October 3, 2002 Committee Hearing: William Webster, William Odom, Frederick Hitz

Joint House And Senate Select Intelligence Committee
October 3, 2002

CHAIRED BY: SEN. BOB GRAHAM (D-FL)

PANEL I: ELEANOR HILL, STAFF DIRECTOR, JOINT INQUIRY;

PANEL II: LEE HAMILTON, FORMER CONGRESSMAN; WILLIAM WEBSTER, FORMER FBI AND CIA DIRECTOR; WILLIAM ODOM, FORMER NSA DIRECTOR; FREDERICK HITZ, FORMER CIA INSPECTOR GENERAL

LOCATION: 216 HART SENATE OFFICE BUILDING

BODY:
SEN. GRAHAM: I call to order the joint inquiry of the House Permanent Select Committee on Intelligence and the Senate Select Committee on Intelligence.

This is the seventh open hearing of our committees as we conduct our joint inquiry into the intelligence community's performance regarding the September 11th attacks. The committees have also held 11 closed hearings.

The purpose of today's hearing is to receive and review suggestions for the future organization of the United States intelligence community and to consider legal issues that the intelligence community faces in dealing with terrorism.ong other matters, we have asked our distinguished witnesses for their thoughts on the role and responsibility of the director of Central Intelligence, the secretary of Defense and the law enforcement community in counterterrorism and domestic intelligence programs. In that context, we have also asked that they address how proposals for the organization of domestic intelligence functions might impact on civil liberties in the United States.

Today's hearing will be in two parts. First, we will hear from Ms. Eleanor Hill, staff director for the joint inquiry, who will give us a presentation in relation to this portion of our inquiry. We will then hear from a panel of very impressive witnesses: Our former House colleague, Congressman Lee Hamilton; Judge William Webster; Lieutenant General William Odom; and Frederick Hitz, who I will introduce more fully after Ms. Hill's presentation.

I'll now ask my colleagues if they have an opening statement. Congressman Goss?

REP. PORTER GOSS (R-FL): Thank you, Mr. Chairman. I regret that the House is in the middle of a journal vote, and our members will be back shortly. But I look forward to the input we are going to receive today. We have a very distinguished group of people, and I am very grateful they've taken the time to come forward and assist us in our efforts. Thank you, sir.

SEN. GRAHAM: Thank you, Mr. Congressman. Senator Shelby.

SEN. RICHARD SHELBY (R-AL): Thank you, Mr. Chairman. I'll try to be as brief as I can.

Mr. Chairman, in the wake of a well-publicized series of significant intelligence failures, including the failure to prevent the bombing of the World Trade Center in 1993, the failure to prevent the bombing of Khobar Towers in 1996, the failure to anticipate the Indian nuclear test in 1998, the failure to prevent the bombings of our embassies in Africa that same year, 1998, the accidental bombing of the Chinese embassy in 1999, the failure -- in Belgrade -- the failure to prevent the attack on the USS Cole in 2000, and, of course, the failure to prevent the attacks of September 11th, there have been no shortage of proposals to reform the U.S. intelligence community in light of that.

Most of them, Mr. Chairman, have involved variations on the theme of empowering the director of Central Intelligence, the DCI, to exercise more real authority within the mostly Defense Department- owned intelligence community.

Other proposals, such as one being discussed in the defense authorization conference, would empower the Pentagon by creating an undersecretary of Defense for intelligence. All of them so far have gone nowhere.

When such ideas do not founder upon the rocks of interdepartmental rivalry and what the military calls rice-bowl politics, they simply fail to elicit much interest from an intelligence community that, even to this day, insists that nothing is fundamentally wrong.

Too often, serious reform proposals have been dismissed as a bridge too far by administration after administration and Congress after Congress and have simply fallen by the way side. While very modest attempts at reform have been enacted, they've been ignored by succeeding administrations and openly defied by our current director of Central Intelligence.

With this in mind, I asked our committee's Technical Advisory Group, that we call the TAG, last year to undertake its own look at these issues. The TAG is a group of prominent scientists and technologists that volunteer their services to advise our committee on very difficult technical and program management issues. And I think history shows they've done an excellent job.

We worked with them over several months on these matters, and we came to some interesting conclusions. Rather than rest our hopes for reform upon plans destined to run headlong into vested interests wedded to the current interdepartmental vision of intelligence resources or to be smothered by pained indifference from holdover bureaucrats satisfied by the status quo, the Technical Advisory Group proposed instead that the president create something entirely new, a small, agile, elite organization with the president's personal support, dedicated wholly and single-mindedly to conducting fusion analysis.

This organization would draw upon all the information available to the federal government and use the resulting knowledge to achieve a single clear goal -- dismantling and destroying terrorist groups that threaten the U.S. This, they hope, might allow meaningful reform to take place without initially having to upset entrenched bureaucratic apple carts.

They proposed, in effect, an intelligence-related version of the Manhattan Project that would take place, to some extent, outside the traditional chains of command and networks of vested interests. They suggested an approach modeled on the movie catch phrase, "If you build it, they will come."

If this new venture were successful, its progress would breed further successes by gradually attracting resources and support from elsewhere, and perhaps by stimulating the intelligence bureaucracies to do more to reform themselves when faced with the success of an alternative model.

I was struck the other day, Mr. Chairman, during our hearing on information-sharing, by the degree to which Governor Gilmore and our DIA witness, Mr. Andre, both echoed themes emphasized by the TAG group. They described the need for a single, all-source intelligence fusion center equipped with the latest analytical and data-mining tools and authorized to apply these tools against the whole spectrum of agency data bases, even to the point of accessing so-called raw data.

I think these ideas are very much on the right track. I hope, therefore, Mr. Chairman, that these two committees, ours and the House, in considering all the proposals for intelligence reform that have been made in recent years, will also give serious consideration to the excellent work of our TAG group and the valuable advice of some of our witnesses.

Thank you, Mr. Chairman.

SEN. GRAHAM: Thank you very much, Senator, for a very thoughtful statement. And I particularly appreciate the recognition you've given to the outstanding work of our Technical Advisory Group and the contributions which I think their ideas, as well as the witnesses that we have and will hear, will make towards our final recommendations to the American people, to the administration and to our colleagues in the Congress.

SEN. SHELBY: Thank you, Mr. Chairman.

SEN. GRAHAM: Ms. Hill.

MS. HILL: Thank you, Mr. Chairman. Good morning, Mr. Chairman and members of the joint committee.

In prior hearings, we have, as you know, discussed specific factual issues and systemic problems that relate to the intelligence community's performance regarding the events of September 11th. These have included analytical, information-sharing, budgetary and cultural issues.

Today's hearing, by contrast, moves beyond the factual record that has been established to look toward the future and the need for reform within the intelligence community. Specifically, today's testimony will focus on how the community could and should be changed to strengthen and improve the ability of the U.S. government to counter terrorist threats.

In 1947, Congress passed the National Security Act. This act established the statutory framework for the United States intelligence community, including the Central Intelligence Agency and the director of Central Intelligence. The act also created a semi-unified military command structure under a secretary of Defense and a National Security Council to advise the president.

Since then, many new organizations have been created and their missions have been defined in a variety of laws, executive orders, regulations and policies. During this 55-year period, numerous independent commissions, experts and legislative initiatives have examined the growth and the evolving mission of the intelligence community.

Many proposals have been made to address perceived shortcomings in the community's structure, management, role and mission. These have ranged from a fundamental restructuring of the community to tinkering with its component parts.

The earliest studies of the community addressed questions of efficiency and effectiveness. They included the first and second Hoover commissions to review the organization of the executive branch of the government in 1949 and 1955; the 1949 Dulles-Jackson-Correa report of the Intelligence Survey Group that was established to evaluate the CIA in its relationship with other agencies, and the 1975 Commission on the Organization of the Government for the Conduct of Foreign Policy, known as the Murphy Commission.

The reviews and investigations of the 1970s and the 1980s, the most prominent of which were the Rockefeller Commission on CIA Activities within the United States, the Senate and House investigating committees led by Senator Frank Church and Congressman Otis Pike, and the Iran-contra committees, dealt with issues of legality and propriety. They also addressed, in varying degrees, the fundamental operating principles of the intelligence community.

With the end of the Cold War, both the executive and legislative branches charted numerous additional studies to examine a variety of issues, including intelligence community capabilities, management and structure; extent and competence of U.S. counterintelligence; managerial structure of armed services and DOD intelligence components; DCI roles, responsibilities, authorities and status; allocation of personnel and financial resources; duplication of effort within the intelligence community; expanded use of open-source intelligence; and need for covert action capability.

Since the end of the Cold War in the early 1990s, the pace of reviews and studies relating to the intelligence community has markedly increased. The more prominent of these have included -- and there is a long list -- in 1995 through 1996, the Commission on the Roles and Capabilities of the U.S. Intelligence Community, known as the Aspen-Brown Commission; in 1996, IC 21, the Intelligence Community in the 21st Century, which was a House Permanent Select Committee on Intelligence staff study; 1997, Modernizing Intelligence Structure and Change for the 21st Century, General Odom's study; 1998, Intelligence Community Performance on the Indian Nuclear Test, also known as the Admiral Jeremiah report; 1999, the Rumsfeld Commission on the Ballistic Missile Threat; 2000, Countering the Changing Threat of International Terrorism, a report from the National Commission on Terrorism, known as the Bremer Commission; 2000 report of the National Commission for the Review of the National Reconnaissance Office; also in 2000, the National Imagery and Mapping Agency Commission report; 2001, Road Map for National Security, Imperative for Change: The Phase III Report of the U.S. Commission on National Security in the 21st Century, also known as the Hart-Rudman Commission; also in 2001, the Advisory Panel to Assess Domestic Response Capabilities to Terrorism Involving Weapons of Mass Destruction, also known as the Gilmore Commission; in 2001, Deutch Commission on Weapons of Mass Destruction; 2002, a Review of Federal Bureau of Investigation Security Programs, also known as the Webster Commission; 2002, the House Permanent Select Committee on Intelligence Subcommittee on Terrorism report; also in 2002, the Scowcroft Commission, which has not yet released their report.

These reviews varied in the areas they examined and emphasized different issues in different reports. However, the ones we have identified -- the ones we have mentioned did identify several areas where improvement was needed, including development of a strong national security strategy; information-sharing with other federal agencies and with state and local government organizations; greater emphasis on human intelligence; additional resources for analysts and linguists; and restructuring the distribution of responsibilities and authorities between the DCI and the secretary of Defense.

For today's hearing, we have asked the witnesses to discuss these and other issues relating to the community, particularly to the authority and organization of the intelligence community, in the context of the findings and recommendations of those reports as well as the factual record regarding September 11th that we have seen in the course of these hearings.

As a prelude to that testimony, I would like to provide a very brief overview of a few of the previous reports on these topics and describe several common issues and themes that are of particular relevance to this joint inquiry.

The 1995-'96 Commission on the Roles and Capabilities of the U.S. Intelligence Community included the following among its key findings: Intelligence agencies must be integrated more closely with the law enforcement community. Intelligence agencies must function more closely as a, quote, "community." There was insufficient central authority and too many administrative barriers that impeded cooperation.

The process for allocating resources to intelligence agencies was severely flawed. Work forces were not aligned to needs. Multiple personnel and administrative systems were inefficient, and modern management practices needed to be utilized. And finally, the confidence of the public in intelligence matters needed to be restored.

In 1996, the House Select Committee on Intelligence conducted a review of the intelligence community and published a staff study. Its key findings included: The intelligence community would benefit greatly from a more corporate approach to its basic functions; for example, stronger central management, reinforced core competencies and collection, analysis and operations, and a consolidated infrastructure.

The DCI required additional authority to manage the community as a corporate entity. There was little collaboration between collection agencies and all-source collection management. And the National Security Act and existing executive orders were sufficiently flexible to allow improved cooperation between law enforcement and intelligence without blurring the important distinction between the two.

General William Odom, one of our witnesses this morning, authored a report in 1997 entitled "Modernizing Intelligence: Structure and Change for the 21st Century." The report included the following observations: No organizational reform can overcome the absence of effective leadership and management, but dysfunctional organizational structure can neutralize the efforts of the best leaders.

The report also included the following recommendations: Strengthen the role of the National Intelligence Council in providing unique national-level analysis and overseeing analysis and production throughout the intelligence community; separate the directorate of intelligence from the CIA and subordinate it to the DCI through the NIC; require the DCI to conduct a structural review of the intelligence community every five years; restructure the CIA by giving it two major components -- the National Clandestine Service and a component for handling overt human intelligence; designate the director of this restructured organization as the national manager for HUMINT.

In 1998, the Jeremiah report focused on the intelligence community's performance relating to India's testing of nuclear weapons. The report's author, Admiral David Jeremiah, noted publicly that the findings included, quote, "failures in imagination and personnel, flaws in information-gathering and analysis, and faulty leadership and training."

In 2000, the National Commission on Terrorism, led by Ambassador Paul Bremer, found that, among other things, the FBI, which is responsible for investigating terrorism within the United States, suffered from bureaucratic and cultural obstacles to obtaining terrorism information.

The Department of Justice applied the statute governing electronic surveillance and physical searches of international terrorists in a cumbersome and overly cautious manner.

The risk of personal liability arising from actions taken in an official capacity discouraged law enforcement and intelligence personnel from taking bold actions to combat terrorism.

The U.S. intelligence and law enforcement communities lack the ability to prioritize, translate and understand, in a timely fashion, all of the information to which they have access. And the law enforcement community was neither fully exploiting the growing amount of information it collected during the course of terrorism investigations nor distributing that information effectively to analysts and policymakers.ong that commission's key recommendations were the following: The attorney general should ensure that the FBI is exercising fully its authority for investigating suspected terrorist groups or individuals, including authority for electronic surveillance. Funding for counterterrorism efforts by CIA, NSA and FBI must be given higher priority. And the FBI should establish a cadre of reports officers to distill and disseminate terrorism-related information once it is collected.

Earlier this week, former Virginia Governor James Gilmore testified in great detail about the work of the Advisory Panel to Assess Domestic Response Capabilities to Terrorism Involving Weapons of Mass Destruction. Chaired by Governor Gilmore, the panel made a number of recommendations in 2001, including: Increase and accelerate the sharing of terrorism-related intelligence and threat assessments with state and local governments; ensure that all border agencies are partners in intelligence collection, analysis and dissemination , and increase and accelerate the sharing of terrorism-related intelligence and threat assessments among federal agencies.

Finally, in July of this year, the Subcommittee on Terrorism and Homeland Security of the House Permanent Select Committee on Intelligence, led by two members of this joint inquiry, Representatives Saxby Chambliss and Jane Harman, published the results of its year-long review. Among other things, the subcommittee recommended that steps should be taken to ensure human collection remains a central core competency, improve watch-listing and language capabilities, ensure that consumers receive the most reliable reporting, and that sufficient analysis is applied, and share information more completely.

In sum, those are but a few of the many, many findings and recommendations that have resulted from many months of study and focused deliberation on the performance of the intelligence community. While there has been a plethora of recommendations for reform over the years, many of the most far-reaching proposals have not been acted on to any significant degree, particularly in the area of organization and structure. The tragedy of September 11th may at long last serve as the catalyst for action to implement meaningful and sustained reform within the intelligence community. We are hopeful that this joint inquiry will make a substantial and constructive contribution toward that end.

Thank you, Mr. Chairman. That concludes my statement this morning.

SEN. GRAHAM: Thank you very much, Ms. Hill. I would now like to introduce the members of our panel.

Mr. Lee Hamilton served in the House of Representatives for 17 terms, from 1965 through 1998. During the course of his outstanding service, he chaired, among other committees, the House Permanent Select Committee on Intelligence, the House Iran-Contra Committee, and the House Foreign Affairs Committee. He is currently director of the Woodrow Wilson International Center for Scholars.

Judge William Webster, after service on the federal district and appellate benches, was the director of the Federal Bureau of Investigation from 1978 to 1987, and the director of the Central Intelligence Agency from 1987 until 1991. He recently chaired a Justice Department commission that examined FBI security programs in light of the espionage of Special Agent Robert Hanssen. Judge Webster now serves as a member of the president's Homeland Security Advisory Board.

General William Odom served as director of the National Security Agency from 1985 to 1988. Prior to his tenure at the NSA, he served on the staff of the National Security Council during President Carter's administration, and then as assistant chief of staff for intelligence in the Army. General Odom is currently director of national security studies at the Hudson Institute.

Frederick Hitz has served as a CIA operations officers and as director of legislative affairs at the CIA and the Department of Energy. In 1990, he was appointed as the first statutory inspector general of the Central Intelligence Agency, a position in which he served until 1998. He is currently a lecturer of public and international affairs at the Woodrow Wilson School at Princeton University.

To each of our distinguished panelists, I would like to extend our warm welcome and appreciation for your participation in this important endeavor as well as a lifetime of service to America.

Each of our committees has adopted a supplemental rule for this joint inquiry, that all witnesses will be sworn. I ask our witnesses if they would please rise at this time.

Please raise your right hand. Do you solemnly swear that the testimony that you will give before these committees will be the truth, the whole truth and nothing but the truth, so help you God?

ALL: I do.

SEN. GRAHAM: Thank you. The prepared testimony of each witness will be placed in the record of these proceedings. I will now call on the panelists in the order in which they were introduced. First, Congressman Hamilton.

MR. LEE HAMILTON: Good morning to all of you. Chairman Graham, Chairman Goss, Ranking Member Shelby and the other members of the Joint Committee, thank you very much for giving me the opportunity to join you.

I begin with a word of commendation. I know these have been very difficult hearings for the joint committee. I want you to know that I believe, particularly in the last few weeks, you have illuminated the concerns of the nation about the events leading up to September 11th. I know you've already made a number of constructive improvements in the intelligence community. And I think you are and will point to further improvements that should be made. I'm a strong believer in congressional oversight. It's a unique responsibility of the Congress. you're the only independent oversight of the executive, and because intelligence is such an important function of government, the role of oversight is terribly important. Only the Congress can provide it effectively, and I think you have.

I will jump around in my statement. I begin with the obvious observation that good intelligence is essential to our national security. It's the most important single tool we have to prevent terrorism. Good intelligence does not guarantee good policy. Poor intelligence does guarantee bad policy. I'm impressed by the demands that are made upon the intelligence community. It just seems to me they're exploding. Our technology today permits us to collect such vast amounts of information, and of course, the challenge, as Eleanor Hill said a moment ago, in part is to take that information, to sift through it, coordinate the different agencies and get the right information to the right person at the right time.

Currently, I believe our intelligence capabilities are very good, but there is a lot of room for improvement. I believe that the people working on intelligence, and I've been a consumer of intelligence for over 30 years in the Congress, are highly talented and dedicated people. They are called to an extremely difficult, sometimes dangerous job, with the knowledge that good work will rarely receive outside recognition. As Senator Shelby said a moment ago, we've had some spectacular failures. We've also had some success. But I think all of us know that we've got a lot to do to improve the intelligence community.

I'm very much aware that too much effort or too little effort can be put into the reform process. Too much effort can lead to spending so much time rearranging the boxes that you lose sight of your mission. Too little reform can occur if key weaknesses are not addressed. From my point of view at least, I do not favor radical change in the intelligence community. But I do have several reforms that I will address, and I understand that a number of these reforms are already underway, and therefore my comments will be largely to reinforce some things that have been done.

The primary purpose of the intelligence community is to advance the national security. There are very many important topics for intelligence to explore --economic, environmental, health concerns -- but as we look at how to reform the intelligence community, it seems to me we have to focus on the national security. There is just an insatiable demand for intelligence among policy makers. When I first came to the Congress, we focused principally on the Soviet missile capability, maybe the Soviet submarine capability, and that was the intelligence. It's a little exaggerated, but not much. Today, we simply want to know everything.

The fact is the intelligence community cannot do everything at once and do it all well. Priorities have to be established. Greater attention has to be given to long-term strategic planning. The House committee said in one of its reports not long ago that the focus on current intelligence erodes intelligence on comprehensive strategic analysis. I agree with that comment. There simply have to be priorities established. I'm not sure we're very good at that, those of us who have been and those who are now consumers of intelligence.

And there has not been a clear set of priorities or allocation of resources within the intelligence community. I understand that the National Security Council has some responsibilities in this area, but the consumers of intelligence now have to make clear to the intelligence community what their priorities are with regard to intelligence. From my point of view, the most important priorities at the moment are combating terrorism and preventing the proliferation of weapons of mass destruction. But the responsibility is on the consumer of the intelligence, in both the legislative and the executive branch to set forward in some orderly manner the priorities. And I am not persuaded that that is done today, or at least not done well. Instead, we just seem to demand more and more intelligence on every conceivable topic, and that makes it very tough on the intelligence community.

With regard to the organization, I favor a -- more concentration of power in a single person. New intelligence priorities do demand a reorganization of the intelligence community. The very phrase "intelligence community" is intriguing. It demonstrates how decentralized and fragmented our intelligence capabilities are. We don't use that phrase anywhere else in the government today. The intelligence community is a very loose confederation. There is a redundancy of effort, an imbalance between collection and analysis, and problems, as we have repeatedly heard in recent weeks, of coordination and sharing.

We need a center in the government for all intelligence, foreign and domestic, to come together -- the so-called "fusion center" idea. Senator Shelby mentioned that a moment ago in his comments. There is currently, as I understand it, no place in the government where we put it all together from the domestic and foreign services. We need a single cabinet-level official who is fully in charge of the intelligence community -- a director of national intelligence or DNI. He must be in frequent and candid contact with the president, have his full confidence -- I suspect there would be very few appointments that a president would make that would be any more important. He should have control over much, if not all, or most of the intelligence budget. He should have the power to manage the intelligence community.

Currently, the director of central intelligence, the leading intelligence figure, as we all know does not control but a small portion of his budget. The DCI has, as I understand it, enhanced authority after 1997, but -- and that permits him to consolidate the national intelligence budget, to make some trade-offs, but given the overwhelming weight of the Defense Department in the process, that is of limited value.

The director of national intelligence should not be the DCI, the national security advisor or the secretary of defense. They have a natural bias towards their own agency. Secretary Rumsfeld, when he was secretary of defense first time around, made a comment -- I don't think I can quote it exactly but I have the essence of it -- he said, "if it's in my budget, I'm going to control it," and I can understand that. And that's part of the problem here in intelligence, because so much of the budget is not under the control of the top intelligence official.

So, you need a new management structure. I'm very much aware of the opposition to this approach. I'm also aware of the difficulty of enacting it. But, it's a new era, and we have to think anew. And if we were starting all over again from a blank sheet, I cannot imagine that we would create such a vast enterprise and have no one in charge, and that's what we have today. I can't think of an enterprise in America, public of private, that is so decentralized and has such little direct authority at the top.

We need more cooperation among our intelligence agencies. That's been stated repeatedly. I'll certainly not emphasize that. The principle agencies here, the FBI and the CIA, have to fundamentally alter the way they do things in order to work together more effectively. The two agencies will have to share information and work together to infiltrate, disrupt and to destroy terrorist cells. And they have to have improved technology. We need better computer networks to improve the flow of information within and between agencies. There needs to be a centralized database where individual names can be checked for relevant information.

If the shortcomings leading up to 9/11 were systemic in nature, as Ms. Hill testified a moment ago, the solution lies in better system management, the handling and analysis of vast amounts of information, and the distribution in a timely manner the key conclusions to the right people. I learned the other day that a lot of work now is being done by the intelligence community to check with the large private enterprises that handle vast amounts of data to see how they do it, and I suspect we've got an awful lot to learn from some of the giant enterprises in America about handling huge amounts of information.

We also have to develop a lot closer relationship with countries that can help us get critical information. We've learned that in the past few weeks. Countries as diverse as Pakistan and Germany, Yemen and Philippines, have provided the assistance to us, and so we have to strengthen those relationship. The al Qaeda operates in 80 countries or more around the world, and we don't have all the information ourselves.

We need to increase resources for the intelligence community. I think a lot of this has probably already been done and that you have increased those resources dramatically, perhaps, although that figure is not public, in the last few years.

I agree with the general observations about needing to hire more spies. Technology along will not make us more secure. I served on the intelligence committees when we increased hugely the amount of investment in technology. We thought we were doing the right thing at the time. I think we probably were, but we did not do enough for sure with regard to human intelligence.

I think it's important, however, in the present environment that we not have an exaggerated expectation of what HUMINT can achieve, especially in dealing with a terrorist cell. I do believe we have to make a greater effort in this area, but it calls for caution and discriminating judgments. Back in the '90s, as some of us will remember, the CIA agents were closely involved with drug smugglers and human rights violators and that led to, I think it was Director Deutch, putting out guidelines with respect to hiring some people. That's been heavily criticized and I think changed in recent days. But, when you come right down to it, when you begin to hire people of unsavory reputation, it takes caution and discriminating judgement, and I'm not sure any broad guidelines can state it all for you.

But HUMINT obviously is important. We need to expand the talent pool, qualified, language and professional training. I think that's underway. And that's not going to bring about quick progress either. It takes a long time to develop a large number of people fluent in any of these difficult languages around the world -- not easy for, at least native-born Americans, and to get them into the stream so that they're effective. That's not a quick solution. It's a very long- term one.

We need to make greater use of open-source information. On the Hart-Rudman Commission, we concluded about nine months before September 11th that Americans would die on American soil. Well, why did we conclude that? Because of terrorism. Why did we conclude that? We concluded it simply because we sensed as we traveled around the world that there was an awful lot of hostility towards Americans, a lot of resentment, a lot of anger towards us, and we began to understand that we really didn't understand very well a lot of the foreign cultures and religions. We think we're pretty nice people in this country. We can't understand why people don't like us. And we came to the conclusion that that anger had reached such a level that it would explode on us, on our soil, on some day. And, unfortunately, we turned out to be correct about that.

We have to make sure we're more cost effective in the use of resources. I said a moment ago we ought to have more resources, but merely spending does not necessarily fix anything. Many of the steps necessary for improving our intelligence capability are not expensive, and HUMINT, for example, is much less expensive than the technology that is used in intelligence gathering.

I think we have to be kind of hard-headed on cost-benefit analysis. I am not sure that we always have been in the intelligence community. There is here perhaps more than in any other area that you deal with a decided tendency to throw more dollars, and hurriedly, at the problems simply because of their urgency.

I was very pleased to see in your letter to me that you wanted a comment or two on the respect for the rule of law. Judge Webster is here. He has been one of the strongest advocates in the country for the rule of law in the FBI and in law enforcement, and I'll leave that largely to him, except to say that the United States intelligence agencies don't operate in a vacuum. They're part of a representative democracy. They function under the United States Constitution, and they have to work within a democratic system of checks and balances.

Concluding, let me just say that we need -- I believe we need a statutory foundation for the United States intelligence community. This extraordinary set of disparate laws and executive orders that we've produced over 55 years, none of them, I don't believe, give a comprehensive legal foundation for a massive intelligence establishment, and that is a remarkable state of affairs in a country that prides itself on taking the rule of law seriously. Now, this is exceedingly difficult to do. You're looking at a man here who tried it on three separate occasions and didn't get anywhere, so I know how difficult it is, but at least to me it still makes sense.

We need to increase public understanding of the intelligence community. I am now working in an environment with a lot of academics, and I am just amazed at the cynicism about the intelligence community that I find in the intelligence -- in the academic community. These are the people that are teaching our sons and daughters and grandchildren. It's not in our interest to let this cynicism grow. It's a tough problem. These are secret agencies. But they operate in a democratic society, and as much information as possible -- possible has to be made public about the process. And if we don't begin to educate the American people more on the intelligence community, the importance of the intelligence, the difficulties they confront, the obstacles they have, we're going to pay for that down the road.

And, let me put a word in about politics. I'm the only politician at this table, so I have some freedom to make a comment on it, I think -- a few politicians in front of me, of course.

I think we have to be careful to ensure that intelligence is not mixed with politics. Policy-makers should not use intelligence as a tool to make policy look good. They should use intelligence as tool of good policy. It's a very hard distinction to make, but it's a terribly important one. Because this community relies so much on secrecy, intelligence fits awkwardly into an open society, but it is essential to our national security. Secrets must be kept. The burden is on you, the burden is on the president, to ensure to the maximum extent possible that our intelligence community is held to standards of accountability and transparency as much as possible in a representative democracy.

Thank you. Thank you, Mr. Chairman.

SEN. GRAHAM: Mr. Congressman, thank you very much. Judge Webster.

MR. WILLIAM WEBSTER: Thank you, Mr. Chairman. It's an honor for me to be here, and that you are -- may be interested in some of my views. The shortness of time when I was invited to come and my travel schedule precluded me from preparing a formal statement, but if you would give me just a few minutes, I might make some informal comments and then be able to respond to whatever you might want to say.

SEN. GRAHAM: Thank you, Judge.

MR. WEBSTER: The -- much of what Congressman Hamilton said I find myself in total agreement with, and I will try not to repeat that. The genius of our Constitution, of our founding fathers, is in checks and balances, and over time we've been called upon to address special needs, special circumstances, but be true to our principles, including the rule of law.

In my time, when I first came here in 1978, 24 years ago, the first thing that Vice President Mondale did was to hand me a copy of the Church and Pike Committee reports with a suggestion that I read them, which I did. At that time, the pendulum had swung over in the interest of "leave us alone." Today, we have a different set of circumstances in which people are saying "do something about it," and that your task, along with that of the president and the judiciary -- of course, I don't need to preach to the choir -- is to strike that balance true, to deal with these threats as they occur, to be relevant to the particular kinds of sets we're doing, but to preserve our values and our institutions, by means for which we will not have to change and upset the apple cart. I used to say, "Let's try to keep this pendulum as close to the center as we can, because then we'll always have to go back and change when mood of the country changes."

General Vernon Walters, who had a distinguished career, was deputy director of central intelligence, and our representative to the United Nations, and ambassador to Germany, and trusted colleague of General Eisenhower, used to say that the American people had an ambivalent approach to intelligence. When they felt threatened, they wanted a whole lot of it, and when they didn't feel threatened, it was maybe a little immoral. And I used to couple that with some comments about security from my perspective at the FBI. I said, "Security in this country always seems to be too much, until the day it's not enough." And this is the challenge that these great agencies which report to you for oversight have to deal with -- having enough security, but not too much, and having enough intelligence, but not intruding on the rights and privacy interests of our citizens. And that's a big challenge.

And I think nowhere in my memory in over all those years of thinking back to how we dealt with it is -- has there been so much impact on a problem as the issue of terrorism as it now exists in our country. In 1980, I made terrorism one of the four top priorities of the FBI. Previously there had been foreign counterintelligence, white-collar crime and organized crime. We were experiencing about 100 terrorist incidents a year, not of the size and scope of 9/11, of course, but they were killing people, they were threatening people, and they were putting people in fear.

We determined to improve our intelligence capability in order to get there before the bomb went off. And as I look back on it, I think we did a pretty good job for the nature of the challenge as it existed at that time. There were less than a handful of terrorist incidents in the year I moved from FBI to CIA in 1987. And the following year, I believe, there were no terrorist incidents.

There were no truly international terrorist events taking place on our shores. And that is where I think there is a significant difference that intelligence and law enforcement have to address. We had certainly -- the largest terrorists when I started were from Armenians attacking Turks in this country and from Serbs and Croatians warring with each other and Irish Republicans and so forth.

We addressed those and they disappeared from our scene. But they were not truly international terrorists as we now define them. They were people who had ties with the homelands from which they'd come or from which their parents had come. They were fighting old wars. But they were not getting their instructions and their marching orders from overseas.

This is a new experience for us, although, as I believe that Senator Shelby pointed out, the 1993 Trade Center was a wakeup call to do something about it. But it calls for new sets of relationships between CIA, which has been functioning largely abroad, until more recently the FBI's participation and expanded legal attache relationships, and the law enforcement responsibilities of dealing with the threat here; and now, of course, the whole concept of a new Department of Homeland Security, which will have to be dealt with in a way that advances and utilizes and magnifies the capabilities of intelligence that we have.

What I'd like to suggest -- first of all, I do want to comment on the fact that President Truman, in selecting and asking for a Central Intelligence Agency, did want an agency that did not have an agenda, did not have a Defense perspective, did not have a State Department perspective, but would try to call it as they saw it to be, to provide useful and timely intelligence so that the policymakers, not the CIA, could make wise decisions in the interest of our country.

Now we're confronting what to do about terrorism. The one thought I'd like to lay on the table, and yield to the next participant and answer questions down the road, is this: More than any other kind of threat that I can recall -- and I went through the Cold War and the Gulf War and the invasion of Panama and a whole host of challenges during the time I was here -- more than any other kind of threat, there is an interrelationship between law enforcement and intelligence in dealing with the problem of terrorism.

At the time I started out, Interpol, the one great international organization for effective law enforcement and cooperation on an international basis, refused to authorize assistance on matters relating to terrorism because it was deemed to be an Article 3 type offense, which is, "We don't deal with political matters."

We worked very hard. I went to Milan. I went to Luxembourg. We dealt with the United Nations, with Interpol, and finally were able to persuade them that when you take on and injure and kill innocent victims away from the scene of the controversy, under circumstances that would be criminal in almost any other context, this was criminal, and therefore Interpol ought to cooperate and the United Nations ought to cooperate. And we moved that ball way down the road.

But I think it's important to understand it is not just criminal. It is also a matter of very good intelligence. And so it isn't enough, in my mind, to say we need more analysts to deal with your problem. In looking at these situations, we need both investigative capability and intelligence collection capability, as well as those who go through the bits and pieces and fill in the dots.

And I hope that this committee will not come up with a recommendation that tilts in one direction or the other. And you can probably anticipate I do have some views on the fact that the CIA and the FBI are now somewhat liberated from the rules that said "Stay away from each other" that came out of the days of the Church and Pike Committee report, and that they now have a responsibility to work together and share together and not feel they're doing something that's illegal or prohibited, but also to recognize that while we talk about intelligence, investigation develops intelligence and they have to work together.

Both are important to dealing with the problem we now confront. And I hope also that in the rush to judgment, we will remember who we are and that the methods we choose, both for intelligence and for law enforcement, will be consistent with who we are in this country.

Thank you very much.

SEN. GRAHAM: Thank you, Judge Webster. General Odom.

GEN. ODOM: Thank you, Mr. Chairman. Good morning -- or I guess it's close to noon -- members of the committee. It's an honor to appear before you today. You've asked me to share my views on the roles and responsibilities of the director of Central Intelligence, secretary of Defense, the FBI, in dealing with terrorism and a number of other very large topics.

I've submitted, as Eleanor Hill mentioned this morning, for your record a study I did, which is my comprehensive answer to that. The analysis and recommendations it puts forward, in my judgment, are even more compelling in light of the September 11th events of last year.

This morning I want to submit a very short statement for the record, and I will truncate it a little bit in my comments to the committee.

Looking at this very complex set of structural issues, it's very difficult to be clear in a way that you're not implicitly introducing a lot of conflicts. But let me try to simplify in a way that I don't think -- that I think removes the conflicts, because I've looked down much lower into the details here.

And I would prioritize and articulate for you three overarching structural issues. The first concerns the orchestration of the intelligence processes; some of the things Lee Hamilton mentioned here about the analytic side, not the collection side but the analysis.

The second concerns management of resources, getting more intelligence for the dollar.

The third concerns counterintelligence, which is key for dealing with terrorism as well as hostile intelligence services.

Changing technology has produced a general trend in the intelligence community over the last 30, 40 years, but it has been blocked and delayed in some parts of the community by bureaucratic turf concerns. Each of the three collection disciplines -- signals intelligence, imagery intelligence and human intelligence, particularly clandestine -- are very different disciplines. I mean, they're as different as ballet dancing, opera singing and orchestra work, and they have to be treated and handled in light of their very specific requirements.

Each, therefore, I think, needs a national manager to orchestrate the collection activities. Modern technology allows you to do that on a global scale in a way it was not possible in the 1960s. You can do things around the globe that just are not conceivable to most people if you're comparing it to the way we did it 30 years ago.

The trend here is most advanced toward a national manager system in the signals intelligence area, not because of any particular talent but because communications are their business and therefore it's somewhat to be expected.

The director of NSA comes as close to having the authority and the means to manage and orchestrate signals intelligence of anyone in the community. Imagery -- for imagery intelligence, the director of the National Imaging and Mapping Agency is the proper candidate for that job, but his agency is fairly new. His authorities and means have not yet been made adequate. Turf fights prevent the trend coming toward fruition in the imagery area.

In clandestine human intelligence activity, the CIA's director of operations has long had the authority, it seems to me, in place to be a national manager if it really wanted to, but it never has shown much interest. It does its own thing by itself and has been more competitive with the Defense Department in clandestine efforts than sponsoring them the way the NSA deals cooperatively with the service cryptologic elements in the SIGINT world.

As long, I think, as the DCI is double-hatted as both the director of Central Intelligence and the director of CIA, it's difficult if not impossible for him to stand above the community and to carry through the creation of the fully empowered national managers for all three of these (collection dishes ?)

Now, turning to the second issue, getting more intelligence for the dollar, the DCI is the program manager for all these budgets. And there's a lot of power in that. I'm not sure that you have to write a new statute here. I think the DCI can exercise a lot more authority than I've ever seen any of them do. But he's blocked, to some degree, by a very powerful set of legacies, dating back to 1947 and the creation of the CIA, which does not want to see this authority used effectively in the sense that I have described it.

Since he lacks national managers in each of these different areas, and also for counterintelligence, which I'll turn to later, he doesn't have anybody who can rigorously relate inputs to outputs in each of these areas. His executive management organ, which I believe today is called the Intelligence Executive Committee, includes most of these senior managers.

But when that body meets, there's not a single person in that room who can say, "I have the program management," not necessarily budget execution, which is quite different, but program management authority from top to bottom in this discipline.

And, therefore, he cannot use a system of planning program budgeting system which was introduced in the Defense Department in the 1960s and has been there ever since, which takes (line-item ?) budgets -- belt buckles, rifles, ships -- separates them out, puts them behind missions, so that you can have some view of what the connection is between dollar inputs and intelligence collection outputs.

I think if there were three collection managers with full program authority, then they could be directed, and I think compelled to present a budget to the DCI which shows the effects of various cuts in these disciplines. I'm leaving aside how you do this for analysis, but it's more or less the same.

The biggest stumbling block to achieving this kind of manager system is the National Reconnaissance Office. As a procurement organization, not an intelligence organization, it spends a large amount of money allocated for signals intelligence and for imagery intelligence, thus preventing the directors of the National Security Agency and the National Imagery and Mapping Agency from being able to trade off NRO projects against other projects in each of those disciplines, which they are only in the position to know what the tradeoff would be, because they've got an information base the NRO doesn't.

And as long as this is the case, we will still have quite good intelligence, but there will be a considerable waste in input resources. In other words, if you want to improve the efficiency here -- I've looked at this thing for a long time -- that is the single thing that would make it possible to make gains. It won't ensure it.

Finally, the third issue is counterintelligence. I think it's in the worst shape of all. Five organizations run counterintelligence operations in the government, with no overall orchestra -- conductor of the operations: The FBI, the CIA, and the three military departments.

The parochialism, fragmentation and incompetence in all are difficult to exaggerate. This has become publicly clear, I think, to anyone following the reporting on the FBI and the CIA over the past several months. It is not new. It has long been the case, right back to World War II and through the Cold War, when the NKVD ran over us like an NFL football team over a Division III football team, in the 1940s, the 1950s, the 1960s, the 1970s, the 1980s, right on down the line.

The combination and fragmentation leaves openings between the organizations which hostile intelligence operatives exploit. And also the lack of counterintelligence skills ensures a dismal performance. And terrorists are very much like spies. They come through the openings.

The skills problems that are most troubling to me here derive from mixing law enforcement and counterintelligence. Spies will always beat cops. They are a different animal. It is like -- asking the cops to do the counterintelligence business is like sort of switching the personnel on the New York Yankees with the New York Giants and let the football players play baseball and the baseball players play football.

They both have their competence. I don't mean to degrade any. These are just not very compatible talents. And as long as they are merged together, we will not have significant improvement of this area.

Therefore, I think the first step, if you really want to create this capability, is to create a counterintelligence organization which comes largely out of the FBI, leaves it doing its law enforcement business in the fullest sense it always has -- I'd call it a National Counterintelligence Service, and I would put it under the DCI, but I would give it operational or oversight into the counterintelligence efforts of the CIA, the Army, Navy and Air Force.

And then it would be in a position to be held responsible for a comprehensive counterintelligence picture. There is no place you can get a comprehensive intelligence picture. And you will not get one by fusion center analysts. You will have to be able -- you'll have to run both decentralized activities with oversight and then selective bringing back for centralization. So centralization alone is not the solution here.

Now, the proposal has sometimes of late been called the MI-5 model or solution. What I'm proposing is somewhat different. First, an NCIS, as I see it, would have oversight, as I said, over CIA and the military services, which I don't think MI-5 does over MI-6 and the defense ministry in Britain.

Second, I would not give it arrest authority. It doesn't need arrest authority. Counterintelligence is not security and it's not law enforcement. Counterintelligence is intelligence about the enemy's intelligence. It's an operations activity to use that intelligence.

The FBI might be the agency to use it to go make the arrests and provide the evidence for prosecutions, but the business of locating spies, finding out what they're doing, understanding patentable collection, terrorist infiltrations, et cetera, can be primarily an intelligence operation.

Then the task, if you -- I can see that after that was put together, then the DCI would have the responsibility to make sure it provides this kind of counterintelligence information to the agencies that need it -- Homeland Security, the Defense Department, the president, the State Department and others.

Now, let me sum up briefly. I see three major reform directions. First, separate the DCI from the CIA, and at the same time create three national managers, which will mean you will have to do something, if they're going to have program authority, about the NRO.

Second, require the DCI, with its new arrangement, to implement a planning program budgeting system for handling the dollars. As I say, you won't get very far on that as long as NRO is funded the way it is. You can keep the NRO; just don't let it come to Congress for its money. Have it go to the NIMA and the NSA and say, "Do you need this satellite?" And if you want to buy it, they'll buy it. If they don't, they don't. And they have to deliver the intelligence. And they get the phone calls if there's an intelligence failure. The head of the NRO does not get these phone calls.

Third, create a National Counterintelligence Service, as I've suggested, under the DCI. I could say more about -- I worry about its potential to violate civil liberties and rights, but I think that can be managed by more oversight from the FISA courts as well as from the Congress.

That ends my remarks, and I'll be prepared to fill in the details in the question period. Thank you.

SEN. GRAHAM: Before calling on Mr. Hitz, Chairman Goss has an announcement for his members.

REP. GOSS: I'm advised that we have a 15-minute vote right now, to be followed by a five-minute rule vote. And members need to get themselves recorded and get back as quickly as possible so we can deal with the time constraints we've got, because additionally we're advised that those going to Hawaii this afternoon, the plane will be leaving earlier than anticipated for the funeral of Ms. Mink, for anybody who's doing that. So I wanted to let you know we're going to be working through till 1:00, I understand.

SEN. GRAHAM: That's correct.

REP. GOSS: Till 1:00, and we want to take advantage of the time. Thank you.

SEN. GRAHAM: Thank you, Mr. Chairman. Mr. Hitz.

MR. HITZ: Thank you, Mr. Chairman. And it's a pleasure to be back here to see so many familiar faces on the dais and behind the dais.

In the interest of time, I'm going to, as my predecessors have done, skip around in the prepared statement that I have submitted for the record. I sought in my statement to make three disparate but connected points.

First, I wanted to deal, and Judge Webster talked a little bit about it, the increasing overlap in missions between CIA and FBI. Secondly, I wanted to talk a little bit about the way in the statutory authority underlying the charter of the intelligence agencies needs to be changed to reflect the new reality, in my view, of involvement in terrorist operations that extend into the United States. And thirdly, I just wanted, sort of our of the realm of all of the discussion of structural changes, to just give you a feel for how public service is looked at in the educational institutions with which I'm involved, because I think we all recognize that there are lots of things that we have to do at the current time, but in the long-term it's going to -- the appeal of government service to our best and brightest citizens that will help us solve these problems.

First, as you know, and I have personal experience with this, as does, I think, Chairman Goss, the notion that intelligence work meant secret, overseas, and designed for the edification of policy-maker exclusively no longer obtains. In -- on the contrary, in counter- terrorism operations, CIA increasingly has to be held to the evidentiary standard of the courtroom in terms of the quality of its reporting, because in the courtroom a number of its findings may well be tested.

Conversely, the FBI, ones that used to think of as almost exclusively involved in domestic law enforcement activity. And now, in the effort to combat terrorism, we are asking the bureau to act before the perpetration of a terrorist act rather than merely try to piece together what happened and who did it after the fact. In that sense, law enforcement is being challenged to meet the intelligence needs of policy makers to figure out in advance of an event what needs to be done, as well as the prosecutors and the courts, to whom they have always been bound, and over the broad range of challenges that a war on terrorism entails, rather than on a case-oriented basis, which has been their method before.

This is a tall order of change for CIA and FBI, and in many ways represents the reworking of a lifetime of habits, which will not happen overnight. Little wonder there has been so much talk of connecting the dots. Considering the traditional core mission of the agency and the FBI, there have heretofore been strong reasons in both agencies never to connect the dots between them. Grand jury secrecy and prosecutorial fiat limited what FBI agents could say to others about current cases, and need-to-know and the principle of compartmentation inhibited the intelligence agencies as well.

In addition, the National Security Act of 1947 specifically prohibited, and as Judge Webster said, Harry Truman wanted -- President Truman wanted some centralization of the intelligence information that was presented to him, but the history books show that he most clearly did not want to create another Gestapo, as he put it. And so, in the '47 act, CIA was specifically prohibited from exercising domestic law enforcement powers.

And here is something to which I could speak -- can speak from personal witnesses. FBI and CIA, up until the last several years, have a 55-year history of intensive rivalry and suspicion to overcome. FBI Director J. Edgar Hoover sought to strangle the fledgling CIA in its crib in 1947, sought to keep its authority to retain overseas deployment in Latin America, and to tightly constrain CIA collection and counter-intelligence activities in the United States, even in the early days when there was a foreign nexus. As a junior clandestine services officer at CIA in the 1960s, I remember having to go through a single focal point at the FBI to obtain information. Mr. S.J. Pavich (sp) -- I will never forget the name, and will always wonder if there was ever such a creature. In those days, it was hard to think of establishing a day-to-day working operational relationship.

Well, those things have changed, of course. And I applaud the efforts of Director Tenet and Director Mueller to breakdown the cultural differences between the two organizations and to have CIA analysts serve on detail at the FBI and vice versa. But, it will take time.

My second point was that, and it's seems that we are -- we appear to be making some progress in this world -- the USA Patriot Act required attorney general guidelines, for example, to implement the grand jury testimony sharing that's to take place with intelligence officers. I gather those are out. I haven't had a chance to study them. Likewise, we're going through a process that eventually will sort out what will be the area of permitted operation of the FISA court.

But, I've argued in a -- in a academic journal last spring that I think this committee and other committees of the Congress will have to come to grips with the fact that the prohibition in the '47 act against CIA exercising domestic law enforcement powers is no longer applicable. It seems to me that with CIA, for example, sitting at the elbow of domestic law enforcement and supplying intelligence information and expertise relating to the foreign providence of terrorist planning and implementation -- which we want it to do, what it has to do, as Judge Webster said -- if we are to be successful in preventing future 9/11 attacks, this has got to be construed, or will be construed eventually in a court of law to be domestic law enforcement activity, which is specifically prohibited, as I say, currently under the 1947 act. So, I think you have to take a look at that.

Finally, let me take a moment to talk about what I encounter on the university campus. I was sorry to hear from my distinguished colleague Lee Hamilton that his contacts or his involvement with academics have uncovered a cynical vein in the atmosphere and in the attitudes of some academics in conveying their views on the intelligence community at the current time. I can't say I've run into that myself, but it's -- it's perhaps a different place.

I think you would be proud of the response to the events of 9/11 that have taken place on the university campuses where I have the privilege of teaching -- Princeton and the University of Virginia. I have students visiting me every day seeking help in getting their resumes to the intelligence community, law enforcement, and the armed services for summer jobs, internships and permanent employment. I'm currently supervising five undergraduate thesis on subjects relating to the war on terrorism, historical or prospective, and have had to turn down others. Indeed, one of my students is here today, I'm glad to say.

And, several of my students over the summer have begun the study of Arabic, continuing it during this academic year. Clearly, it's a response to the events of last year, and that's not an easy language to study, as you all know.

What concerns me is that traditional the United States government has been quite poor in capitalizing on this outburst of patriot enthusiasm. I read the statistics of government being overwhelmed by the growth in interest and number of applications for employment in the post-9/11 involvement -- event -- in the national security area, and I can sympathize with the difficulty of sort of sorting through these numbers. They're drinking from a fire hose. However, to me it is so important that we capitalize on the renewed interest in public service that this -- that I see among American students.

Every person on this committee is aware of the frightening statistic reflecting the eligibility for retirement of large numbers of current federal civil servants over the next five years with no identifiable replacement cadre in the wings. I think, and perhaps these are just hobby horses, but I've had some experience with thinking through some of them, Washington should respond to this quiet crisis in three dramatic ways to take advantage of this post-9/11 interest in federal service.

Radically increase the number of summer internships that are available for qualified students in the intelligence and law enforcement area. Now, these students obviously aren't going to be green as grass, able to help out in any material way with a lot of the problems that our current CIA and FBI officers are facing, but it is so important for them to get an idea of what this work is about. It's also important for government to be able to look over these fresh faces to see if they have what it takes to work in this area, and I think internships are a perfect answer to that.

The implications of federal pay I'm sure have been brought to your attention constantly. Federal pay has fallen way behind pay in the private sector for our best students. Now, that's not to say that our ablest students who are interested in government service are going to be absolutely deterred from coming in given that discrepancy, but frankly, recognize that with the rise in cost of university education and graduate school, it means that a good many have loans to pay off, and it is a discouraging factor.

And finally, on a more general point, and I think we're all about this now, over a considerable period of time, several decades, I think it has been customary for competitors for the highest office in the land to denigrate the federal service and denigrate the U.S. government in Washington. Frankly, this has had its impact on many of the students with which I am involved. It's made them skeptics, and it has caused them to shy away from the federal service. Let me give you an example.

Over a five-year period, I have looked at the statistics related to the jobs that graduates of Princeton's master's in public administration programs migrate to after they've finished their degree. This is a two-year degree, very intensive, quantitative analysis, and one which is extremely well-funded from the standpoint of students not having to pay much by way of tuition. This master's in public administration is utilizable in the best and most practical way by giving your (services to ?) government. We're down around 20 percent of that graduate class, a graduating class of 63, who elect to go to work for the federal government or state, local and municipal governments likewise. Does that mean that the rest are trucking off to Wall Street and the management consultancies? No. In many instances they are preferring NGOs, non-governmental organizations, and international work -- international consultancies to these jobs. So it isn't -- it isn't something that can be discussed entirely in the context of money.

And I hope we're going to turn that around in our country. I think, as I say, there has been quite a patriotic response to the events of 9/11, but all of us have to work on the business of making government service in these critical areas even more attractive.

SEN. GRAHAM: Thank you very much, Mr. Hitz. As we were planning for this hearing today, we gave this hearing the title of "The Wise Men," wishing to hear people who had decades of experience with the issues that we are confronting. Our definition of this panel was too modest, and I wish to thank you very much for the very significant contribution that you have made.

It has been our practice in our previous hearings to designate lead questioners who have prepared themselves to ask questions in areas of particular importance to the committee. After the lead questioners, we will then have five-minute questions from the individual members of the committee. The lead questioners, with 20- minutes each, are Senator Rockefeller, Representative Everett, Senator DeWine, and Representative Condit.

Senator?

SEN. SHELBY: Mr. Chairman.

SEN. GRAHAM: Yes, Senator Shelby.

SEN. SHELBY: We've been notified we have a vote on the Senate floor. Do you -- you are the chairman. You --

SEN. GRAHAM: I think -- what?

STAFF (?): It just started.

SEN. GRAHAM: Just started. If that's going to result in Senator Rockefeller having his 20 minutes interrupted, Senator, would you like to break now, vote, and then come back and you'll have your 20 minutes uninterrupted? We will recess for the Senate vote. Hopefully also our House colleagues will have completed their votes and you'll have a larger, more attentive audience when we return. So, the meeting is recessed at the call of the chair.

(Recess for vote.)

SEN. GRAHAM: The joint inquiry has reconvened. Our first designated questioner will be Representative Everett.

REP. TERRY EVERETT (R-AL): Thank you, Mr. Chairman. And thank you, panel, for being here. Great admiration for all of you.

You know, this is -- in reading over the material and studying this, this is something we've been trying to pen up for at least 10 years or more, and I don't think we've got that rabbit penned yet. How we do it is of course the big question.

Let me start with the DCI and ask each of you to respond to that. Do you believe the DCI position needs to be elevated and separate from the CIA? I know that somebody has already testified to that. But I tell you, let's start with, on the left, if you don't mind, and just go right down the line. General.

GEN. ODOM: I think he should be separated. I don't see it so much as an elevation as it is a separation. It may have the appearance of an elevation if he does that, but I think he becomes trapped -- the DCI becomes trapped if he's also directing and agency, and therefore he doesn't look at the community as a whole as much as he could. And I don't think things will improve much in the direction that I'm talking about until you make the separation. How much additional authority you give him, I think that's kind of -- that's a variable boundary. You might want to do more or less.

My own view is that as the authorities now stand, the DCI, if he moved out, and he has to take some organizational capability with him -- he can't just stand out there in an office and be a czar over in the White House. I would have an expanded national intelligence council, a rump part of the DI- and CIA as sort of a reinforcement for him, to focus in on problems such as terrorism that other people are not focusing on or neglected. And then you'll find out when he gets it going, other people will take it over and begin to do it sort of in a routine way. And that would give him -- and then his -- community management staff, he would have a pretty good organizational base, and he controls the programs of all these people. I'm not sure you can give him budget execution unless you in Congress rewrite the whole regulations for spending money in the various departments, because the Defense Department has expenditure rules. The Treasury Department has different ones. Other people have different ones. And, I don't -- it seems to me that's just an administrative hurdle you have to deal with. But it's not all that critical if the exercise of program management authority is vigorously exercised.

REP. EVERETT: But you would advocate keeping budgets separate? Budget authority?

GEN. ODOM: Well, I'd leave the budget -- I don't -- I don't know how you would change the budget execution -- that is, after the appropriation has gone out of here and been signed into the law by the president, you give the intelligence agencies authority to spend their money. NSA is in the Defense Department, it has to spend by Defense Department rules. And I don't see how -- I mean, maybe you could change that and put it under a central authority, I'm not really sure. But it strikes me that that's -- it works pretty smoothly anyway, that where the real problem comes is in the program bill side and the program presentation to the Hill, and what's hidden behind it, whether in the input-output relationships are clear there.

REP. EVERETT: Congressman Hamilton.

MR. HAMILTON: Congressman Everett, I go back for decades, really, and we've been talking about the DCI and the authority the DCI should have. And I think the general trend line has been that we want to increase the authority of the DCI. And I think in 1997 he was in fact given enhanced authority. I don't discount that, but I really don't think that's the solution either. I think the solution is to have one person, a director of national intelligence, who is over the entire intelligence community. That person should not be the DCI. He or she should be the defense secretary, or he or she should not be the national security advisor. But I really think it's necessary now, given the importance of intelligence, and for accountability purposes, that you have a person who is identified as being the top person in the government on intelligence to whom you can look, and you know he has the authority in terms of management, and budget, and responsibility, and accountability.

So, I see a director of national intelligence who would have control over much if not all of the intelligence budget. He would not be the DCI. He would not be the national security advisor. It would not be the secretary of defense. It's the only way you're going to get accountability into the system, it seems to me. We do it that way for everything else in government, why don't we do it in the intelligence community.

Now, what I've said has huge problems in terms of the practicalities of getting it put into place. I recognize that. But you asked me what I thought out to be done. That's what I think ought to be done.

REP. EVERETT: And I appreciate that. Mr. Webster.

MR. WEBSTER: This is one of the very few areas in which I find myself not entirely in agreement with Congressman Hamilton. I've been there. I've thought about the ability to function in a -- in both the detached DCI and a DCI that stays behind, and I'm not persuaded that that will create the kinds of synergetic improvements that you're looking for.

I would put more emphasis on finally addressing the lack of real authority that the DCI has over the intelligence community. He does not write the report cards on the agency heads. He does not even pick the agency heads. He has nominal authority over the budget, but I think it's really a matter of (nominalism ?). In my years there, we tried very hard and I got along pretty well with the agency heads, but we had to work at a consensus building approach, even down to having our monthly luncheons at different agencies so that people wouldn't be concerned about DCI -- rather CIA appropriating all of the work. But it had no real authority to make it happen. Occasionally I would issue something that looked nominally like an instruction, it was mostly hoping with a lot of groundwork behind it to hope that something would come of it.

If you're talking about a chairman of a think tank at the top rather than someone who can in effect give orders and have somebody do something about it, then I think it's another reason why I don't think that's the kind of leadership that's going to be required. So, the British have some models. I don't really feel they fit our situation here, with all our checks and balances.

I would strengthen the DCI. I would not have a head of the national intelligence unless that national intelligence was actually running something. But if he's off at the White House with no troops, it's difficult for me to see how it would be truly effective. I -- I would look for ways to strengthen the role of the DCI in ways in which he does lead. Now, maybe that's going to mean someday that you're going to separate the two functions, but I don't know what you're going to give him to be effective in a room in the White House. I think you're -- you may be duplicating what goes on in the National Security Council.

REP. EVERETT: Mr. Hitz?

MR. HITZ: Congressman Everett, I find myself on the side of Judge Webster on this one, and it's -- I'm too young to be cynical, but having seen a number of these reports, what we're talking about the 800-pound gorilla that the director of central intelligence has always had trouble wrestling to the ground, of course, is the secretary of defense, because it's his authorities, responsibility for the defense intelligence agencies. And I remember when the most recent report that had congressional participation that came in several years ago under Harold Brown was drafted after Les Aspin died, in the end of the day, Harold Brown, of course, a former secretary of defense, said that was just one nut they couldn't swallow. They -- they recognized the need for the secretary of defense to have command authority, to support the fighting men, and they weren't going to give that up.

So, maybe mine is just too much time spent observing how this has played out in years past. But I tend to agree with Judge Webster that if you call a director of national intelligence the overall head, and you give him some budget authority and no comprehensive operational responsibility -- and I wonder how you could give them operational responsibility to control all the entities that are trying to gather and analyze information in this fast intelligence world, I think you may be following the illusion of some kind of reform and not really getting the reality of it.

It seems to me that the secretary of defense and the defense agencies and the director of central -- this enhancement of the director's authorities that you last looked at in '97, giving him a kibitzing power over the selection of the director of NSA and more collaborative powers with the secretary of defense, it may seem not a very dramatic resolution, but it may be the realistic one.

REP. EVERETT: Well, this is interesting. We have different opinions there, and from people we respect very much.

Mr. Webster, you're in a unique position. You've been both the DCI and head of FBI, right? No? Yes. When you were DCI, did you find yourself in turf battles with the NSA and CIA, NRO and FBI?

MR. WEBSTER: Well, I tried to avoid that as much as possible.

REP. EVERETT: I understand. But did you find yourself in some turf battles?

MR. WEBSTER: I would not define it as turf battle. I would define it as people sort of going their own way and not necessarily keeping you informed. There were issues -- the one issue that was troubling to me was the correlation between the FBI and the CIA over counter-intelligence. I established a counter-intelligence center about 1988, after I went over to the DCI, and I filled it with seats from all of the principle agencies, including the FBI. But the FBI never assigned a permanent representative. I don't know what the concern was, that we were engaging in turf encroachment on their responsibilities. They had people who would come and attending meetings, but no (secundis ?). Later, after problems with -- with Aldrich Ames and other problems with respect to counter-intelligence, the problem was solved by placing an FBI agent in charge of the counter-intelligence center, and that seemed to make -- resolve all the turf differences. I just give that as an anecdotal approach to how you can deal with some of these things.

Defense is another issue because of the enormity, as Mr. Hitz pointed out, the enormity of their budget in relation to the total intelligence budget, and their special needs for isolated purpose, for their military purposes, and their reluctance to yield up any of that, much of in our old NSA, NIMA, a whole host of important intelligence agencies are under the Defense Department umbrella. And I would anticipate considerable resistance if any of the Scowcroft recommendations, for example, were seriously considered. It needs to be talked out. I don't think it's life and death, but I do -- I do think that the suggestions that have been made don't address that particular problem.

REP. EVERETT: Of course, we haven't seen that report yet.

MR. : (Inaudible.)

(Off mike cross talk.)

REP. EVERETT: Let me just mention -- and I have great admiration for your experience, and mine has not been near what yours has been. I've been here 10 years, and four years in investigation and oversight chairman on the VA, but I must tell you that the turf battles I've seen firsthand in this place have been tremendous. And I'm almost certain that we do have them within the -- in the community.

MR. WEBSTER: I'm sure that you do, but my experience over that whole period convinces me that it -- that it starts at the top, that the attitude of the leaders has a tremendous impact on the people who work in those organizations, starting with the problems between the DCI Dulles and J. Edgar Hoover and working their way through, if the people think it's not career-enhancing to work together, they won't work together.

We even had -- I even went to the extent with Admiral Turner when he was DCI of publicly playing tennis together so that they would know that we were -- we got along and we hoped they would get along. And then there have been other things -- I think that Director Tenet and Director Mueller have worked very hard during this crisis to demonstrate that -- that that's what they want, is cooperation and working together.

REP. EVERETT: I must agree with you that they have worked very hard in that direction.

General Odom, you wore the suit. But you were also the director of NSA. Did you -- tell me about your relationship at NSA with the secretary of Defense, and not a long thing. Was it a good relationship, or -- also, who'd you feel that your boss was?

GEN. ODOM: I had a very good relationship with Cap Weinberger. Any time I wanted to see him, I could go in to see him. I always felt that I could do the same thing with Bill Casey and Bill Webster, who were the directors of Central Intelligence at the time.

I just followed what were the legal definitions of the position. The DCI has two kinds of controls over me. He could really dictate a lot about my budget. As I tried to make clear in my testimony, I don't think any DCI has been served very well by staff. Because of the way it's organized, he can't see how to effectively use that power as much as he could be if he had a program budgeting approach. He'd have a lot more leverage if he had that. And that's something to be done within the community.

The second point is, I depended on the DCI and what was produced from his staff as my collection guidance. I didn't decide to collect signals in South America because I particularly liked South America. You get it because the DCI has sent the national signals intelligence list out to you each year telling you where to put your money and where you wanted the intelligence to come from.

So I looked at Weinberger as my commander, but I looked at the DCI as my operational control. Now, in the military we have that. We have unified commanders in Europe and East Asia and other places. General Franks, for example, at CENTCOM, he doesn't command those forces in the sense of a solid line. He can't --

REP. EVERETT: Let me interrupt you just a moment. What part does the budget play in operational command?

GEN. ODOM: It doesn't play. You've got two things going on. I tried to make the point in my testimony that there's an operational management issue and there's a resource management issue. They're different worlds. In the Defense Department, the services do resource management; the CINCs do the operations. And you have that integrated, mixed up, not very well-clarified within the intelligence community.

REP. EVERETT: And you wouldn't subscribe to the idea that whoever controls the budget controls the operational?

GEN. ODOM: He who controls the -- yeah, sure. I would agree with that in principle, yeah. That's my point about -- the DCI, I think, now, if he wants to, can have a big impact. He did in my day have a pretty big impact on what my budget was.

REP. EVERETT: Eighty-five percent of the budget's over in Defense.

GEN. ODOM: Right. But how the programs -- they fenced that budget. And then my budget was scrubbed by the community staff. They would go through that in great detail. There were particular cases where I saw very big signals intelligence programs in the NRO that we really didn't need. I couldn't take that money and move it. Instead I just had to live with it.

REP. EVERETT: Mr. Hamilton, would you talk about budget authority and how you see it and where it ought to be?

MR. HAMILTON: If you don't have a budget, you can't get anything done. The person who controls the budget controls the operation. And if you don't have budget authority, you are dramatically undercut in your ability to manage the operation. That's why the bureaucrats fight so hard over budget. Budget is power.

REP. EVERETT: And you would put that budget control under DCI? Or did I misunderstand you?

MR. HAMILTON: I would -- I would put it under a director of national intelligence. And that person would have real budget authority and real personnel authority. I wouldn't put it in the White House, as Judge Webster is suggesting. I think you've got to give him real authority.

Now, the criticism made of my position is that it's unrealistic; you just can't get it done. That may be valid. That may be valid. But I wasn't approaching it that way. I was trying to think, through my testimony, how I would structure this in the best of all worlds, if you would.

REP. EVERETT: And that's the way you would do it.

MR. HAMILTON: I am impressed by the fact that after September 11th, you have an altogether different national security environment and that an institution like the FBI, which has previously been focused on law enforcement, has now been told that its number one responsibility, its number one priority, is prevention. That means intelligence, because that's how you prevent.

We're in a new world, and we have to begin to think of ways to structure this. I have heard the argument about strengthening the DCI for 35 years. "Let's strengthen the DCI. Let's give him a little more authority." And I don't -- I'm not against that; I think it's been helpful. It's a move in the right direction. But I don't think it gets us into the new era we're in.

REP. EVERETT: Then you would let the DCI control the CIA.

MR. HAMILTON: The DCI would -- yes, he would control the CIA. I don't think it's a good idea to -- I think General Odom used the phrase "double-hat" in his testimony earlier; head of Central Intelligence, head of all the intelligence. I don't think that works very well.

REP. EVERETT: Thank you, gentleman. I did not know -- I apologize; the red light is on. We've spent an awful lot of time on this. As you said, it's been going on for a number of years. But unless we find out how to head this thing up, I don't know how we'll accomplish anything along the road. Thank you very much. Thank you, Mr. Chairman.

SEN. GRAHAM: Thank you very much, Congressman Everett. Senator Rockefeller.

SEN. JAY ROCKEFELLER (D-WV): Thank you, Mr. Chairman. I pray that out of these public hearings is going to come, yes, some more public understanding of what is and is not happening in the world of intelligence.

But, more importantly, I hope that because we are public, that the intelligence community is listening very closely, because there have been some things uncovered here which have not been a part of the public domain. And we have -- the whole question of the 85 percent controlled by the secretary of Defense and 15 percent by the Central Intelligence Agency director is not known. Huge problems lie in that.

What I fear and what I hope our chairman and our membership will not allow to happen is that this becomes another study without a report. We have very good reports, but there may be no action. I share your frustration.

Mr. Hamilton, I want to start with a "towards-us" question for you. When you're talking about reform in intelligence, you're also talking about decent, good oversight. And we do that, but we do it on a very short time line, because, unlike any other committee of the United States Congress in the House and the Senate, we are constrained by the number of years that we can be on this committee.

I know a lot about health care. It took me 12 years to learn it. This is much, much, much, much more complicated. After eight years, I'm off. Chairman Graham, who is a superb chairman, has to leave, because the majority leaders have a rule; (the minority and?) majority have a rule that you can only do eight years and then you're off.

So you can't build up the expertise, I mean refined expertise. You can develop knowledge but you can't get the refined expertise that you need, the nuances, the countries that you've been to, digesting, ingesting, thinking through, rejecting bad concepts that appeared to you when you first kind of encountered them, and then you discovered they weren't as good because of other things. It's mature learning.

The reason they have that, I think, is because of power. So many people want on these committees. I don't know; I have no basis for saying that, but that's my judgment. And I think it's really damaging to the oversight, because I think it encourages "gotcha." It encourages, when people don't have adequate information or they don't have refined, matured, you know, like good wine, information, what they do is they retreat to attack, because it's always easier to find something wrong with the other people than it is to figure out what should we do.

Eleanor Hill listed all these commissions. You say for 35 years you've been waiting. Well, there's a reason for that, I think, and part of the reason is that we are limited in our oversight, and therefore not sufficiently confident in our oversight and don't have sufficient time for our oversight. And because of this what I call ridiculous eight-year rule, I would like your judgment, as a former chairman, on that matter.

MR. HAMILTON: Well, I think you've stated it better than I can. I would remove the limits. I think it's six years in the House.

SEN. ROCKEFELLER: I think it's now eight years.

MR. HAMILTON: Eight years, is it? I'm out of date. So it's eight years. When the Intelligence Committee was originally put together in the House, the idea was to put on it very, very senior members who were inside players who would not speak to the press. Chairman Bowlen (sp) was chairman of the Intelligence Committee for a long time in the House. I don't recall exactly, but I don't think I ever recall an interview he gave to the press. And you did not want to have a big turnover.

But because of the pressure -- you said it's the most popular committee. Congresswoman Pelosi is here; she's part of the leadership. I know she would say, or at least I think she would say, that it's probably the most popular committee in the House, or among the most popular committees. So there's enormous pressure to get on the committee. And the six-year limit becomes a political judgment, in a sense.

From the standpoint of effective oversight, I agree with your comments. You'd be better off to have people who get intimately acquainted with a very complex subject matter. I think I was on the Intelligence Committee at least two years, and maybe three, before I understood the terminology. The field that General Odom worked in is enormously technical. And a fellow who comes out of Indiana and didn't know anything about those things had a hard time.

So I'd take the limits off. I know that creates problems for the leadership. But in terms of effective oversight, it's the best thing to do.

SEN. ROCKEFELLER: I thank you. I won't ask others for their opinion. If we invade Iraq, it would not be impossible that there would be retaliation. And if that's the case -- and retaliation in the homeland -- then you have the question of how ready are we, and what about all those sleeper cells, and what about the ones that will exponentially grow because of what will then follow? And who knows what follows upon what follows?

That brings up the question which I think was discussed to some degree when I was coming back, and that is, if you've got this, Judge Webster, you say this refined sensibility about let's keep America the way America is, and I agree with that, but you have a situation where right now you have about -- I think it's 11 FBI people working in counterterrorism at the FBI, at the CIA, and about 25, including 19 analysts from the CIA, working at the FBI. It's not what I would call sort of covering the country.

Now, nobody wants to put the CIA intelligence in terms of the intelligence-gathering in this country. I'm not sure I agree with that, but that's the deal. That's -- it'd be very hard to do around here. So we talk about, "Well, we've got to get some alternative organizations, some alternative way of doing it, or we get a cabinet secretary or we get somebody who's in charge of the whole thing."

But in practical terms, as you said, Judge Webster, this whole deal has so changed, and we are -- this next 20 or 30 years is going to be so dangerous that we have to think in very, very different terms. And just as, you know, people don't like the strip search when they go through the airports but they get onto an airplane and they're safe, they adjust. If they want to travel, they do what's necessary. As you said, there's not enough security until you need it; then you can't get too much.

So to each of you, I would like to ask a question which may have been asked before. What do we do about that? And I'm going to predicate that with the inspector general of the FBI came out recently here, and he said that, with regard to the FBI -- the Department of Justice inspector general released this -- that in spite of 9/11, as well as a commitment made three years prior to that -- I'm looking at the FBI now -- the FBI has yet to perform a comprehensive written assessment of the risk of the terrorist threat facing the United States. It's right here.

Number two, according to that same report, the FBI has not established a core training curriculum. And this is your point, General. There are two different people, two different cultures; one is not the other. But you think they'd be doing this sort of core curriculum training if there was a chance of turning an FBI agent into an intelligence-gathering operator, that there would be training. There's no proficiency standards for incoming agencies working on counterterrorism, nor does the FBI measure the proficiency of agents working counterterrorism squads in the field or in headquarters units.

And he says that the type and extent of counterterrorism-related training varies throughout the FBI in a way which is not helpful; this, despite testimony the committee received last week that the FBI in 1998 established counterterrorism as a tier-one priority.

Now, I just ask you -- waiting 35 years, 9/11, we're either going to go to war or we're not going to go to war -- but somebody has got to figure out where the bad folks are at home. And I want answers from each of you as to how that ought to be done, in your judgment, without being too careful about what you say. I want answers that are helpful to this committee. Maybe they're answers that can't get passed in legislation; so be it. But what should happen? General.

GEN. ODOM: I would repeat what I mentioned earlier. I think the counterterrorism function -- and it would be both domestic and foreign counterintelligence; that is, focusing on gather intelligence on intelligence, and I think it will overlap into terrorism very heavily -- should be pulled out of the FBI and should create a new counterintelligence service.

Now, you made the point earlier that we're going to have something happen here, who's going to watch for all these sleeper cells? Analysts can't do much about watching for sleeper cells. It's going to take a lot of people who are field agents looking at them, people who will commit themselves to surveillance time, to the activities that are required to run these kinds of operations. The weakness of U.S. counterintelligence across the board, in the military services and elsewhere, has been inadequate resources to do this kind of thing. It's not sexy compared to the intelligence of finding an enemy tank or an airplane or what somebody's political program is in a foreign country. And it's always been less well-funded.

I don't know how you can -- if you mix the law enforcement -- you've got plenty of law enforcement people out there to arrest people. But to surveil particular cases and to gather the intelligence, which you can then turn over to law enforcement to bring them in, strikes me as another business. You have to separate that out. We will miss some. It's like other kinds of things. But we will increasingly become more proficient at it.

I would cite the experience of how Britain has dealt with Northern Ireland. They've had a member of the royal family killed. Part of it is learning to cope psychologically with the public at large. Now, I think a hearing like this maybe can contribute to that. But I think we will learn how to cope. We'll become much more skillful in identifying those. But you won't unless we make this organizational change where the intelligence function here is separated from the law enforcement function.

MR. HAMILTON: Well, I think the threat of terrorism is going to require an unprecedented overlap between intelligence and law enforcement. And we understand that both of the primary agencies here, the FBI and the CIA, have operated for a very long period of time doing what they have done, and I would argue they've done it quite well.

Now they're suddenly confronted with a new world, and the director of the FBI is told and says, "Our number one priority is prevention." Now, that's a huge change for the FBI. It just turns the agency around from a law enforcement agency to prevention. And we cannot expect that to turn around on a dime. It's like the ocean liner. It takes a while to turn it around.

I have a lot of confidence in Director Mueller and in Director Tenet. I think they're very good people. I think they're very keenly aware of this problem, and I think they want to try to correct it. What does it require? It requires, then, first of all, leadership at the top. If you don't have the leadership there, you're not going to get anywhere. I don't think it's a statutory solution, a legislative solution, to the kind of problems you cited a moment ago. A couple of them surprised me a great deal.

And may I say that in this role, the oversight function that you perform becomes exceedingly important to see whether or not the FBI and the CIA and other agencies perhaps are doing the kind of job you want them to do. And it requires more and more tougher oversight, because they have been asked to go through such a remarkable transition in the focus of their agencies. And there are thousands of people that are involved here.

So it takes leadership, it takes oversight, and it demands, in that oversight process, that you insist on the sharing of information that is at the heart of so many of the problems.

SEN. ROCKEFELLER: Chairman Hamilton, I hear what you're saying. The gentleman on your right made what I think is the ultimate statement: "No organizational reform can overcome the absence of effective leadership and management, but dysfunctional organizational structures can neutralize the efforts of the best leaders." I think that's our problem. It's dysfunctional organization.

And I want this to go on to you, General Webster. You say it takes time. I don't know how much time we have. We probably don't have the time for that cultural change. We had a hearing the other day -- I'll put this to General Webster -- when we had an FBI agent from Minneapolis who had dealt some with the Moussaoui situation, and he had two alternatives before him. One is that Moussaoui's French visa had expired. That was a bad thing. (He enforces ?) the law. And so he went that direction.

His alternative was that there was some evidence that Moussaoui might have terrorist connections. He chose to ignore that -- not surveillance; that's not his job. I said, "But how could you possibly pick the choice not to surveil over expiration of the French passport?" "Because basically that's my job."

Now, how do you, in fact, change that culture? We can talk about it. We can say it happens. The ship turns slowly. But it isn't going to happen, is it?

MR. WEBSTER: I don't know quite how to walk into that question.

SEN. ROCKEFELLER: Try your best, sir. You've done it all.

MR. WEBSTER: First of all, one of the problems that worries me about too expansive a view of prevention is that the next word you hear is disruption, and that any technique to disrupt something is the thing that you want to do, even before you've run the surveillance that you were talking about to get the greater information. So it's stop the fellow quick, whoever it is; disrupt the organization.

I hope those things I heard right after 9/11 have been digested and refined and that we're not looking at that kind of a situation. It is one investigative tool when you have a bad guy. I mean, Al Capone went to jail on income-tax evasion. But the importance is not -- it's not a cultural problem, that he didn't want to look into the terrorist thing. He believed he had something to stop the terrorist.

I don't know the full facts, but I can relate to why he did it. We had the same problem in drugs, learning to let drugs run under control so you could get to the top and find out what was going on about it. Other countries even, you had to arrest somebody the minute you saw a drug on the table.

The FBI has developed a capability, and it needs a much stronger capability now to work with the information coming from abroad, primarily through the Central Intelligence Agency, to mesh that information and follow up on those leads and to be sure that that information is delivered to the right people and acted upon.

We have to have that interface. As I tried to say earlier, counterterrorism is not pure intelligence. It's not about finding a throw weight of a new Russian weapon or looking into economic issues that might result in some adverse circumstance around the world. It's about crime, here and now, being planned against us. And we need to have people in place who can deal with it. If the numbers are wrong, the numbers can be quickly adjusted and should be.

I don't warm to the idea of separating counterterrorism from the FBI. We're not England. We're not 500 miles across our territory. We have thousands of miles to cover. Would you propose to create an organization that had people all over the United States, as the FBI does?

It does a remarkable job with its 11,000 agents, one-third the size of the police force of the city of New York, but I'd hate to think of what this new organization would have in the way of people in place, trained to anticipate, to pick up information on the spot, on the scene, in the United States about unusual activity, to report it back and expect to have it acted upon. We wouldn't have that.

And I fear you would never vote the resources to have a second FBI throughout the country. So better to use what we have and train them to be more responsive, as you pointed out.

SEN. ROCKEFELLER: Yeah, okay. Mr. Hitz.

MR. HITZ: Senator Rockefeller, just following up on that comment, it seems that in a number of these instances, the first responder is going to be the local police. It's going to be the local person who is checking trucks that go through the Lincoln Tunnel. It's going to be the person on the checking line at an airport.

And what you're going to -- it seems to me what you do to amplify -- the force multiplier here is going to be CIA and FBI and their responsibilities getting more proficient, but also interacting with people on the ground who are going to have the first contact.

SEN. ROCKEFELLER: That's right, Mr. Hitz. And in --

MR. HITZ: So you're not going to have to have --

SEN. ROCKEFELLER: And in West Virginia, we have a superb state police which I governed for eight years, and they have 63 detachments. And as of about eight months ago, seven of them had Internet capacity. So, now, you tell me how they get this resolved.

MR. HITZ: Well, they obviously are going to have to find some way to get some resources to do that.

SEN. ROCKEFELLER: And so resources, resources, resources. I understand all of that. People don't come forward. They don't put their positions on the job. I'm chairman of the Veterans Administration -- and I'll stop. I'm chairman of the Veterans Administration. The first question I always ask the person who comes up before us for confirmation, at the beginning of a new presidency, is, "Will you -- if you don't get the budget that you need, will you go into the Oval Office and put your job on the line and say, 'I'm going to get this, bypass OMB'"?

OMB has to clear every single piece of testimony that's given before any committee in the Congress; OMB has to do it. That's Mitch Daniels running the president. Okay? And so I asked him that. "Are you willing to put your job on the line?" And that's where we get into the 85-15 thing. Defense has 85. You know, George, who I think is terrific, has 15. He isn't going to stray outside this 15 because he'll get knocked down by the secretary of Defense every single time. And so the pattern continues while we talk.

Thank you, Mr. Chairman.

SEN. GRAHAM: Thank you, Senator Rockefeller. Congressman Condit.

REP. GARY CONDIT (D-CA): Thank you very much. Let me say to the panel that I'm delighted that you're here and you've been very informative with your testimony and your written testimony as well as the articles and commissions and various statements that you've made in terms of reforming the intelligence community.

And this is a totally serious question. It may sound like I'm being sarcastic, but I'm really not. I know that Congressman Hamilton has mentioned 35 years of work, and all of you have put in a decade of suggestion reforms. Can you tell me, do you have an idea why we can't reform the Intelligence Committee? I mean, is what we're doing here today and what we've been doing the past few months, is this going to be helpful, in your opinion, to reform the intelligence community?

I'm not advocating one of your suggestions or plans over another one. I think they all have some merit, and you probably could pick and choose items out of each one that would be beneficial. But what's the reason we can't fix it, we can't change it, we can't reorganize it?

MR. HAMILTON: Mr. Condit, I think, first of all, substantively it's just very difficult. You've got a vast enterprise. You have thousands and thousands of workers. You have dozens and dozens of agencies. And it's terribly difficult to develop a consensus on how you put these boxes together and to whom you give authority and take away authority.

It is one thing to be in favor of reform, but it's quite another thing to agree on how you reform. And we have never been able to build a consensus, because substantively people have very different people.

Secondly, the politics of it are very tough. It follows a little bit from the first point. But you begin to take away budget authority from the Defense Department anywhere, and you run into formidable assistance. And I just pick on the Defense Department, which may not be fair, but it's probably true elsewhere as well. As you move boxes around, you're shaking up careers and changing pensions and health care systems and all the rest. It becomes very, very difficult. So I'd say it's -- we can't reform. We haven't succeeded at reform, because substantively we have not been able to get an agreement on a plan. You heard the differences of opinion expressed in this panel.

REP. CONDIT: And I appreciate that.

MR. HAMILTON: And, then, secondly it's very difficult to do because of the politics of it.

REP. GOSS: Well, whose responsibility is it to knock heads if we have to on that? You are talking about bureaucracies, you are talking about turf battles, you are talking about -- but is it our responsibility, the Congress?

MR. HAMILTON: I think the only way you really get major change in the organization of the federal government is from the president. The presidents really have to take the lead, otherwise you just can't get it done. We, the country who is floundering around on Department of Homeland Security, all kinds of opinions out there, the president comes in and says, We are going to do it this way. That focuses everybody's attention. And he's the only person that can really move the bureaucracy in something of this sort. For presidents this would not be an easy decision. It's a very, very difficult call for a president. Why did the president leave out of the Department of Homeland Security, the FBI and the CIA? Well, I personally think his judgment was correct about that, but as a logical matter, as a rational matter, you put them all into the Department of Homeland Security probably. So --

REP. CONDIT: General, you want to make a comment?

MR. ODOM: I think the way to address that problem best is to ask who the users are. Intelligence is to be used. And if the users are happy with what's being supplied to them, the organization is okay. If they are not happy, then they're the people who ought to try to change it. And I think that drives it back to Mr. Hamilton's point that the president -- it has to start here. I thought about this a lot. It seems to be the real constituency at the national level for intelligence -- the president, the secretary of Defense, secretary of State. If they want to change it they can do it. They could do changes that I'm talking about, except for a national counterintelligence system with an executive order. The big users, the really big users of intelligence, are the military services -- and you don't even have that in your budget here. And if you take sort of off-the-wall proposals like I heard the Scowcroft proposal where you would move the signal intelligence and the imagery out of the Defense Department, you know exactly what will happen: they will build their own there, because when they are outside they will not serve the Defense Department. I've had many experiences of calling up CIA and trying to get tactical support. They work for the president. They don't work for the Defense Department. I don't think you want to outsource your plans writer if were a military officer trying to run an operation. I don't think you'd want to outsource a lot of activities in that regard. And if you are going to put everything outside these departments under some other umbrella, then I think you have got a real problem of solving the support to the users.

As long as the users are happy with this, it is going to continue just like it is. Therefore I agree with Congressman Hamilton. I would say that I think you have an opportunity now to do something about the counterintelligence, which you haven't had before, because the politics have just been impossible. I think you probably can do that piece. That's why I chose that. I think the DCI could on his own try to separate these two positions and begin to act more like, and use the program authority. I don't know whether we are talking on the same sheet of music or not, but Mr. Hamilton here on controlling the budget, but there is a lot more power in control of the program than maybe you understand, unless you've been through it. Once it's programmed in here, we can't move it out of the law the way you allocate it without coming back reprogramming it, et cetera. And if the DCI staff really exercises effective control over that, you will have a lot of say. It has never done that effectively. One of the major reasons it hasn't done that effectively is there's other structural issues. And that's the NRO arrangement -- how it gets this money. And that's why -- so it's those three things. If you want to have a major effect on opening up for more -- better performance, it is the counterintelligence issue first of all, and second I think it is the DCI, really become head of the community. And, third, it's creating this national program management system.

REP. CONDIT: Moving along -- and I appreciate that. I get it that you think there are some organizational changes that can be made without the president or the Congress acting. But I would think that we have to take some role in this. We just -- we can't sit here and point our finger at the bureaucracy and say they ought to do this and they ought to do that, without us -- would you agree to that? Would --

MR. ODOM: I agree with that. I should have added the constituency that I think can change it includes not just the president, the secretary of State and the secretary of Defense and the secretary of State, who is a very important user, but also the chairman of the committees here. And it will be the chairman not only of the Intelligence Committee, but it will be of the Armed Services Committee -- and probably in the case of counterintelligence, the Judiciary Committee has oversight over the FBI.

REP. CONDIT: Let me just think out of the box for a minute on Mr. Hamilton's suggestion on the DCI being the -- I guess the overall authority for intelligence. That's at the White House, is that right, Mr. Hamilton? And what Senator Rockefeller said about law enforcement, local agencies -- how do you tie all those together? I mean, there are some countries who have centralized police, federal police. Are we talking that? I mean, because the problem is that, you know, we have communication problems with local law enforcement, the first responders, so on and so forth. Is that where we are headed? We have --

MR. WEBSTER: If -- may I try to answer that question? If -- you are talking -- are we headed toward a federal police, I'd say absolutely not. I think if there's anything that's fundamental in this country it is that we do not want a federal police system, and that's why we have the checks and balances that are there. We have to build up a more effective means of communicating between federal authorities and state and local in the times that we are going through. And rather than spending a lot of time on moving the botches around, I would recommend that this committee and the Congress look to see are those areas in the system which need badly to be shored up with appropriate resources and training -- and I'll give you one example, because I think it's crucial. There's a lot of talk about sharing of information, a lot of talk about gathering it and getting it to the right place in a timely way. And we have heard -- I have been reading the reports of witnesses who've said where the failures have occurred. One place where the FBI has been trying to get help for years, and has not succeeded, is in its information structure, it's information case -- automatic case system. It's gone from one extreme to the other. It has enormous amounts of data coming in, woefully inadequate means of mining that information, and other shortfalls in communicating it out to people who need to know it. It's a 12-year-old system. I don't know a single successful business in this country that gets along on a 12-year-old system. They could ask it limited numbers of questions. They can't do like I used to do as a navigator in World War II and the Korean War -- I wanted as many fixes, lines to narrow the focus and get the information -- not ask it a question like, What is Alaska? -- and get a room full of information, and that's all I can ask. It really needs attention -- the trilogy, the three patchwork system on which a lot of money has been spent, is not adequate to the task ahead. If we are going to bring everybody into this picture, we need to know who needs it, who doesn't need it, what is it we are trying to find, and what do we have -- and move it along. And to share that with the Central Intelligence Agency and vice versa -- DCI's whole purpose of gathering -- they're much further along the line in knowing how to do this. They have the filing systems, the retrieval systems, and the dissemination systems that the FBI simply does not have, and badly, badly needs. And I -- if I just had that one to impose on you to make that suggestion, look closely at the FBI's system for managing data, because it's worthless if it cannot reach the right people at the right time. And that's the kind of improvements that I think you can do. It used to be some cynical thing that the people in Congress would tell their constituents, they added a thousand new agents. And I was saying rather why not a new computer? And they said, There's not a lot of political value in a new computer. But we have to put aside those, as I know this committee is doing, and see what's really needed -- make sure that the FBI is fully equipped -- not worry about how many more people, but worry about do they have the ability to match up in an appropriate way with the Central Intelligence Agency and the intelligence community -- because that's what everyone is complaining about -- things went unnoticed or undetected or uncommunicated. And if you could help us in that area it would be a major step down the road -- far better than --

REP. CONDIT: Judge Webster, you lead me in -- I'll get back to you, but he leads me into an area that I just want to touch on briefly, and it's a little different than what we talked about this morning. And one of the principal findings I think of the joint inquiry so far that we have come up with is we have done a very poor job in sharing information within the intelligence community and between agencies and government that plays a role in combatting terrorism. It's been pointed out -- you just did -- that the new information technology can be very helpful in linking these groups together and sharing of information. The concern I have is the technology can also be used vastly to improve our way of communicating with each other. But what about people's privacy and civil liberties? What suggestion do you have to how the government can proceed to take advantage of these tremendous capabilities without infringing upon people's privacies and civil liberties? Do you have any suggestions for me about that, Judge Webster? And Mr. Hitz as well.

MR. WEBSTER: I am certainly not minimizing privacy. I think my own shorthand quick solution -- I know the time is running. The judiciary plays a major role here, and should in the future continue to do so. The fact that you have the ability to do something doesn't mean you should be allowed to do it, unless there is probably cause and meets our legal standards for doing so, getting the appropriate warrants. Even the problem we have now with electronic surveillance with digital privacy making it so difficult to do -- you still need that warrant. But you also need help in making it possible. You get the warrant, and if you can't use it it is not much good to you. There's improvement that needs to be brought along the road. When Abraham Lincoln was assassinated, 2,000 Americans were arrested -- the entire cast of "My American Cousin." That's the way things were in those days. They didn't have fingerprints. They didn't have DNA. They didn't have other forensic capabilities. And they certainly didn't have wiretapping.

But the concept is with the emerging standards of decency, to which you refer, in our society -- we just have to get better professionally. But I think the Congress's role is to be sure that we have the tools and that we are using them in accordance with the law. And that's an important role for the Department of Justice, and that's why I'd hate to see law enforcement go outside the Department of Justice at the federal level by giving it to people who are not trained and do not understand the requirements that the Constitution and our laws impose on them.

REP. CONDIT: Mr. Hitz, I know you've made some comments in your testimony, but I would appreciate your comments as well on this.

MR. HITZ: Thank you. Thank you, Congressman Condit. I just wanted to say and interject as far as what Judge Webster was saying about the needs o the FBI for help in the information technology, information retrieval and storage area. We wrote, oh, over a period of eight years, almost every management review, every audit we did of the directorate of operations records contained as a final recommendation. Would you please direct it to the director of central intelligence, Bill Webster, among others? Could we secure money for the directorate of operations to modernize and improve its record system? Because over a period of time, just as appears to have happened in the Bureau, monies were tight, and monies were obviously going to be used for operational purposes as opposed to meat and potatoes infrastructural purposes, if that choice had to be made. So I think there has been strides that have been made in the CIA s a consequence of the attentions of this committee and the pounding that we gave them from the inspector general's side. But it is an issue.

On the issue of civil liberties, just if you will permit me an anecdote -- yearly there's a seminar in Princeton, the Medina (ph) seminar, gathering state and federal judges for a couple of days to be lectured by -- or discus with some of the faculty fine arts and everything else. At the end of the day, the end of the session, I had the privilege of addressing them on the subject of terrorism, and talked a little bit about civil liberties. Up a hand came from the back of the room, and a senior judge from Atlanta, whose name I never got, said, You know, I'm interested in what you say about not throwing the baby out with the bath water. I and four or five of my fellow judges of this experience contacted the Justice Department very shortly after September 11th to say that we had an awful lot of experience granting federal warrants in this area; we were willing to get on a plane, go anywhere to help meet any crunch that the government may have had to deal with the demands of law enforcement to move these cases along. And I, like Judge Webster, would like to see a lot of the response to terrorism remain in the judiciary, remain in the Article 3 system, rather than being handled on an ad hoc basis.

MR. HAMILTON: Congressman, intelligence requires that the government get information, and information requires that you have to survey -- have surveillance on people. And some of those people may not be criminals. And so you have got a tremendous challenge here it seems to me to facilitate information gathering from suspicious people who may not have committed a crime, and trying to insulate legitimate personal and political activity from intrusive activity. And the solution to it lies to a person like Judge Webster. When he was head of the FBI, he was extremely sensitive to civil rights and the rule of law. And that has to come from the top. You get a lot of hard chargers in the bureaucracy who may not have that sensitivity. You have to have that sensitivity at the top. And I think that's required. You have to do it in the courts -- obviously that's the bulwark of our liberties, the courts. But I would say your protection here -- and I really appreciate your question, because I think we -- it's very easy to overlook these matters of privacy and civil rights. It has to come from the top of the agency. It has to be protected by the courts. The United States Congress, the intelligence committees, have to be sensitive to the matter in which intelligence activities are carried out, and they have to zero in on civil rights and liberties.

REP. CONDIT: General, did you --

MR. ODOM: I would just add one point on the protection of rights. The committees that did the investigation in the 1970s did a great service in implementing the system they have in the National Security Agency now ensuring that rights are not violated. So we look back and say nothing was achieved by any of these committees. It just occurred to me that this was -- this one was very important, and you are not getting any credit for it. I think Congress should get credit for that. And as the director of the agency I felt better for having this. I felt that I could be certain that my bureaucracy was not going to run away and violate these kind of rights. And it was a thoughtfully done process that created that system in the 1970s.

REP. CONDIT: Thank you, gentlemen. Thank you for your answers, and thank you for your service to the country. I appreciate it. Thank you.

REP. GOSS: Thank you, Mr. Condit. We are at a convenient place to break for a luncheon recess. And the intent of Chairman Graham is that we reconvene at two o'clock, and at that time we will have Senator DeWine asking questions for about 20 minutes, and then such members as are here we will provide the opportunity to ask further questions, if that is agreeable to you all. Thank you very much. We'll see you then. And we have had a very useful morning. (Sounds gavel.)

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