the early to mid 1990s, and the concomitant reduction in resources for basic human intelligence collection, there were fewer operations officers, fewer stations, fewer agents, and fewer intelligence reports produced. This li ely gave CIA fewer opportunities for accessing agents useful in the counterterrorism c impaign and eroded overall capabilities. Several management decisions also likely d4 graded CIA's CT capabilities by, for example, redirecting funds earmarked for core,, ield collection and analysis to headquarters; paying insufficient attention to CIA's unilateral CT capability-, TClying too much on liaison for CT; and neglecting sufficient investment of foreign language training and exploitation. The dramatic increase in resources for intelligence since 9-11 improves the outlook for CIA's CT capabilities, but 0 ly if CIA management acknowledges and deals with the systemic problems outlined in his report.

Recommendation: CIA leadership must ensure that HUM NT collection rem sa central core competency of the agency, and should develop additional operational tools, in conjunction with other appropriate agencies (FBI, etc.), penetrate terrorist cells, disrupt terrorist operations and capture and render terrorists to law enforcement as appropriate. More core collectors need to beput on the streets.

Build New Platforms. CTA'nee&'Io niit long- Werin inveslm'6 in new pil rms 16 collect on the al-Qa'ida target. Using both unilateral and liaison resources will be necessary. Recognizing that liaison partners may have different interests, maintaining a unilateral capability is of key importance. More attention to individual al-Qa ida network presence worldwide is necessary.

Recommendation: CIA should ensure that a management structure is in pla to steward

t ~11'1

. n

~C,

the multi-year in vestments needed to build new pla~forms to collect oil terrorlst targets. CIA in ust also ensure sufjicien t n Limbers of unilateral CT slots infield statioi andbases.

. ... . .........

Forewarning of Terrorist Intentions. There were a number of pre-9-11 suc esses, including a number of takedowns d Uring the Mi I lenni Lim. Therewasalso,ho ever, intelligence acquired prior to 9-1.1 that, in retrospect, proved to be directly rel-vant to 911. The ability to watchlist terrorist suspects by CIA and in other agencies proved inadequate. Fixing some of the structural issues identified in this report migh: have put CIA in a better position to make use of such warning information.

Recommendation: CIA should lead an effort to improve watchlisting to ensiTthat all relevant agencies, including FBI, Homeland Security, and others, have access to a common database of up-to-date terrorist person-related data collected by US government agencies and other appropriate sources. Y7ze creation of a terrorism watchl' ing unit at CIA may be a usefulfirst step.

Additional Attention to Foreign Language Training and Document Expl Ration. CIA has paid insufficient attention to foreign language training and documenti exploitation efforts requiring linguists. In the most recent class of new case officers in training, less than one-third had any language expertise. CIA also needs to focus on finding ways to provide clearances for people with the right language skills in less commonly taught languages for document exploitation and other linguist nee~

Recommendation: Require all new case cfficers and analysts to achieve a "level 3 language proficiency prior to initial deployment, and devise a mechanism for nsuring language skill maintenance is incentivized and directly tied to performance e aluation.

Additional institutional support for the CT career path. CTC more than in

size from September 2001 to Spring 2002, but these officers were not all ex. in

the counterterrorism mission. CIA needs to ensure that all training incorpor

development to support the counterterrorism mission, and that home basing f~r CTC case

officers is a viable option and is career-enhancing.

Recommendation: CIA should take immediate and sustained steps to dramatTially improve all aspects of its CT training program. Establish structures to provi efor homebasing in CTC in such a manner that ensures a normal careerpathfor r1lese officers. Incorporate counterterrorism -related skill development in all appr iale trainingfor case officers and analysts

Balance CIA's no threshold terrorist threat reporting policy. It has been increasingly difficult for consumers to determine the reliability of source reporting amidst he large volumes of reporting provided. One example of a CTC summer 2001 threat r, -port, entitled "Threat of Impending al-Qa'ida Attack to Continue Indefinitely" illus Tates the

polinig a`

il t

ubled p enced

~~tq'

ates skill

Recoimnend~tion: Internal policies, such as CTCs 'no threshold' threat repord a policy,

should be reviewed and nzoelifted to ensure that consumers are getting the most r It . able

reporting and that sufficient analysis is applied to that product in advance of its holesale

dissemination, wherever ossible.

Recruiting Assets. The availability and allocation ofAsources, including the redirection by CIA managers of funds earmarked for core field collection and analysis to headquarters, likely negatively impacted CIA's CT capabilities. The excessi~ ' e caution and burdensome vetting process resulting from the guidelines on the recruitm~nt of foreign assets and sources issued in 1995 undermined the CIA's ability and willingness to recruit assets, especially those who would provide insights into terrorist organizations and other hard targets. Despite a statutory requirement in December 2001 to rescind the 1995 guidelines the DCI still had not done so at the time this report was completed.

Recommendation: 7he 1995 guidelines must be rescinded immediately, and replaced with new guidelines that balance concerns about human rights behavior and law breaking with the needforfle-ribility to take advantage of opportunities to gather informat . 0 terrorist activities, as required by law.

0 CIA S progems reqMuire more than just expressed commitment from sen Cr managers. They require sustained attention, and the subcommittee will CIO ingfor deeds rather than words. As a start, CIA should begin to develop and implem nt a strategic plan to address the shortcomings identified in this report.

9 CIA may not be capable of provwling information OS64611in` 'preventing every type

incident, but it can certainly manage its resources more efficiently and effect y to

enhance its CT capabilities and thereby reduce the likelihood that future 9-1 Is will occur.

HUMINT is one of our best hopes. We must not squander this historic oppor~mity to

effect lasting positive change.

FBI

The summary finding regarding FBI is that FBIs main problem goingforward is to o vercome its information sharingfailures. This report also arrived at the findings and recommend, aions that follow.

Enhance FBI's prevention mission. The Subcommittee has found that FBI cus has been investigating terrorist acts, but it has placed less emphasis on preventing ;uch acts. FBI identified many of its CT Program shortcomings prior to 9-11, but was slow to implement necessary changes. FBI's policy to decentralize investigations as inefficient for CT operations, especially against the international terrorist target. FBI's CT Program was most negatively impacted by the reticence of senior FBI mangers to institute broader information-sharing initiatives; a failure to levera ,e FBI's ability to perform joint financial operations with other U.S. government agencies

against terrorists until after 9-11; an ineffective FBI headqUarters-based CTa alytical capability prior to 9-11; the failure to share field office CT expertise with tile BI community-at-large; and critical staffing shortages oftranslators, interpreters, and Special Agents with proficiency in languages native to most terrorists. Since accepting the position as FBI Director ust a few days prior to the 9-11 attacks, Robert Mueller has mandated positive, substantive changes in the modLIS operandi of he FBI's CT Program.

Recommendation: "Ensuring adequate information sharing" should be com unicated throughout the Bureau as the Director's top priority, and a clear strategy incorporating the personnel dimension, the technical dimension, and the legal dimension of the information-sharing problem should be developed and communicated immediately.

0 Improve intelligence gathering and analytical Capabilities. Significant chapges in law were made in the October 2001. USA Patriot Act and the May 2001 changes to the Attorney General's guidelines. While these may improve intelligence gathenipg, FBI's analytical capabilities remain insufficient, pending the establishment of the ne~v Office of Intelligence.

* Address foreign language shortfalls. A January 2002 report noted that FBI rojected shortages of permanent translators and interpreters in FY 2002 and 2003, and eported backlogs of thousands of un-reviewed and untranslated materials. In key counterterrorism languages, FBI reported having in June 2001 a critical shorta e of special agents with some proficiency, and FBI had very few translators and in erpreters with native language skills in those languages.

0 Fixing Information Tech n ology Cb a ng'e-'si.- ne'906-Uhr Commission inb&t6h 2002 noted in detail many of the information technology challenges of the FBI. FB I has made concerted efforts to implement change to improve technology. Recommendation: The FBI Director should review the IT implementation str~legy to ensure that it incorporates plans tojacilitate the necessary information sharing processes needed within the intelligence and homeland security communities. NSA

The summary f inding regarding NSA is that NS,4 needs to changerrom a passtv~e` ga to a

proactive hunter - a revolution in how it conducts its work. This report also arrived the

findings and recommendations that follow.

Ensure Appropriate Intelligence Collection Priorities. The Subcommi ec found it troubling that more SIG[ NT resources were not devoted by NSA to CT prior to 9-11,

,i7a I

t~erer t

It e4

given the prior terrorist attacks against US interests starting in 1983. Also lof concern is the fact that NSA hired virtually no new employees for an extended peri~d of time prior to 9-11, resulting in a negative impact in overall capabilities, includit g CT.

Recommendation: IVSA should review its processesfor setting collection tin analysis priorities to ensure that appropriate resources and effort are devoted to inip rtala targets like CT

0 Address Analyst and Linguist Shortfalls. In April 2000, the GAO reporte a significant shortfall in linguists at NSA. After the 9-11 attacks, this shortfall actually increased slightly and was well below additional requirements identified since 9-11. A long-term linguist and analyst hiring strategy is required, as well as a methoclical program to improve the skills of non-native linguists. The solution should not be age cy speci ic.

ne :~Tn conjUh6tion with the commUn-dy, ftA should develop a' k5hig4'erm' strategyfor ensuring appropriate number of linguists are available as well nsuring a structurefor surge linguist capabilities in unanticipated crisis areas.

e Support Signah Research and Target Development. In the art of finding ew targets, before 9-11 NSA did not have a comprehensive, focused, counter-terrorism t rget development effort. Although there were numerous analysts conducting the ~ission across NSA and its collection sites, NSA claims there were insufficient resources to conduct a focused CT-specific target development effort. NSA needs an ag essive target development focus against CT and other targets that should not be in competition for assets conducting sustained collection against established targets. NSA also nceds to strengthen a cultural norm in the organization to encourage target discovery.

Recommendation: NSA should review its signals research and target develo~ment ell" to ensure that long-term objectives in the counterterrorism effort are met, especially in follow-on phases beyond the campaign in Afghanistan.

MM 0 Need for worldwide collection across the global communications networ . The

global communications network is increasingly digital, high-volume fiber optic cable

rather than radio frequency, internet rather than telephone, and packet- switc~ed rather

than circuit-switched, with customer instruments moving from fixed to mobilie. NSA has

been unable to organize itself to define and implement an integrated system that can

follow the target across the global intelligent network, beyond high-level goals and plans.

NSA also needs to develop methodologies to find non-govemmental radical xtremists

who are associated with international terrorist organizations but might not b in direct

contact with them. NSA also needs to balance modernization funds across i collection

' C

a~rc'

now

,~ae

systems in order to continue toproduce intelligence on CT.

Recommendation: NSA int(st define and implement till integrated system that canfollow a target across the global intelligent network.

Fix Systems Development Deficiencies. NSA has fundamental acquisitio management

problems. Technical solutions continue to be solved by tackling s aller

manageable" projects and lack a larger plan on how these small projec s ill integrate

into a whole. NSA has historically been able to successfully develop quick reaction

solutions to address crisis needs, but has been unable to establish an effecti e

requirements process for balancing systems acquisition with available reso rces.

Recommendation: NSA should work with an outside body of experts on resource management and organizational restructuring to ensure that its organizatignal reform efforts currently underway appropriately align current mission needs, evcpektedfuture needs, resources, and organizational processes and structures.

WMD

The summary finding regarding weapons of mass destruction terrorism is that terrorist interest in CBRN weapons has been strong enough to require that the US address this threat 1 ore vigorously than it ever has before. This report arrived at the additional findings an recommendations that follow.

9 Strong terrorist interest in CBRN. Terrorist interest in CBRN weapons h been sufficiently strong to require that the US address this threat vigorously with ~he highest priority. Bin Ladin declared in 1998 that acquiring unconventional weapow was "a religious duty". Documents recovered from Afghanistan show that bin Ladcn was pursuing a biological weapons research program.

* Capabilities are not widespread. Terrorist capabilities in CBRN have not Deen widespread, but determined groups could access chemical, biological, radiol gical and possibly nuclear devices. Al-Qa'ida trainers prior to Sept I Vh were training people in poisons. There were indicators that they possessed small quantities of toxic ndustrial chemicals, World War I-era CW agents, and biological toxins. The most lethal chemical, biological, and radiological devices are not easy to make, but non-state actors have demonstrated the ability to acquire or fabricate chemical and biological wealions materials, components, and complete weapons systems. There is much concern about dirty bombs, or radiological dispersion devices. Nuclear weapons design is much harder, but proliferation of fissile material and of expert knowledge from other states' weapons complexes is continued cause for concern. OLIr intelligence collection needs to focus on acquiring additional information in these areas.

s i' ,k r r

I &I

' 0'

IC response. The intelligence community is the first line orderense. A shar r focus on

I pe offensive preventive measures and deeper analysis will be necessary. It will ernain necessary to maintain aggressive intelligence and law enforcement operation~ for some

years to come to lower the probability oraIC19RN attack by a non-state actor ntheUS or its interests. A number of intelligence prodUcts note the gaps in IC knowle 1ge of current CBRN capabilities of terrorists. Focused effort is more urgent than ever.

Recommendation: Congressional oversight committees, in conjunction with I e DC1, shouldfocus immediately oil assessing improvements in IC knowledcge of curr lit CBRN capabilities of terrorists, as well as assist in identifying additional operationa and analytic capabilities that are required to address the threat.

Other Issues

The report also arrived at two findings and recommendations on additional important ssues.

Prosecute Leaks. Several leaks have done major damage to the intelligence c mmunity's efforts.

Recommendation: Devise a senior level mechanismfor overseeing the invest ation and, where possible, the prosecution ofwil4'ul leakers.

Congress: Create a leadership staff mechanism

Recommendation: 71se Subcommittee recommends the' cre''adonof ~ienior s itions

within the leadership ofboth parties to coordinate and address terrorism and homeland

security issues, and budgets, in conjunction with the existing committees of - r - d- I -

Ju s ic ion.

Recommendationsfor Congressional Activity

In addition to the specific recommendation set forth in the chapter on Congres ional oversight, the report concluded that a number of other activities would be usefully un ertaken by Congress.

Recommendation: The House Permanent Select Committee on Intelligence should continue aggressive oversight on a number of issues identi

fied by the Subcommittee, including: ensuring robust unilateral clandestine collection ca, abili i s

'r t e

benefiting counterterrorism collection; improving the core trainingprogram and career

pathfor officers in the counterterrorism discipline,- enhancing language traini ig

capabilities across the IC,- continued support to ini ortant signals re earch and target

p s

development sites; support to NSA to reform its acquisition process; global covet-age

capabilityfor clandestine human inlelligence collection and analysis.

Recommendation: HPSCI should continue 16 iv6ik wtili-Mie Diriec`tor of Centil Intelligence to examine ei?iet-aitigpt-oposalsfoi-foriyiiilatiizg one or several hadragency

0 C11

counterterrorism analytical units.

er S,

ec m

I e r 11

I atJ

t ff os a

s ic

Viii

Recommendation: The Speaker should direct the relevant committees qfjui-Lliclioll, mr including HPSCI, International Relations, Anned Services, and Judiciary 10' conduct a joint assessment of the effectiveness of the U.S. government's strategv, capa ilitics, and budgets to combat CBRN len-orisln.

Questionsfor Further Focits in the Futive

The Subcommittee views oversight of intelligence-related elements of te m and homeland security matters as critical to strengthening U.S. security and will concentrate on these matters in the coming months. This study has looked back. We must also raise qu stions for the future. The most important of these questions, which will assist in setting the Subc mmittec's agenda going forward, are listed below.

1. End State. What will the end-state homeland security archificture need , o look like?

2. Intelligence Components. What are the key intelligence-related comporlents necessary in such an architecture? Where they do not yet exist, how mu e begin to build them?

3. Security and Other American [deals. How should we rebalance Ameri need for security - and strong intelligence and warning -- with other American i als, such as economic prosperity and personal liberty.

4. Intelligence Support to All Parties. As the roles of citizens, public, and rivate sectors, and first responders begin to clarify how can the intelligence co munity be fully responsive to requirements for useful information on the nature of he terrorist threat.

5. Technology Plan. What ought to be the technological components - especially critical in intelligence collection and analysis - incorporated into the e~Iate homeland security architecture?

6. Legal Framework What ought to be the legal framework guiding the homeland security intelligence collection and analysis missions?

7. nreat Assessment and Weapons ofMass Destruction. How will the homeland security architecture ensure a full, ongoing process for assessing the threat, including conventional tactics of mass destruction as well as CBRN weapons.

8. Additional Threats. Although this report focuses on new capability to rcduce the terrorist threat, it is important that, as priorities and resources shift other threats to Mir national security continue to receive sufficient understanding, monitorin , and warning.

The subcommittee expects this report to be helpful to the joint inquiry bein conducted by the House and Senate Intelligence Committees into the September I I attack, s. S meofthe

tt w

or rrol

'I S,

C 11

1~0

c S

i eal

1 .1,

,~d

~C'

questions posed by this report may be answered in the course of their inquiry. Oth s will be the focus of the subcommittee's efforts in the weeks ahead as it continues to work to rCiuce the threat of future terrorist attacks.