October 17, 2002 Committee Hearing: Eleanor Hill, George Tenet, Robert Mueller and Michael Hayden

Joint House And Senate Select Intelligence Committee
October 17, 2002

SPEAKER:
CHAIRMAN

LOCATION: WASHINGTON, D.C.

WITNESSES:

ELEANOR HILL, JOINT INQUIRY STAFF
GEORGE TENET, DIRECTOR, CENTRAL INTELLIGENCE AGENCY
ROBERT MUELLER, DIRECTOR, FEDERAL BUREAU OF INVESTIGATIONS
LIEUTENANT GENERAL MICHAEL HAYDEN, DIRECTOR, NATIONAL SECURITY AGENCY

BODY:

HOUSE AND SENATE INTELLIGENCE COMMITTEES HOLD JOINT HEARING
ON PRE-9/11 INTELLIGENCE FAILURES

SPEAKERS:
U.S. SENATOR BOB GRAHAM (D-FL)
CHAIRMAN
U.S. SENATOR CARL LEVIN (D-MI)
U.S. SENATOR JOHN D. ROCKEFELLER IV (D-WV)
U.S. SENATOR DIANE FEINSTEIN (D-CA)
U.S. SENATOR RON WYDEN (D-OR)
U.S. SENATOR RICHARD DURBIN (D-IL)
U.S. SENATOR EVAN BAYH (D-IN)
U.S. SENATOR JOHN EDWARDS (D-NC)
U.S. SENATOR BARBARA MIKULSKI (D-MD)

U.S. SENATOR RICHARD C. SHELBY (R-AL)
RANKING MEMBER
U.S. SENATOR JON KYL (R-AZ)
U.S. SENATOR JAMES M. INHOFE (R-OK)
U.S. SENATOR ORRIN G. HATCH (R-UT)
U.S. SENATOR PAT ROBERTS (R-KS)
U.S. SENATOR MIKE DEWINE (R-OH)
U.S. SENATOR FRED THOMPSON (R-TN)
U.S. SENATOR RICHARD LUGAR (R-IN)

U.S. REPRESENTATIVE PORTER J. GOSS (R-FL)
CHAIRMAN
U.S. REPRESENTATIVE DOUG BEREUTER (R-NE)
U.S. REPRESENTATIVE MICHAEL N. CASTLE (R-DE)
U.S. REPRESENTATIVE SHERWOOD L. BOEHLERT (R-NY)
U.S. REPRESENTATIVE JIM GIBBONS (R-NV)
U.S. REPRESENTATIVE RAY LAHOOD (R-IL)
U.S. REPRESENTATIVE RANDY "DUKE" CUNNINGHAM (R-CA)
U.S. REPRESENTATIVE PETER HOEKSTRA (R-MI)
U.S. REPRESENTATIVE RICHARD BURR (R-NC)
U.S. REPRESENTATIVE SAXBY CHAMBLISS (R-GA)
U.S. REPRESENTATIVE TERRY EVERETT (R-AL)

U.S. REPRESENTATIVE NANCY PELOSI (D-CA)
RANKING MEMBER
U.S. REPRESENTATIVE SANFORD BISHOP JR. (D-GA)
U.S. REPRESENTATIVE JANE HARMAN (D-CA)
U.S. REPRESENTATIVE GARY CONDIT (D-CA)
U.S. REPRESENTATIVE TIM ROEMER (D-IN)
U.S. REPRESENTATIVE SILVESTRE REYES (D-TX)
U.S. REPRESENTATIVE LEONARD BOSWELL (D-IA)
U.S. REPRESENTATIVE COLLIN PETERSON (D-MN)
U.S. REPRESENTATIVE BUD CRAMER (D-AL)

*

GRAHAM: Call the meeting to order. This is the ninth public hearing of our inquiry into the events surrounding the terrorist attacks of September 11th. We have also held 13 closed sessions. Under our current schedule, this will also be the last public hearing. And I would like to take this opportunity to thank the members of the House and Senate committees for their commitment to this very important process.

I am especially grateful for the cooperation of our co-chairman and my good friend, Representative Porter Goss, as well as the outstanding and cooperative relationships with Congresswoman Nancy Pelosi and my Senate colleague, Richard Shelby. I would also like to express my personal gratitude for the outstanding work of our exceptional staff of investigators, led by Ms. Eleanor Hill. We will hear another presentation from Ms. Hill in just a few moments.

As we contemplate our next step in this inquiry, the writing of our final report, I would like to say how important I believe the experience of conducting this inquiry in a joint manner, the first time in the history of the Congress that such an enterprise has been undertaken, will be to our final report. The value will be that when we make our recommendations for reform, both House and Senate members will do so, having heard the same testimony, shared the same information, listened to the same discussions. Based on that, we will make our recommendations.

These recommendations will be the most important legacy of our hearings, launching reforms that will assure the American people that our first line of defense against terrorism, our intelligence agencies, are doing all that they can to detect, deter and disrupt schemes against our homeland and American interests abroad. As we heard at our last public hearing on October 8, there have been a succession of reports recommending reforms to the intelligence community. The majority of those were issued prior to September 11, 2001.

What most of those reports have in common, sad to say, is that relatively little has been adopted from them. I am hopeful that, as a result of this joint process, our recommendations will be taken more seriously and will have a greater impact on the intelligence community in the 21st century.

I look forward to working with all the members of the House and Senate committees on these recommendations in the weeks to come.

Today's hearing will be in two parts. First, we will hear from Ms. Eleanor Hill, who will review the major issues that have been identified in the course of the inquiry.

We will then hear from a panel of distinguished witnesses, consisting of the director of Central Intelligence, the director of the Federal Bureau of Investigation and the Director of the National Security Agency. Among the questions that we look forward to exploring today: what the intelligence community in general, and the CIA, FBI and NSA in particular, have learned from September 11 regarding what should be done to improve our counterterrorism programs.

And in addition to learning what should be done, what are they actually doing and planning to do in order to improve the effectiveness of their programs? We will also discuss with our witnesses what the president and the Congress should do to assist them in these reforms.

I will now ask my colleagues, starting with Congressman Goss and then Vice Chairman Shelby and Ranking Member Pelosi, if they have any opening comments for today.

Chairman Goss?

GOSS: Thank you very much, Chairman Graham. I just wanted to add briefly a couple of points to the very kind opening remarks you've made.

I think that these public hearings have been a very helpful window into the intelligence community to help Americans appreciate a little better the men and women and the extraordinarily tough jobs that they do for our national security. And I think for that, it has been extremely helpful as a sidebar to our other stated mission.

I think trying -- for all of us -- trying to understand terrorism better and how we must fight it is something of a national challenge. And I think these public hearings have been very useful in awareness and alertness areas.

I am very grateful for the participation of the members. I believe that everybody has participated fully and gotten involved and done their homework and asked questions and been very much a part of this, which was our hope from the beginning, as you know. And I do take away from this that there is a possibility of a happy marriage between the Senate and the House.

We'll inevitably have some bad days. But I think that it's reassuring to the American public that, in fact, we do work together.

There's a part of this that the American public has not seen; it's what's going on behind the scenes, which we can't talk about entirely because of the protection of sources and methods and plans and intentions and matters that deserve to be held closely at this time because of ongoing investigations and other legitimate reasons. In time, those will be revealed as well, for the most part, I suspect, as is usually the case.

So in many ways, this is openers, what we are doing. And there will be follow on. We all know that. And we think that we have created a springboard for that. And the rest of the work that our staff has done under the very able leadership of Eleanor Hill is, I think, remarkable and will serve those who come after us in this process very well.

I think it is very clear that our oversight work for these two committees in the future is going to be very vigorous and very required. And when Ms. Hill makes her remarks this morning, which I've had the privilege of seeing, I think it's an excellent blueprint of the problem and some of the solutions that might be out there and some of the places we're going to have to direct our attention. So I urge people to pay attention to her statement this morning.

And I would also point out, it's not just intelligence oversight. It's going to be oversight of many of the committees of Congress as well. So I think we have served not only our purposes in the narrow area of our responsibilities of intelligence, but a broader picture for the responsibilities of Congress to try and understand better the events of 9/11.

Thank you, Mr. Chairman.

GRAHAM: Thank you, Congressman Goss.

Senator Shelby?

SHELBY: Thank you, Mr. Chairman. First of all, Mr. Chairman, I want to thank you for your kind personal remarks. I've served with you when you were the vice chairman, as I am now, and when I was the chairman. And I'm serving now as your vice chairman and you are the chairman.

I prefer to be the chairman. But I've enjoyed working with you as the vice chairman.

(LAUGHTER)

Having said this, Mr. Chairman, this is probably our last public meeting together, the two of us, and other members of this committee. And while this may be our last public hearing before the Congress adjourns, too, for the year, I believe it's important to point out, Mr. Chairman, that our work will continue until the 107th Congress comes to an end.

We will continue to ask questions and review documents until we are compelled by the calendar to conclude the fact-finding phase of this inquiry. We will then begin the process of drafting a report.

I'm hopeful, Mr. Chairman, that we will reach a consensus. But I'm also cognizant of the difficulty of such an undertaking.

Mr. Chairman, while our work will ultimately end, the process that we have begun must not. If we have learned anything here, it is that nearly every day brings a new revelation, a new bit of information or a new line of inquiry. That, Mr. Chairman, is why the leadership of these committees have determined that a commission must be established to continue and to expand upon the work that we're doing here.

I believe, Mr. Chairman, the American people should know that we've been limited by time here, by resources and yes, by scope. We have been at work for a little over six months, with a small staff examining only the performance of our intelligence community.

The story of 9/11 and our inability to detect and prevent it extends far beyond, I believe, our intelligence agencies. The American people, Mr. Chairman, must know that the full story is yet to be told.

Mr. Chairman, we've learned many lessons. But there are many yet to be learned. We have answered many questions. But there are many yet to be answered.

I believe our work has been useful and constructive in this joint inquiry. We have discovered many instances where our intelligence agencies failed to perform as we expect them to. We've also discovered, Mr. Chairman, many more examples of dedicated and tireless Americans, performing their duties with distinction and honor. The American people should know that the latter is the rule, not the exception.

Often, I hear commentators refer to our work as an effort to discover what caused the events of September 11. I think we can report safely to the American people that we have no doubt what caused 9/11. It was the twisted actions of a network of murderers, dedicated to killing Americans.

What these committees are endeavoring to determine is why we were unable to detect and to stop this plot. That work is ongoing and I believe must continue if we are to ensure that this never happens again.

Mr. Chairman, I look forward to today's testimony. But I do so knowing full well that this is not the end of our work or the work that must still be done for the American people.

Thank you.

GRAHAM: Thank you, Senator Shelby.

Congresswoman Pelosi?

PELOSI: Thank you very much, Mr. Chairman. I want to join in commending you and Mr. Goss for your leadership as chairmen of this joint inquiry since the beginning of this year. I think it provides a model for how we can work not only, Mr. Chairmen, in a bicameral way, but in a bipartisan way for the benefit of the American people.

But the American people were well served by the two of you in the chairmanship roles. And I know that Mr. Shelby said that he would rather have been chairman. And I associate myself with those remarks in my own case.

(LAUGHTER)

In any event, when we came together to announce this joint inquiry, our statement of intent said, in our preamble we said, "To reduce the risk of future terrorist attacks, to honor the memories of the victims of the September 11th terrorist attacks, by conducting a thorough search for facts to answers to the many questions that their families and many Americans have raised and to lay a basis for assessing the accountability of institutions and officials of government." I believe that included the Congress of the United States.

"The Senate Select Committee on Intelligence and the House Permanent Subcommittee on Intelligence adopt this scope of joint inquiry that we pursued."

Before I go into how I think that we have honored that charge, I want to say to Director Mueller, who I know -- hope -- is within earshot, as we welcome our distinguished witnesses today, I want to express my condolences and those of all whom I work with for the loss suffered by the men and women of the FBI in the loss of their colleague in the tragic events of Monday night.

The murder of Linda Franklin is another reminder that dealing with acts intended to instill fear, regardless of whether the individual or group committing them has roots at home or abroad, is our greatest security challenge. I hope that the director will convey condolences of our joint inquiry committee to his colleagues.

Four months ago, we began the hearings phase of our joint inquiry with these same witnesses in closed session. Since that time, we have been very well served by Ms. Hill, Mr. Sincagranna (ph), her deputy, and the joint inquiry staff. I think that -- well, I'll say more about that later.

Although it was necessary to take much of the testimony on the September 11th attacks in secret, it was clear that there was a portion of the story that could be -- in fact, had to be -- made public. Through the open hearings of the past four weeks, that part of the story has been told.

I want to commend our staff director again, Eleanor Hill, her deputy Rick Sincagranna (ph) and the joint inquiry staff for the effort that has gone into these public hearings. In my judgment, they have contributed significantly to increasing the understanding of the American people about the events that led up to the attack.

As the hearings have made clear, with respect to at least some of the hijackers, their associates and people who may have been their associates, signs were missed, opportunities were not seized and legal procedures were misunderstood. Had those mistakes not been made, would the outcome of September 11th been any different? We will never know.

Perfection is a difficult standard to which to be held. With respect to counterterrorism activities, however, it is the only one that can apply -- if not as something that can be reasonably attained, then as something that must always be the goal.

Our witnesses have had the difficult jobs of trying to explain the unexplainable. It's not enough to say that we did not have enough money or enough people. No one does. It's always the case.

It's about establishing priorities. It's about deciding what is most important from a host of important requirements and ensuring that, from available resources, those sufficient to do the job are assigned to it.

It's about recognizing where improvements are needed in ways in which business is done and making them. And it's about making certain that information that appears insignificant to one agency is shared as widely as possible with others on the chance that it has an importance beyond what is apparent on the surface.

One of our chief objectives, as was mentioned in our preamble, in this inquiry has been to contribute to making the American people safer than they were on September 11th. Our witnesses today have a chance to describe how things have changed in the past year, how agencies are working more closely together and how the cooperative efforts of the International Anti-Terrorism Coalition have contributed to successes against the Al Qaida.

I hope they will advise us whether our chances of preventing another attack on the United States are any better today than they were last September. And if not, why not?

I look forward to their testimony and agree with some of the comments of Mr. Shelby that, while we focused on the intelligence community mostly in this, that some of the answers go well beyond this. And we have to seek the truth, wherever it is.

I think that speaks to the need for an independent commission to build on the very excellent work that this joint inquiry has already produced.

With that, I commend the two distinguished chairmen, once again, and say that it has been an honor to be associated with their leadership and their work in this regard, as well as that of Mr. Shelby. And I think he's perfectly appropriate in the role that he has now.

(LAUGHTER)

Thank you very much, Mr. Chairman.

GRAHAM: Thank you very much, Congresswoman Pelosi.

Before hearing from Ms. Hill and our witnesses, I would like to present several administrative matters to the committees for consideration and action. At several earlier hearings, we have provided for supplementation of the record. We have done this without objection.

As we prepare to bring our hearings to a conclusion, it would be desirable to extend that authority to supplement to our hearing record on a general basis. Accordingly, I ask unanimous consent that one, classified staff statements be placed in the classified portion of the hearing records, where appropriate.

Is there objection? Without objection, so ordered.

Two, that Chairman Goss and I, acting jointly after consultation with Ranking Member Pelosi and Vice Chairman Shelby, be authorized to place in our hearing records classified and unclassified exhibits that are designated for inclusion by any member of the two committees or by the staff director of the joint inquiry.

Is there objection? Without objection, so ordered.

Second, our practice throughout these hearings has been to invite witnesses, by a joint invitation of the two chairmen, Vice Chairman Shelby and Ranking Member Pelosi. In the event that we determine that the full record of the proceedings should be amplified by additional witness statements for the record, I ask unanimous consent that the four of us, acting jointly, be authorized to invite and place in the record, written statements by additional governmental or private organizations or persons.

Is there an objection? Hearing none, it is so ordered.

Finally, on June 18th, the committee heard testimony in a closed session from the director of Central Intelligence, the director of the Federal Bureau of Investigation and the Director of the National Security Agency about what the intelligence community now knows about the September 11th plot. We then asked the directors to declassify their testimony, to the extent consistent with national security.

The director of the FBI has previously submitted his declassified statement, which was then included in our open record. The director of Central Intelligence has now submitted his declassified statement for the record. I ask unanimous consent that his declassified statement also be made part of the open record of these proceedings.

Is there objection? Hearing none, so ordered.

Ms. Hill, please proceed.

HILL: Thank you, Mr. Chairman. I have one additional administrative item before beginning my statement, and that is the members may recall that on September 24th, we held an open hearing, at which I presented a staff statement regarding the FBI's handling of the Phoenix electronic communication and the investigation of Zacarias Moussaoui prior to September 11th.

At the time of that hearing, we presented a statement that had been in part redacted, due to concerns about the ongoing criminal case with Mr. Moussaoui. At that hearing -- or right before that hearing -- we received an order from the judge in that case, which then allowed us to pursue with the Justice Department and the FBI expanding or eliminating some of the redactions that we had made in the initial statement.

Last night, we received back from the CIA and also having gone through the Justice Department and the FBI, a revised version, expanded version of what we presented at the September 24th hearing. I'd like to offer this as part of the record, in that it has added more information from the original classified version that has now been cleared for public release.

GRAHAM: Is there objection. Without objection, so ordered.

HILL: Thank you, Mr. Chairman.

Chairman Goss, Chairman Graham, members of this joint inquiry, good morning. Over the course of the last few months, these committees have considered a great deal of information, obtained both through witness testimony and through extensive documentary review. This morning's testimony by the senior leadership of the intelligence community will bring to a close this series of open hearings.

What has been perhaps unprecedented, at least in terms of the intelligence committees, is the extent to which a good portion of this review has been accomplished through open, public hearings. That effort was driven by both the magnitude of September 11th and your recognition of the American public's need to better understand the performance of their government and particularly the intelligence community, with respect to the events of that day.

Beyond the events of September 11th, however, we believe these open hearings have also served to educate the public on the ongoing policy debate about the future path of the intelligence community. The considerable factual record that is now before these committees touches on a wide range of issues that are critical to that debate.

Ultimately, many of those issues will be considered and will be addressed in even greater depth, as these committees deliberate on what will become the final report of this joint inquiry. At this point, however, the staff has been asked to briefly review the most important elements of the factual record, as well as key questions that we believe have been raised through the course of these public hearings.

Beginning with the initial public hearing, the record describes, in considerable detail, the situation confronting the U. S. intelligence community with respect to the terrorist threat posed by Osama bin Laden prior to September 11, 2001. Key facts include: Osama bin Laden's public fatwa in 1998 authorizing terrorist attacks against American civilians and against military personnel worldwide -- U.S. military personnel; information acquired by the intelligence community over a three-year period indicating in broad terms that bin Laden's network intended to carry out attacks within the United States; the director of Central Intelligence's statement in December 1998 that -- quote -- "we are at war" -- close quote -- with bin Laden and that no resources should be spared by the intelligence community in that regard; information accumulated by the community over the course of a seven-year period indicating that international terrorists had, in fact, considered using airplanes as weapons; and numerous indicators of a major impending terrorist attack detected by the community in the spring and summer of 2001.

Although those indicators lacked the specifics of precisely where, when or how the attack would occur, the community had information indicating that the attack was likely to have dramatic consequences for governments and cause mass casualties. While the specifics of the September 11th attacks were not known in advance, relevant information was available in the summer of 2001. The collective significance of that information was not, however, recognized.

Perhaps as a result, the information was not fully shared in a timely and effective manner, both within the intelligence community and with other federal agencies. Examples include: in January 2000, the Central Intelligence Agency succeeded in determining that bin Laden operatives Khalid Almihdhar and Nawaf Alhazmi were in Malaysia and in obtaining important information about them.

While some information regarding the two was provided to the FBI at an early point, the weight of the evidence suggests that the CIA apparently did not transmit information regarding Almihdhar's possession of a U.S. multiple-entry visa and the likelihood of travel by the two to the United States, despite various opportunities to transmit all or part of that information in January 2000, March 2000 and June 2001. And on that point, Mr. Chairman, I do want to note, I note in Mr. Tenet's statement for the record this morning, he refers to the -- there is a January 2000 CIA message, indicating that that information was passed to the FBI.

I just want to make clear for the record that we are fully aware of that message. We have referenced it in our previous staff statement.

But we are also aware of the fact that there is considerable other evidence -- or, I should say, lack of evidence -- on this point, to the effect that the information was not passed, which in my recollection includes interviews of the author of the message, who cannot remember the information being passed, interviews of other CIA and FBI individuals who also have no recollection of it being passed and contemporaneous e-mails, both within the CIA and the FBI, that indicate while briefings of other issues were provided to the FBI regarding those individuals, that there was no mention of the visa or the information about the possible travel to the U.S.

So my statement is based not simply on the one message, but on the weight of all that evidence taken as a whole.

Going on, it was not until late August 2001 that the CIA watch- listed Almihdhar and Alhazmi and advised the FBI of their likely presence in the United States. FBI efforts to locate them through the New York and Los Angeles FBI offices proved unsuccessful. Other potentially useful federal agencies were apparently not fully enlisted in that effort. Representatives of the State Department, the FAA and the INS all testified in hearings of this joint inquiry, that prior to September 11th , their agencies were not asked to utilize their own information databases as part of the effort to find Almihdhar and Alhazmi.

An FAA representative, for example, testified that he believes that, had the FAA been given the names of the two individuals, they would have picked them up in the reservations system".

The FBI did not grasp the significance of a July 2001 electronic communication from the Phoenix field office identifying a pattern of Middle Eastern males with possible terrorist connections attending flight schools in the United States. Apparently, no one at FBI headquarters connected that idea to previous FBI concerns about the topic or to the increasing threat of a terrorist attack in the summer of 2001. The communication generated no broader analytic effort on the issue nor any special alert within the intelligence community. Despite its relevance to civil aviation, the FAA did not receive the communication until it was brought to the agency's attention in 2002 by the joint inquiry staff.

HILL: Also in the summer of 2001, agents in an FBI field office saw in Zacarias Moussaoui a potential terrorist threat, were concerned about the possibility of a larger plot to target airlines and shared those concerns with both FBI headquarters and the DCI's Counterterrorism Center. Neither FBI headquarters nor the CTC apparently connected the information to warnings emanating from the CTC about an impending terrorist attack or to the likely presence of two Al Qaida operatives, Almihdhar and Alhazmi, in the United States. The same unit at FBI headquarters handled the Phoenix electronic communication, but still did not sound any alarm bells.

No one will ever know whether more extensive analytic efforts, fuller and more timely information sharing or a greater focus on the connection between these events would have led to the unraveling of the September 11 plot. But it is at least a possibility that increased analysis, sharing and focus would have drawn greater attention to the growing potential for a major terrorist attack in the United States involving the aviation industry. This could have generated a heightened state of alert regarding such attacks and prompted more aggressive investigation, intelligence gathering and general awareness based on the information our government did possess prior to September 11.

Aside from a considerable factual record relating to the September 11th attacks, the hearings before these committees have also identified systemic problems that have impacted and will, if unresolved, continue to impact the performance of the intelligence community. Witnesses have, for example, complained about the lack, prior to September 11th, of sufficient resources to handle far too many broad requirements for intelligence, of which counterterrorism was only one.

While requirements grew, priorities were often not updated. As we reported last week, to much of the intelligence community, everything was a priority. The U.S. wanted to know everything about everything all the time.

A lack of counterterrorism resources has been a repeated theme through the course of these hearings, particularly in the testimony of witnesses from the intelligence community. There has also been some debate about the exact number of analysts at the FBI and the CIA that are dedicated to bin Laden and Al Qaida -- that were dedicated to bin Laden and Al Qaida -- after the DCI's declaration of war on bin Laden in December 1998.

The CIA has disagreed with the numbers previously reported by the staff for full-time UBL analysts within the DCI's Counterterrorism Center. The staff was originally given those numbers in interviews with representatives of the CTC. Recently, we have received additional figures on this point from the CIA indicating that, as of August 2001, there were a total of 48.8 FTEs, or the equivalent of about 49 analysts, focused on bin Laden throughout the entire CIA.

Regarding their resource issues, the FBI has emphasized that FBI headquarters had a number of operations analysts, in addition to the one strategic analyst which we had been told of originally by FBI officials and which was noted in our previous staff statement. Our statement, which also noted that some of the FBI's strategic analytic capability on Al Qaida had been transferred to -- quote -- "operational units", does not dispute that point. Our focus had been on the FBI's ability to perform strategic, as opposed to operational, analysis of Al Qaida.

Beyond those specific points, however, I do believe that the staff, the CIA and the FBI are all in agreement that the resources devoted full time to Al Qaida analysis prior to September 11th paled by comparison to the levels dedicated to that effort after the attacks. As a CIA officer testified during the September 20th joint inquiry hearing, both CIA and FBI personnel working on bin Laden were -- quote -- "simply overwhelmed" -- close quote -- by the workload prior to September 11th.

Resource issues were not, however, the only systemic problems facing the intelligence community. Even aside from the case of Almihdhar and Alhazmi, a number of witnesses have described their own experiences with various legal, institutional and cultural barriers that apparently impeded the community's ability to enhance the value of intelligence through effective and timely information sharing.

This is critically important at several levels: within the intelligence community itself; between intelligence agencies and other components of the federal government; and between all those agencies and the appropriate state and local authorities.

Finally, the loss in potential intelligence from a lack of information sharing cuts both ways. We heard from representatives of state and local authorities that, when confronting the threat of terrorist activity within the United States, intelligence obtained at the local level can be critically important.

In the course of these hearings, we also learned of issues that transcend the community and involve questions of policy. In the aftermath of the Cold War, U.S. counterterrorist efforts confronted the emergence of a new breed of terrorists practicing a new form of terrorism, different from the state-sponsored, limited casualty terrorism of the 1960's, 1970's and 1980's.

U.S. counterterrorist efforts faced a host of new challenges, including the rise of bin Laden and Al Qaida and the existence of a sanctuary in Afghanistan that enabled Al Qaida to organize, to train, to proselytize, to recruit, to raise funds and to grow into a worldwide menace. As bin Laden and his army flourished within this sanctuary, the United States continued to rely on what was primarily a law enforcement approach to terrorism. As a result, while prosecutions succeeded in taking many individual terrorists off the streets, the masterminds of past and future attacks often remained beyond the reach of justice.

Finally, the record suggests that, prior to September 11th, the U.S. intelligence and law enforcement communities were fighting a war against terrorism largely without the benefit of what some would call their most potent weapon in that effort: an alert and a committed American public. One need look no further for proof of the latter point than the heroics of the passengers on Flight 93 or the quick action of the flight attendant who identified shoe bomber Richard Reid.

While senior levels of the intelligence community as well as senior policymakers were made aware of the danger posed by bin Laden, there is little indication of any sustained national effort to mobilize public awareness of the gravity and the immediacy of the threat prior to September 11th. In the absence of such an effort, there was apparently insufficient public focus on the information that was available on bin Laden, his fatwah against the United States and the attacks that he had already generated against U.S. interests overseas.

As Kristen Breitweiser suggested in her testimony during the first public hearing, could -- and I quote -- "the devastation of September 11th been diminished in any degree" -- close quote -- had the public been more aware, and thus more alert, regarding the threats we were facing during the summer of 2001?

In sum, the record now before these committees raises significant questions for consideration by policymakers, in both Congress and the executive branch, as they chart the future path of the intelligence community in the war against terrorism. For purposes of this public hearing, these include: does the director of Central Intelligence have the power and the authority necessary to marshal resources, to instill priorities and to command a consistent response to those priorities throughout the entire intelligence community?

When the DCI identified the existence of a war against bin Laden, what prevented full mobilization on a war footing throughout the community? What, if any, structural changes are needed to ensure greater responsiveness to established priorities and improved collaboration on counterterrorist efforts through all parts of the community?

What can be done to significantly improve the quality and the timeliness of analytical products throughout the intelligence community? Do we have the resources, the training, the skills, the creativity and the incentives in place to produce excellence in analysis, at both the strategic and the tactical levels? Are analysts now focused not only on individual events, but also on the collective significance of the bigger picture? Do we need to create a kind of all-source "fusion center" to maximize our ability to connect the dots in the future?

What can be done to insure that the community makes the full and the best use of the range of techniques available to disrupt, preempt and prevent terrorist operations? For example, can we improve and increase our use of human intelligence, signals intelligence, liaison relationships with foreign intelligence and law enforcement services, renditions of terrorists abroad for prosecution in U.S. courts and covert action? Do our intelligence personnel have the training, the resources, the tools and the incentives needed to use those techniques effectively?

Is the community adequately equipped to address the full range of the terrorist threat, both at home and abroad? Has the Community made the adjustments needed to succeed against global terrorist organizations that now include the domestic United States within their range of targets? Have we established clear channels to facilitate enhanced communication and collaboration between our foreign and domestic intelligence capabilities?

Can the FBI effectively shoulder the responsibility of addressing the threat within the United States, including the analysis, collection and sharing of intelligence? Is the traditional law enforcement focus on individual prosecutions compatible with a broader, more proactive focus on intelligence and prevention?

If so, what can we do to strengthen the FBI's ability to meet the challenge? If not, where should responsibility for addressing the domestic threat lie?

Can the intelligence community requirements process be revamped to reflect more accurately legitimate priorities, to simplify the tasks facing collectors and analysts and to establish a clearer and more credible basis for the allocation of resources? How can we ensure that both community requirements and resources keep pace with future changes in the terrorist threat?

Do our counterterrorist efforts have full access to the best available information? How can we maximize information sharing within the community, both between agencies and between field operations, management and other components of individual agencies? In the aftermath of September 11th, can our counterterrorist efforts rely on full access to all relevant foreign and domestic intelligence? Have we finally overcome the walls that legal, institutional and cultural factors had erected between our law enforcement and intelligence agencies?

How do we bridge the informational gap that often exists between the community and other federal, state and local agencies? What can be done to improve the timely dissemination of relevant intelligence to customer agencies? How do we ensure that analytic and collection efforts fully benefit not only from information held within the community, but also from the great wealth of information that already exists in other government agencies, as well as the private sector?

Can we better harness the benefits of technology to strengthen U.S. intelligence and counterterrorist efforts? When will the FBI be ready to implement technological solutions that will end its longstanding database problems? What, if anything, can be done to speed up that process? Is the intelligence community on course to fully utilize data mining and other techniques to greatly improve its collection and analytic capabilities? How can we ensure that the community makes the most of future advances in technology as they occur?

Should the intelligence community play a greater role in focusing policymakers not only on intelligence but also on those areas where the intelligence suggests defensive or other action may be called for? How can we better ensure that future efforts to harden the homeland -- in areas such as tightening border controls and strengthening civil aviation security -- will be identified and will be implemented before, and not merely after, attacks of the magnitude of September 11th?

And finally, how can we ensure that the American public understands and fully appreciates the significance and the severity of whatever threats may confront this country in the years ahead? How do we balance legitimate national security concerns about the release of intelligence information with the need for the American public to remain alert and committed in efforts as critical as the war against terrorism? How do we maintain, over the long run, a threat warning system that remains both responsible and credible in the eyes of the American people?

How can our government, and the intelligence community, best explain to the American people, not only what happened on September 11th, but also what they can expect to face in the future?

Those are, in our view, legitimate and relevant questions, based on the factual record of this inquiry. The extent to which effective responses are developed and ultimately implemented could significantly impact the future course of counterterrorist efforts, both within and beyond the boundaries of the intelligence community.

With that in mind and with a view towards the future, we have asked the witnesses today to address the following: first, if the intelligence community could replay the years and months prior to September 11, 2001, would the community do anything differently the second time around? Second, what lessons has the community drawn from the September 11th experience? And third, what will the intelligence community do, in specific terms, to improve future performance?

Mr. Chairman, that concludes my statement. Thank you.

GRAHAM: Ms. Hill, thank you for another outstanding presentation, which has brought a high level of insight and analysis to complex questions. Your service and your colleagues on our joint inquiry staff have performed a great national service, for which we are deeply indebted.

HILL: Thank you, Mr. Chairman.

GRAHAM: Before introducing Directors Tenet and Mueller and General Hayden, at our request, the heads of two other important components of our intelligence community have submitted statements for the record. The statements are from Lieutenant General James Clapper, United States Air Force, Retired, the director of the National Imagery and Mapping Agency, and Rear Admiral Lowell Jacoby, the acting director of the Defense Intelligence Agency. I ask unanimous consent that their statements be made part of the record.

Is there objection? Without objection, so ordered.

In addition, General Clapper and Admiral Jacoby have each designated a representative to be in attendance today, in the event that any member of the committee has a question for their agencies. The representatives are: Ms. Jennifer Haley (ph), chief of NIMA's Counterterrorism Special Operations; and Mr. Pat Ducy (ph), head of the Joint Intelligence Task Force for Counterterrorism from the DIA.

I would now like to introduce the members of our distinguished panel.

Mr. George Tenet was sworn in as director of the Central Intelligence Agency on July 11, 1997. In that capacity, he has responsibilities relating to the entire United States intelligence community, as well as directing the Central Intelligence Agency.

He previously served as the deputy director of the CIA and in a senior position at the National Security Council. Prior to his executive branch service, Mr. Tenet served for four years as the staff director of the Senate Intelligence Committee.

Robert Mueller was sworn in as director of the Federal Bureau of Investigation on September 4, 2001. He has served in both line and supervisory capacities as a federal prosecutor, including as United States attorney for the district of Massachusetts and later, the northern district of California.

He has also served as assistant attorney general in charge of the Department of Justice's Criminal Division and, for a period, as acting deputy attorney general of the United States.

Lieutenant General Michael Hayden has been the director of the National Security Agency since March 1999. His long and distinguished tenure in the Air Force has included service as commander of the Air Intelligence Agency, director of the Joint Command and Control Warfare Center and deputy chief of staff, United Nations Command and U.S. Forces Korea.

Each of our committees has adopted a supplemental rule for this joint inquiry that all witnesses will be sworn. I ask Directors Tenet and Mueller and General Hayden to please rise at this time, along with the NIMA and DIA representatives, Ms. Haley (ph) and Mr. Ducy (ph).

Please raise your right hands. 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?

(UNKNOWN): I do.

GRAHAM: The full statements of the witnesses will be placed in the record of these proceedings. We have a large number of our members present. And I know that they have a significant and incisive series of questions. Therefore, I am going to ask if our panelists could summarize their statements into approximately 10 minutes, so that we will maximize the time for questions.

At this time, I will call on Directors Tenet, Mueller and General Hayden, in that order, to give their opening remarks.

Mr. Tenet?

TENET: Mr. Chairman, thank you. I'm not going to be able to get this done in 10 minutes, and we'll try and be as fast as I can, but we have a lot we have to say. And we'll be as quick as we can, and I thank you for your indulgence in that regard.

I welcome the opportunity to be here today to be part of an inquiry that is vital to all Americans. On September the 11th, nearly 3,000 innocent lives were taken in brutal acts of terror. For the men and women of American intelligence, the grief we feel, the grief we share with so many others, is only deepened by the knowledge of how hard we tried, without success, to prevent this attack.

It is important for the American people to understand what CIA and the intelligence community were doing to try to prevent the attack that occurred and to stop future attacks, which Al Qaida has certainly planned and remains determined to attempt.

What I want to do this morning as explicitly as I can is to describe the war we have waged for years against Al Qaida -- the level of effort, the planning, the focus and the enormous courage and discipline shown by our officers throughout the world.

It is important for the American people to understand how knowledge of the enemy translated into action around the globe, including the terrorist sanctuary of Afghanistan, before September the 11th.

It is important to put our level of effort into context, understand the tradeoffs in resources and people we had to make, the choices we consciously made to ensure that we maintained an aggressive counterterrorism effort.

We need to understand that in the field of intelligence long-term erosions of resources cannot be undone quickly when emergencies arise, and we need to explain the difference that sustained investments in intelligence, particularly in people, will mean for our country's future.

We need to be honest about the fact that our homeland is very difficult to protect. For strategic warning to be effective, there must be a dedicated program to address the vulnerabilities of our free and open society.

Successive administrations, commissions and the Congress have struggled with this. To me, it's not a question of surrendering liberty for security, but of finding a formula that gives us the security we need to defend the liberty that we treasure; not simply to defend it in a time of peace, but to preserve it in a time of war, a war in which we must be ready to play offense and defense simultaneously.

That is why we must arrive soon at a national consensus on homeland security. We need to be honest about our shortcomings and tell you what we have done to improve our performance in the future. There have been thousands of actions in this war, and intensely human endeavors, not all of which have been executed flawlessly.

Nevertheless, the record will show a keen awareness of the threat, the disciplined focus and persistent efforts to track, disrupt, apprehend and ultimately try to bring to justice bin Laden and his lieutenants.

Somehow lost in much of the debate since September 11th is one unassailable fact: The U.S. intelligence community could not have surged as it has in the conflict in Afghanistan and engaged in an unprecedented level of operations around the world if it were as mired as some have portrayed.

It is important for the American people to know that despite the enormous successes we've had in the past year, indeed over many years, Al Qaida continues to plan and will attempt more deadly strikes against us. There will be more battles won and sadly, more battles lost. We must be honest about that too.

Finally, we need to focus on the future and consider how the knowledge we have gained this year will be applied. Let me begin by describing the rise of Osama bin Laden and the intelligence community's response. We recognized early on the threat posed by him and his supporters. As that threat developed, we tracked it, we reported it to the executive branch policy makers, Congress, and when feasible, directly to the American people.

We reacted to the growing threat by conducting energetic, innovative and increasingly risky operations to combat it. We went on the offensive. And this effort mattered. It saved lives, perhaps in the thousands. And it prepared the field for the rapport success in Afghanistan last winter.

The first rule of warfare is: Know your enemy. My full statement documents our knowledge and analysis of bin Laden from his early years as a terrorist financier to his leadership of a world-wide network based in Afghanistan. But suffice it to say that as bin Laden's providence grew in the early 1990s, it became clear to CIA that it was simply not enough to collect and report intelligence about him.

As early as 1993, our units watching him began to propose action to reduce his organization's capabilities. I must pause here. In an open forum, I cannot describe what authorities we sought or received. But it is important that the American people understand two things.

The first is about covert action in general. CIA can only pursue such activities with the express authorization of the president.

The second point is that when such proposals are considered, it is always because we or policy makers identify a threatening situation. The situation to which we must pay far greater attention. And one in which we must run far greater risks.

As long ago as 1993, we saw such a situation with Osama bin Laden. By the time bin Laden left Sudan in 1996 and relocated himself and his terror network to Afghanistan, the intelligence community was taking action to stop him.

We established a special unit, known as the bin Laden Issue Station, with CIA, NSA, FBI and other officers specifically to get more and more actionable intelligence on bin Laden and his organization. We took this step because we knew the traditional approaches alone would not be enough for this target.

We monitored his whereabouts, increased our knowledge about him and his organization with information from our own assets and from many foreign intelligence services. We were working hard on a program to disrupt his finances, degrade his ability to engage in terrorism and ultimately to bring him to justice.

We must remember that despite the heightened attention, bin Laden was in the mid 1990s, one of four areas of concentration within our counter-terrorism center. That concentration included Hezbollah, the Egyptian-Islamic Jihad, Al Gama'at, the Palestinian rejectionists and smaller groups around the world.

Once bin Laden found safe haven in Afghanistan, he defined himself publicly as a threat to the United States. While we often talk of two trends in terrorism, state supported and independent, in bin Laden's case with the Taliban, we had something completely new, a terrorist supporting a state. What bin Laden created in Afghanistan was as sophisticated an adversary as good as any that we have every operated against.

As the intelligence community improved its understanding of the threat and as the threat grew, we refocused and intensified our efforts to track, disrupt and bring these terrorists to justice. By 1998, the key elements of our strategy against bin Laden and Al Qaida inside Afghanistan and globally placed us in a strongly offensive posture.

They included hitting Al Qaida's infrastructure, working with our foreign partners to carry out arrests, disrupting and weakening his finances, recruiting or exposing operatives, pursuing a multi-track approach to bring bin Laden himself to justice, working with foreign services, developing a close relationship with U.S. federal prosecutors, increasing pressure on the Taliban and enhancing our capability to capture him.

Our 1998 budget submission to the Congress which was prepared in early 1997 outlined our counter-terrorism centers offensive operations listing as their goals to render the masterminds, disrupt terrorist infrastructure, infiltrate terrorist groups and work with foreign partners. It highlighted efforts to work with the FBI in a bold program to destroy the infrastructure of major terrorist groups world- wide. In each subsequent year, we delivered to you equally emphatic statements of our intent.

Despite these clear intentions and the daring activities that went with them, I was not satisfied that we were doing all we could against this target. In 1998, I told key leaders at CIA and across the intelligence community that we should consider ourselves at war with Osama bin Laden. I ordered that no effort or resource be spared in prospecting this war.

In early 1999, I ordered a baseline review of CIA's operational strategy against bin Laden. In the spring of 1999, we produced a new comprehensive operational plan of attack against him and Al Qaida, inside and outside of Afghanistan.

TENET: The strategy was previewed to senior CIA management by the end of July 1999. By mid-September, it had been briefed to the CIA operational-level personnel, to NSA, to the FBI and other partners.

CIA began to put in place the elements of this operational strategy, which structured the agency's counterterrorism activity until September 11 of 2001. This strategy, which we called "the plan," built on what our counterterrorism center was recognized as doing well: collection, quick reaction to operational opportunities, renditions, disruptions and analysis. Its priority was plain: to capture and bring bin Laden and his principal lieutenants to justice.

The plan included a strong and focused intelligence-collection program to track and act against bin Laden and his associates in terrorist sanctuaries. It was a blend of aggressive human-source collection, both unilateral and with foreign partners, and enhanced technical collection.

To execute the plan...

GRAHAM: Mr. Tenet, 10 minutes. If you want to proceed...

TENET: I'd like to, sir.

To execute the plan, CTC developed a program to select and train the right officers and put them in the right places. We moved talented and experienced operations officers into the center. We initiated a nationwide program to identify, vet and hire qualified personnel for counterterrorism assignments in hostile environments. We sought native fluency in the languages of Middle East and South Asia, combined with police, military, business, technical or academic expertise.

In addition, we established an eight-week advanced counterterrorism operations course to share the tradecraft we had developed and refined over the years.

The parts of the plan focused on Afghanistan faced some daunting impediments. U.S. policy stopped short of replacing the Taliban regime. U.S. relations with Pakistan, one of the principal access points, were strained by the Pakistani nuclear tests and the military coup in 1999.

Despite these facts, our surge in collection and operations paid off. Our human intelligence reporting grew. Our human intelligence sources against terrorism grew by more than 50 percent between 1999 and 9/11.

Working across agencies, and in some cases with foreign services, we designed and built several collection systems for specific use against Al Qaida inside Afghanistan.

By 9/11, a map would show that these collection programs and human networks were in place in such numbers as to nearly cover Afghanistan.

Mr. Chairman, let me remind you that I showed you just such a map in closed session. (inaudible) meant that when the military campaign to topple the Taliban and destroy Al Qaida began last October, we were able to support it with an enormous body of information and a large stable of assets.

The realm of human source collection is frequently divided between that which we learn from our foreign partners and unilateral reporting. Even before the plan, our vision for human intelligence on terrorism was simple: We needed to get more from both types.

The amounts of both sources of intelligence rose every year after 1998, and in 1999, for the first time, as I've testified, the volume of reporting on terrorism from our own assets exceeded that from foreign intelligence services, a trend which has continued in subsequent years.

The integration of technical and human sources has been key to our understanding of and our actions against international terrorism. It was this combination, this integration, that allowed us years ago to confirm the existence of numerous Al Qaida facilities and training camps in Afghanistan.

On a virtual daily basis, analysts and collection officers from NSA, NIMA and CIA came together to interactively employ satellite imagery, communications information and human source reporting. The integration also supported military targeting operations before September the 11th, and after, when it helped provide baseline data for the U.S. Central Command's target planning against Al Qaida facilities and infrastructure throughout Afghanistan.

Even while targeting UBL and Al Qaida in their Afghan lair, we did not ignore its cells of terror spread across the globe. We accelerated our work to disrupt and destroy Al Qaida cells wherever we found them.

By 1999, the intensive nature of our operations was disrupting elements of bin Laden's international infrastructure. We went after his leaders and pursued terrorists and other groups engaged in planning future attacks.

By September 11, CIA, and in many cases with the FBI, had rendered 70 terrorists to justice around the world. During the millennium period we told senior policy makers to expect between five and 15 attacks, both here and overseas. The CIA overseas and the FBI in the United States organized an aggressive integrated campaign to disrupt Al Qaida's human assets, technical operations and the hand-off of foreign intelligence to facilitate (inaudible) Foreign Intelligence Surveillance Act warrants.

Over a period of months, there was close daily consultations that included the director of the FBI, the national security adviser and the attorney general. We identified 36 terrorist agents at this time around the world. We pursued operations against them in 50 countries. Our disruption activities succeeded against 21 of these individuals and included terrorist arrests, renditions, detentions, surveillance and direct approaches.

We assisted the Jordanian government in dealing with terrorist cells that planned to attack religious sites and tourist hotels. We helped track down the organizers of these attacks and helped render them to justice.

TENET: We mounted disruption and arrest operations against terrorists in eight countries on four continents, which netted information that allows us to track down even more suspected terrorists.

During the same period, unrelated to the millennium threats, we conducted multiple operations in East Asia, leading to the arrest or detention of 45 members of the Hezbollah network. In December of 1999, an Al Qaida operative named Ressam was stopped trying to enter the United States from Canada.

During the period of the millennium threats, one of our operations and one of our mistakes occurred during our accelerating efforts against bin Laden's organizations when we glimpsed two of the individuals who later became the 9/11 hijackers, Khalid Almihdhar and Nawaf Alhazmi.

In December 1999, CIA, FBI and the Department of State received intelligence on the travels of suspected Al Qaida operatives Nawaf and Khalid to Kuala Lumpur, Malaysia. CIA saw the Kuala Lumpur gathering as a potential source of intelligence about a possible Al Qaida attack in Southeast Asia. We initiated an operation to learn why those suspected terrorists were traveling to Kuala Lumpur.

Khalid and Nawaf were among those travelers who, at the time, we knew nothing more about them. We arranged to have them surveilled. It is important to note that the origin of the operation was a piece of information the FBI passed to U.S. intelligence in August of 1998.

Mr. Chairman, there's a more detailed explanation in the formal statement, but let me walk through the facts. On the 4th of January, based on intelligence, FBI headquarters, its New York field office, CIA, our counterterrorism center and stations overseas knew the full name of one of these individuals, Khalid Almihdhar, who intelligence told us all was an individual with possible ties to Osama bin Laden and the mujahedeen in Yemen, was traveling to Kuala Lumpur.

On the same day, the 4th of January 2000, CIA obtained a photocopy of Almihdhar's passport as he traveled to Kuala Lumpur. It showed U.S. multiple entry visa in Jiddah on 7 April 1999 and expiring on 6 April 2000.

As the operation was under way, CIA briefed senior FBI counterterrorist officers about its progress. CIA continued to keep the FBI apprised of the results of the operation.

On the 5th of January, the CIA officer responsible for initiating and running the operation informed her colleagues at CIA headquarters and abroad in a formal cable that CIA had passed a copy of Almihdhar's passport with its U.S. visa to the FBI for further investigation.

I recognize what Ms. Hill (ph) said in her opening statement. I can only tell you that I've interviewed this officer. She's a terrific officer. She believes she never would have written this cable unless she believes this had happened.

That's as far as we can take that story. And it in no way absolves us of the responsibility for the watch listing, which I will further on complete.

The suspected terrorists left Kuala Lumpur before we could learn about what they discussed at the meeting. At the time we did not know enough about them to assess their significance or the threat they might pose, but we continued to try to learn more.

In March 2000, a foreign intelligence service told us that Nawaf Alhazmi had flown to Los Angeles a week after the Kuala Lumpur meeting ended. Service did not know that Almihdhar was on the same flight. We did not learn that piece of information until August of 2001.

As the active phase of the Kuala Lumpur operation ended, CIA suspected that Almihdhar was a terrorist and knew he had a visa to enter the United States. Those facts met the State Department's standard for adding his name to its watch list. CIA's lapse in not providing that information to the State Department was caused by a combination of inadequate training of some of our officers, their intense focus on achieving the objectives of the operation itself, determining whether the Kuala Lumpur meeting was a prelude to a terrorist attack and the extraordinary pace of operational activity at the time.

The report that suspected terrorist Nawaf Alhazmi had traveled to the United States also should have triggered an early effort to notify the State Department and other agencies. However, the information- only message came almost two months after the terrorists left Kuala Lumpur, and no CTC officer involved with the operation recalls seeing the message when it arrived at headquarters. Again the pace of operations may have been a factor in the missing information.

Later in 2000, in the course of supporting FBI's investigation of the attack on the USS Cole, CIA officers looked at the Kuala Lumpur meeting again, but in their focus on the investigation did not recognize the implications of the information about Alhazmi and Mihdhar they had in their files.

During August of...

GRAHAM: Mr. Tenet, 21 minutes now.

TENET: Well, sir, I just have to say, I've been waiting a year. I've got about another 20 minutes. I think I want to put this in the record. It's important. It's contextual. It's factual. And I'd like to proceed.

(UNKNOWN): Mr. Chairman, I would like to hear the whole thing.

(UNKNOWN): I would too.

TENET: During August of 2001, CIA had become increasingly concerned about a major terrorist attack on U.S. interests, and I directed a review of our files to identify potential threats. In the course of that review, the counterterrorism center found that these two individuals had entered the United States.

On August the 23rd, CIA sent a message marked "immediate" to the Department of State, INS, Customs and FBI requesting that they be watch-listed immediately.

TENET: Before August 2001, CIA should have sent the names of both Hazmi and Midhar to the State Department for inclusion in its watch list. The error exposed weaknesses in our internal handling of watch listing, which have been addressed. Corrective steps have been taken.

The CIA and the State Department are cooperating to transform the tip-off all-source watch list system into a national watch list center. The center will serve as a point of contact and coordination for all watch lists in the U.S. government. It will also allow us to process more efficiently the increase in terrorism intelligence from intelligence and law enforcement agencies.

We have increased the managerial review of the system to reduce the chance that watch list opportunities will be missed. We have designed a database and assembled a team to consolidate information on the identities of known and suspected terrorists and to flag any that have not been passed to the proper audience.

We have lowered the threshold for nominating individuals for the watch list and clarified that threshold for our officers. We have lowered the threshold of dissemination of information that used to be closely held as operational.

Returning to the story of what happened in the run-up to 9/11, in the months after the millennium period, in October of 2000, we lost a serious battle when the USS Cole was bombed and 17 brave Americans sailors perished.

The efforts of American intelligence to strike back at a deadly enemy continued through the Ramadan period, in the winter of 2000, another phase of peak threat reporting. Terrorist cells planning attacks against the United States, foreign military and civilian targets in the Persian Gulf were broken up, capturing hundreds of pounds of explosives and other weapons, including anti-aircraft missiles.

We succeeded in bringing a major bin Laden terrorist facilitator to justice, with the cooperation of two foreign governments. This individual had provided documents and shelter to terrorists traveling throughout the Arabian Peninsula.

We worked with numerous European governments, such as the Italians, the Germans, the French and the British, to identify and break up terrorist groups and plans against American and local interests in Europe.

Taking the fight to bin Laden and Al Qaida was not just a matter of mobilizing our counterterrorism center or even CIA. This was an interagency and international effort.

Two things which are critical in this effort are fusion and sharing. Counterterrorism center was created to enable the fusion of all sources of information in a single action-oriented unit. Not only do we fuse every source of information of reporting on terrorists, we fuse analysis and operations. This fusion gives us the speed that we must have to seize fleeting opportunities in the shadowy world of terrorism.

Based on this proven philosophy, by 2001 the center had more than 30 officers from more than a dozen agencies on board, 10 percent of its complement at the time.

No matter how it is fused within counterterrorism center, no matter how large CTC may be, there are still key counterterrorist players outside of it. If you interview anyone today in the counterterrorism center, he or she will tell you of the work they are doing with their counterparts across CIA, with NSA, with NIMA, with FBI, or today with a special operations unit in Kandahar or Bagram.

It is also clear that when errors occur, when we miss information or opportunities, it is because our sharing and our fusion are not as strong as they need to be. Communication across bureaucracies, missions and cultures is among our most persistent challenges in the fast-paced, high-pressure environment of counterterrorism, and I will return to this later in my testimony.

One of the most critical alliances in the war against terrorism is that between CIA and FBI. The alliance in the last few years has produced achievements that simply would not have been possible if some of the media stories of all-out feuding were true. And FBI officers have been serving as deputy chief of CTC since the mid-'90s, and the FBI reciprocated by making a CIA officer deputy in the bureau's Counterterrorism Division. In the bin Laden issue station itself, FBI officers were detailed there soon after it opened in 1996.

Of course, this is not a perfect relationship. Frictions often develop. In 1994, the CIA inspector general noted that the interactions between the two organizations were too personality- dependent. This has been particularly so when two are pursuing different missions in the same case: the FBI trying to develop a case for court-room prosecution, the CIA trying to develop intelligence to assess and counter the threat.

In 2001, before 9/11, the CIA inspector general found significant improvement, citing, for example, the center's assistance to the FBI in two dozen renditions in 1999 and 2000. The director of the FBI, Louis Freeh, and I worked hard and together on this. We had quarterly meetings of our senior leadership teams. Through training and other means, coordination between our chiefs of station and our legates overseas was significantly improved.

Today, Bob Mueller and I are working to deepen our cooperation, not only at headquarters but in the field. We both understand that, despite different missions and cultures, we need to build a system of seamless cooperation that is institutionalized.

Mr. Chairman, the third period is the run-up period to 9/11. As with the millennium and Ramadan 2000 periods, we increased the tempo of our operations against Al Qaida. We stopped some attacks and caused terrorists to postpone others. We helped to break up another terrorist cell in Jordan, and seized a large quantity of weapons, including rockets and high explosives. Working with another partner, we broke up a plan to attack U.S. facilities in Yemen.

In June, the CIA worked with a Middle East partner to arrest two bin Laden operatives planning attacks on U.S. facilities in Saudi Arabia.

In June and July, CIA launched a wide-ranging disruption effort against bin Laden's organization with targets in almost two dozen countries. Our intent was to drive up bin Laden's security concerns and lead his organization to delay or cancel its attacks. We subsequently received reporting that attacks were delayed, including an attack against the U.S. military in Europe.

In July, a different Middle East partner helped bring about the detention of a terrorist who had been directed to begin an operation to attack an American embassy or cultural center in a European capital.

In the summer of 2001, local authorities, acting on our information, arrested an operative described as bin Laden's man in East Asia.

We assisted another foreign partner in the rendition of a senior bin Laden associate. Information he provided included plans to kidnap Americans in three countries and carry out hijackings.

We provided intelligence to a Latin American service on a band of terrorists considering hijackings and bombings. An FBI team detected explosives residue in their hotel rooms.

In the months leading up to 9/11, we were convinced that bin Laden meant to attack Americans, meant to kill in large numbers, and that the attack could be at home, abroad or both. And we reported these threats urgently.

Our collection sources lit up during this intense period. They indicated that multiple, spectacular attacks were planned, and that some of these plots were in the final stages.

Some of the reporting implicated known Al Qaida operatives. The reports suggested that the targets were American, although some reporting simply pointed to the West or to Israel.

But the reporting was maddeningly short on actionable details. The most ominous reporting hinted at something large was also most vague.

The only occasion from this reporting where there was specific geographic context, either explicit or implicit, it appeared to point abroad, especially to the Middle East.

We disseminated these raw reports immediately and widely to policy makers and action agencies such as the military, the State Department, the FAA, the FBI and others.

TENET: The reporting by itself stood as a dramatic warning of imminent attack. Our analysis worked to find linkages among the reports as well as links to past terrorist threats and tactics.

We considered whether Al Qaida was feeding us this reporting, trying to create panic through disinformation. Yet we concluded that the plots were real.

When some reporting hinted that an attack had been delayed, we continued to stress that where indeed multiple attacks planned and that several continued on track. And when we grew concerned that so much of the evidence pointed to attacks overseas, we noted that bin Laden's principal ambition has long been to strike the United States.

Nevertheless with regard to the 9/11 plot, we never acquired the level of detail that allowed us to translate our strategic concerns into something that we could act on.

The intelligence community counterterrorism board issued several reports that summer. A sign that our warnings were being heard, both from our analysis and from the raw intelligence we disseminated, was that the FAA issued two alerts to air carriers in the summer of 2001. Our warnings complemented strategic warnings that we've been delivering for years about the real threat of terrorism to America.

There's no need to go through it, but you know, Mr. Chairman, in three separate occasions in my worldwide threats testimony, I told you that, as I told you in 1999, there is not the slightest doubt that Osama bin Laden, his worldwide allies and his sympathizers are planning further attacks against us. I told you he will strike whenever in the world he thinks we are vulnerable, and that we were concerned that one or more of bin Laden's attacks could occur at any time.

In 2001, I told you that the terrorists are seeking out softer targets that provide opportunities for mass casualties and that bin Laden is capable of planning multiple attacks with little or no warning.

I looked at the strategic warnings that had been issued on hijacked aircrafts. Earlier in the 1990s we had some serious strategic analytical work on both terrorist targets and methodology. The national intelligence estimate in 1995 warned: "The United States is particularly vulnerable to various types of terrorist attacks. Several kinds of targets are especially at risk: national symbols such as the White House, the Capitol, and symbols of U.S. capitalism such as Wall Street, power grids, communication switches, particularly civil aviation."

The same estimate also said, "We also assess that civil aviation will figure prominently among possible terrorist targets in the United States. This stems from the increasing domestic threat posed by the foreign terrorists, the continuing appeal of civil aviation as a target and a domestic aviation security system that has been the focus of media attention. We have evidence that individuals linked to terrorist groups or state sponsors have attempted to penetrate security at U.S. airports in recent years. The media had called attention to among other things, inadequate security for checked baggage.

"Our review of the evidence obtained thus far about the plot uncovered in Manila in early 1995 suggests the conspirators were guided in their selection of the method and venue of attack by carefully studying security procedures in place in the region. If terrorists operating in this country are similarly methodical, they will identify serious vulnerabilities in our security system of domestic flights."

In the 1997 update, we said pretty much the same thing. It's clear that the message was received. The White House Commission on Aviation Safety and Security noted a number of facts consistent with this in their report which you have in the record.

In its publication, "Criminal Acts Against Civil Aviation 2000," the FAA stated, "Although bin Laden is not known to have attacked civil aviation, he has both the motivation and the wherewithal to do so. Bin Laden's anti-Western and anti-American attitudes make him and his followers a significant threat to civil aviation, especially U.S. civil aviation."

We have given you over a half a million pages of documents and interviewed hundreds of intelligence officers in our efforts to investigate this complex issue. The documents we provided show some 12 reports spread over seven years which pertain to possible use of aircraft as terrorist weapons.

We disseminated those reports to the appropriate agencies, such as the FAA, the Department of Transportation and the FBI, as they came in. Moreover, we also provided versions of intelligence reports that were about threats to civil aviation so they could be distributed more widely through the airline industry.

Mr. Chairman, I want to talk about two more subjects -- and I appreciate the fact that you are letting me go on -- budget and resources.

Ms. Pelosi, you are right. No one should hide behind budget and resources as an excuse for anything. But there's a context to budget and resources that is important for us to evaluate. To evaluate our work, it is essential that you look at three issues: global geo- political issues we were grappling with, counter-terrorism resource changes throughout the 1990s that have affected our ability to fight, and the overall health of U.S. intelligence during this period.

It is simply not enough to look at Al Qaida in isolation. The last decade saw a number of conflicting and competing trends. Military forces deployed to more locations than ever in our country's history, the growing counter-proliferation and counter-terrorism threat, constant tensions in the Middle East, and to deal with these and a host of other issues, far fewer intelligence dollars and manpower.

At the end of the Cold War, the intelligence community, with a $300 billion deficit and budget caps, much like the rest of the national security community, was asked by both Congress and successive administrations to pay the peace dividend. The cost of the dividend was that, during the 1990s, the intelligence community funding declined in real terms, reducing our buying power by tens of billions of dollars over the decade. This loss of people was devastating, particularly in our two most manpower-intensive activities: all- source analysis and human source collection.

By the mid-1990s, recruitment of CIA analysts and case officers had come to a virtual halt. NSA was hiring no new technologists during the greatest information technology change in our lifetime. During this period it was the expectation that we would surge our existing resources to deal with emerging intelligence challenges and including threats from terrorism. And surge we did.

As I declared war on Al Qaida in 1998 in the aftermath of the East Africa bombings, we were in the fifth year of around-the-clock support to Operation Southern Watch. Just three months earlier, we were embroiled in answering questions on the India/Pakistan nuclear tests and trying to determine how we could surge more people to understanding and countering weapons of mass destruction.

In early 1999, we surged more than 800 analysts and redirected collection assets to support the NATO bombing campaign against the Federal Republic of Yugoslavia.

During this time period of increased military operations, the Defense Department was also reducing its tactical intelligence units and funding. This caused the intelligence community to stretch our capabilities because national systems were covering the gaps in tactical intelligence.

TENET: While we grappled with this multitude of high-priority and overlapping crises, we had no choice but to modernize selective intelligence systems and infrastructure in which we deferred necessary investments while we down-sized, or we would have found ourselves out of business.

We had a vivid example of the cost of deferring investments a few years ago when NSA lost all communications between the headquarters and its field stations and were unable to process that information for several days.

Throughout the intelligence community during this period, we made difficult resource allocation decisions to try to rebuild critical mission areas.

In CIA, we launched a program to rebuild our clandestine service. This meant overhauling our recruitment and training practices and our infrastructure. We launched similar initiatives to rebuild our analytical depth and expertise and to reacquire the cutting edge in technology. Although we will not be given credit for these efforts in the war on terrorism, they most assuredly contributed to that effort.

NSA made the hard decision to cut additional positions to free up pay and benefit dollars to patch critical infrastructure problems and to modestly attempt to capitalize on the technology revolution. But with the Al Qaida threat growing more ominous and with our resources devoted to countering the threat clearly inadequate, we began taking more money and people away from other critical areas to improve our efforts against terrorism.

We managed to triple the intelligence community-wide funding for counterterrorism from the period of 1990 to 1999. The counterterrorism center's resources nearly quadrupled in the same period. As your own joint inquiry staff charts show, we had significantly reallocated both dollars and people inside our programs to work the terrorism problem.

Inside CIA, the '90s reflect the same pattern. CIA's budget had declined 18 percent and we'd lost 16 percent of our personnel. Yet in the midst of the stark resource picture, our funding level for counterterrorism just prior to 9/11 was 50 percent higher than our 1997 level. CTC personnel increased by over 60 percent during the same period.

The CIA consistently reallocated and sought additional resources in this fight. In fact, in 1994, the budget request for counterterrorism equaled less than 4 percent of our program total. In the fiscal 2002 budget request, we submitted prior to 9/11, counterterrorism activities constituted almost 10 percent of the budget increase.

During a period of budget stringency, when we were faced with rebuilding essential intelligence capabilities, I made some tough choices. And although resources were virtually everything else at CIA was going down, counterterrorism resources went up.

After the U.S. embassies in Africa were bombed, we requested more money. In the fall of 1998, I asked the administration to increase intelligence funding by more than $2 billion annually for the fiscal years 2000 to 2005, and in each subsequent FYDP program I made similar requests. Only small portions of these requests were approved.

Counterterrorism funding and manpower needs were number one in every list I provided to Congress and the administration. Indeed it was at the top of the funding list approved by Speaker Gingrich in 1999, the first year in which we received a significant infusion of new money for intelligence. That supplemental and those that follow it that you supplied were essential to our efforts and they helped save American lives.

We knew we could not count on supplementals to build multi-year programs. And that's why we've worked so hard to reallocate our resources and seek five-year funding increases. Many of you on this committee and the Appropriations Committees understood the problem very well. You were enormously helpful to us, and we are grateful.

I want to conclude on the resource point by saying one thing. In CIA alone, I count the equivalent of over 700 officers working counterterrorism in August of 2001 at both headquarters and the field. The number does not include the people who are working to penetrate, either technically or through human sources, a multitude of terrorist targets which we could drive intelligence on terrorists. Nor does it include friendly liaison services or coalition partners.

You simply cannot gauge the level of effort by counting only people who had the words "Al Qaida" or "bin Laden" in their position description.

We reallocated all of the people we could and we always knew that we never had enough. We can argue for the rest of the day about the exact number of people we had working this problem, but what we've never said was that the numbers we had were enough.

Our officers told your investigators that they were always short- handed. They were right. They were.

America may never know the names of those officers, but America should know they are heroes. They worked tirelessly for years to combat bin Laden and Al Qaida and have responded to the challenge of combating terrorism all during this time with remarkable intensity. Their dedication, professionalism and creativity stopped many Al Qaida plots in their tracks and saved countless American lives. Most of them are still in this fight, are essential to this fight and they honor all of us by their continued service.

Let me close with some points, Mr. Chairman. Success against terrorist targets must be measured against all elements of our nation's capabilities, policies and will. The intelligence community and the FBI are important parts of the equation, but by no means the only parts. We need a national integrated strategy in our fight against terrorism that incorporates both offense and defense.

The strategy must be based on three pillars: continued relentless effort to penetrate terrorist groups, whether by human or technical means, whether alone or in partnership with others; intelligence military law enforcement and diplomacy must stay on the offense continually against terrorism around the world; we must disrupt and destroy the terrorist operational chain of command and the momentum to deny them sanctuary anywhere and eliminate their sources of financial and logistical support.

Nothing did more for our ability to combat terrorism than the president's decision to send us into the terrorist sanctuary. By going in massively, we were able to change the rules for the terrorists. Now they are the hunted. Now they have to spend their time worrying about their survival. Al Qaida must never again acquire a sanctuary anywhere.

TENET: On defense we need systematic security improvements to protect our country, country's people and our infrastructure, and create a more difficult operating environment here in the United States for terrorists.

The objective is to understand our vulnerabilities better than the terrorists do, to take action to reduce those vulnerabilities, to increase the costs and risks for terrorists to operate in the United States and, over time, make those costs unacceptable to them.

We have learned an important historic lesson: We can no longer race from threat to threat, resolve it, disrupt it and then move on. Targets at risk remain at risk.

In 1993 the first attack on the World Trade Center was damaging, maybe modestly so compared, but nevertheless very damaging. A plot around the same time to attack New York City tunnels and landmarks was broken up.

We all breathed a sigh of relief and moved on, focusing the effort mostly on bringing the perpetrators to justice. The terrorists came back.

At the millennium a young terrorist panicked at a Canadian-U.S. border crossing and his plan to attack an airport in Los Angeles was exposed and thwarted. We breathed another sigh of relief and prepared for his trial. Al Qaida's plans had only been delayed.

Last winter another young terrorist on an airliner ineptly tried to detonate explosives in his shoes, and was stopped by alert crew and passengers. At this point we're smarter. We started checking people's shoes for explosives. It's not nearly enough.

In the last year we have gone on high alert several times for good reason only to have no attack occur. We all breathed a sigh of relief and thought maybe it was a false alarm. It wasn't.

We must design systems that reduce both the chances of an attack of getting through and the impact if it does. We must address both the threat and our vulnerability. We must not allow ourselves mentally to move on while the enemy is still at large.

Two final points: Our people need better ways to communicate. Moreover, we also need systems that enable us to share critical information quickly across bureaucratic boundaries; systems to put our intelligence in from of those who need it wherever they may be, whatever their specific responsibilities for protecting the American people from the threat of terrorist attack.

This means we must move information in ways and to places it never had to move before. We're improving our collaborative systems. We need to improve our multiple communications links, both within the intelligence community and now to homeland security.

Now more than ever before we need to make sure our customers get from us exactly what they need, which generally means exactly what they want, fast and free of unnecessary restrictions.

Chiefs of police across the country express understandable frustration at what they do not know. But there's something else. Intelligence officers in the federal government want to get their hands on locally collected data. Each could often use what the other may have already collected. The proposed Department of Homeland Security will help. So, too, will the intelligence community's experience in supporting our armed forces.

We're going to have to put that experience to work in supporting the police chiefs. We don't have the luxury of an alternative.

This fight is going to be long and difficult, it will require the patience and the diligence that the president has asked for.

It will require resources sustained over a multi-year period, to recapitalize our intelligence infrastructure on a pace that matches the changing technical and operational environment that we face.

It will also require countries that have previously ignored the problem of terrorism or refused to cooperate with us to step up and choose sides.

It will require all of us across the government to follow the example of the American people after September 11th, to come together, to work as a team, and pursue our mission with unyielding dedication and unrelenting fidelity to our highest ideals.

We owe those who died on September 11th and all Americans no less.

GRAHAM: Thank you, Mr. Director.

Director Mueller?

MUELLER: Thank you, Chairman Graham and Chairman Goss, Senator Shelby and Congresswoman Pelosi. And thank you, Congresswoman Pelosi, for acknowledging the loss of our analyst Linda Franklin on Monday as a result of -- at the hands of the sniper.

I want to thank you for the opportunity to appear before you this morning and to discuss the events of September 11th, 2001, and most particularly to discuss the FBI's counterterrorism efforts since that tragic day.

I must start before addressing these matters, though, by taking a moment to honor the victims who died at the hands of Al Qaida terrorists on that day. We cannot begin to imagine how difficult this past year has been for those families and there can be no doubt that the pain, the anger and the grief is as fresh today as it was on that Tuesday morning last year.

As we all know, families lost mothers, fathers, daughters and sons, and the public safety community lost courageous firefighters and law enforcement officers, all of them innocent people going about their daily lives.

And we in the FBI extend our deepest sympathy to the surviving family members and the victims of those attacks and assure them that the FBI is determined to honor the memory of their loved ones by never wavering in our fight to address terrorism.

I would also spend a moment, if I could, at the outset recognizing the men and women of the FBI, particularly those serving as analysts and agents in the counterterrorism program.

These are dedicated, hardworking and most often under-appreciated public servants who were devastated by the events of September 11th. These men and women have struggled day-in and day-out to do their jobs despite often inadequate resources and enormous workloads. And I, over the past year, have been honored to work alongside them, all the men and the women of the FBI.

And I do believe it is important to remind this committee and the American people that the mission of the FBI's counterterrorism program, to identify, prevent, deter and respond to acts of terrorism, is broad and multi-faceted.

While the events of 9/11 have brought into focus the threat posed by Osama bin Laden and the Al Qaida network, we must recognize, as George Tenet has pointed out, that the threats we face are not limited to one individual, one group or one country. Our counterterrorism efforts must address the threats posed by a multitude of international and domestic terrorists.

Our recent history reflects growing threats from a variety of such groups and individuals. Religious extremists, including Al Qaida, committed the bombings of the World Trade Center in 1993, Khobar Towers in Saudi Arabia in 1996, the embassies in Kenya and Tanzania in 1998, and the bombing of the USS Cole in Yemen in October 2000.

More structured terrorist organizations were responsible for numerous other terrorist attacks. Hezbollah, for example, killed more Americans prior to September 11th than any other terrorist group, including Al Qaida: the 1983 truck bombings of the U.S. embassy and Marine Corps barracks in Lebanon, the 1984 of the U.S. embassy annex in Beirut, the 1985 hijacking of TWA Flight 847.

And we cannot forget right-wing terrorist groups espousing principles of racial supremacy and anti-government rhetoric who have also, in the past, become a serious menace, as was so tragically evidenced by the April 1995 bombing of the Murrah Federal Building in Oklahoma City.

MUELLER: I should point out at the same time, as George has, that the FBI and our partners, the CIA and others, have prevented significant terrorist attacks: the 1993 plot to bomb New York landmarks; the 1995 plans to bomb United States commercial aircraft transiting the Far East; the 1997 plot to place four pipe bombs on New York City subway cars, which was narrowly averted by the New York Joint Terrorism Task Force; the 1997 prevention of the possible detonation of 10 letter bombs at Leavenworth federal prison and two offices of the Al Hayat newspaper; and, finally, the 1999 investigation, in coordination with the U.S. Customs Service, which resulted in the conviction of Ahmed Ressam for a plot to bomb the Los Angeles International Airport at the turn of the millennium.

I want to talk for a moment about what the FBI has done subsequent to September 11th. After the September 11th attacks, the FBI, the law enforcement community and the U.S. and foreign intelligence communities joined forces to find out everything we could about the hijackers and how they succeeded. Our immediate goal was clear, and that was to prevent another attack by fully understanding how the terrorists perpetrated this one.

Thanks to these efforts and the unprecedented cooperation of the intelligence and law enforcement communities, both domestic and international, our investigation revealed many of the details about the planning, financing and perpetration of these attacks. Our investigation will undoubtedly continue and likely develop new and significant details in the years to come.

And in earlier testimony before this committee and in my statement for the record, I have explained much of what we now know about the hijackers' activities in this country: that they entered the country legally, that they committed no crimes with the exception of minor traffic violations, they purchased airline tickets in cash or using the Internet, they dressed and acted like Americans, merging into our society.

And I do believe that the context in which these 19 individuals were able to come to the United States and take advantage of the liberties this country has to offer and operate without detection is important to a full understanding of how these attacks were successfully undertaken.

Now, in our post-September 11th investigative activity we have undertaken a number of investigations and operations that have dealt some blows to a number of terrorist groups within the United States. As all of us, I believe are aware, two weeks ago the Joint Terrorism Task Forces in Portland, Oregon, and Detroit, Michigan, arrested four individuals who were charged with aiding and abetting Al Qaida fighters.

Last month, the Buffalo, New York, Joint Terrorism Task Force arrested individuals who were charged with traveling overseas in the summer of 2001 to attend the Al Faruq (ph) terrorist training camp located near Kandahar, Pakistan.

And in May, Jose Padilla was detained as he entered the United States from Pakistan at Chicago's -- he was detained at Chicago's O'Hare International Airport.

And last week in Chicago the executive director of the Benevolence International Foundation, a purportedly charitable organization, was charged in an indictment with fraudulently raising funds for Al Qaida and other violent groups. This was charged as part of a multinational criminal enterprise spanning over a 10-year period.

And I should also add and point out, over the last year, as a result of U.S. military and intelligence community action in Afghanistan, Pakistan and other foreign lands, a large volume of paper documents, electronic media, videotapes, audio tapes and electronic equipment has been seized, and the FBI, CIA, DIA and NSA have established a coordinated effort to exploit these seized materials.

MUELLER: These are just a sampling of the investigative and preventive efforts that have borne fruit over the last year. There have been others but those operations many of them remain classified and have been described in closed sessions with the members of this committee.

I want to talk for a moment and turn to reforms made in the FBI in the wake of September 11th. These 13 months since September 11th have been a time of great change for the Federal Bureau of Investigation.

Starting immediately after the planes hit, and when over half of our 11,500 agents suddenly found themselves working terrorism matters, it became clear that our mission and our priorities had to change dramatically.

Today the FBI has twice the number agents permanently assigned to counterterrorism as were assigned prior to September 11th, and other permanent changes have been carefully considered and implemented.

We have been addressing the shortcomings of the bureau and the intelligence community that have been highlighted since the September 11th attacks, and we have heard and we acknowledge the valid criticisms, many of which have been reiterated by this committee.

For example, the Phoenix memo should have been disseminated to all field offices and to our sister agencies and it should have triggered a broader analytical approach.

And the 26-page request from Minneapolis for a FISA warrant should have been reviewed by the attorneys handling the request in our FISA section.

These incidents and others have informed us on needed changes, particularly the need to improve accountability, analytic capacity and resources, information sharing and technology to name but a few. And we have taken steps to address these shortcomings, some of which I would like to briefly highlight today.

First is the reorganization of the Counterterrorism Division. In November of last year Congress approved my proposal for a reorganization of FBI headquarters. Under this reorganization the assistant director for counterterrorism is responsible for management of the national terrorism program and for select cases and operations which require national-level management due to special circumstances, situations or sensitivity.

This management structure is a recognition that counterterrorism has national and international dimensions that transcend field office territorial borders and require centralized coordination to ensure that individual pieces of an investigation can be assembled into a coherent picture.

This ensures accountability for the program. Under the prior system whereby field offices would have primary responsibility for terrorism cases, responsibility was diffused and bureau leadership could not easily be held accountable for the program.

In this reorganization, the assistant director for counterterrorism is accountable for taking all steps necessary to maximize our counterterrorism capacity. And by saying that I don't mean at all to relieve myself of the accountability ultimately for that program because I am the one ultimately responsible for its success or its failure.

One of the ways in which headquarters supports the field now in maximizing the counterterrorism capabilities is through the newly created flying squads. These squads augment local field investigative capabilities with specialized personnel and support, and they support FBI rapid deployment teams, thereby providing a surge capacity for quickly responding to fast-breaking situations in locations where there is no FBI presence.

Now, this committee is familiar with the FBI's analytical shortcomings, as demonstrated by the limited dissemination and analysis afforded the Phoenix memo. Over the last year we have undertaken the following measures to enhance our analytical capability.

First, we've created the Office of Intelligence which is the component of the FBI that will oversee development of the analyst position and career track and will ensure that intelligence is shared as appropriate within the FBI and the rest of the United States government.

I'm grateful to Director Tenet for his willingness to detail experienced CIA managers from his Directorate of Intelligence to the FBI to set up and manage that office.

We have significantly increased the resources allocated to analysis.

With regard to intelligence operations specialists, who provide direct support to investigations, we are proposing a total staffing level of 205, with 89 currently on board and 44 in various stages of background investigation.

With regard to the intelligence research specialists, who provide strategic analysis, we are proposing a total staffing level of 155, with 70 currently on board and 73 in the background investigation process.

We have requested an additional 28 intelligence operations specialists and 114 IRSes, intelligence research specialists, in our 2003 budget.

And, of course, I'm concerned that until the 2003 budget is approved the FBI will be held to its current spending levels, which could have an impact on the development of our analytical program.

We have created a College of Analytical Studies to provide training for all FBI analytical support personnel. This college is intended to become a featured component of training at the FBI Academy, along with new agent training in the FBI National Academy.

And through the efforts of our expanded Terrorist Financial Review Group and the inter-agency teams conducting document exploitation, we have augmented FBI capabilities to perform financial and communications analyses of terrorist groups and networks.

Much has been made of the reportedly hostile relationship and turf battles between the FBI and the CIA. And as you've heard from Director Tenet, the relationship between the FBI and the CIA has never been stronger or more productive.

While we have to concede that there were in the past isolated failings in the information flow between the two agencies prior to September 11th, we must not overlook the fact that a successful systemic effort has been under way for years to develop and build upon our agencies' relationship.

Starting with Dale Watson's (ph) detail to the CIA's counterterrorism center in 1996, we have had a regular exchange of employees. And at this time we have a number of FBI employees assigned to the CIA's counterterrorism center and the CIA has eight managers and dozens of analysts assigned to the FBI's Counterterrorism Division. Each of these employees has unfettered access to the computer databases and communications systems of the other agency, and every morning a CIA official detailed to the FBI joins other FBI executives in my office for briefings that occur twice a day.

This committee has also presented, I believe, select testimony that is critical of the FBI's historical unwillingness and technological inability to share information with not only the CIA but with other federal agencies and with our state and local law enforcement colleagues. Since September 11th we have instituted several changes which have resulted in significant improvements in communication and coordination of many aspects of information sharing.

I would like to summarize briefly some of those initiatives adopted since September 11th.

MUELLER: We've established joint terrorism task forces in each of our 56 field offices. Prior to September 11th, only 35 offices had those task forces. And this partnering of FBI personnel with investigators from various local, state and federal agencies on these task forces encourages the timely sharing of intelligence that is absolutely critical to our counterterrorism mission.

We established a new joint terrorism task force at FBI headquarters to complement task forces established in each of the FBI's 56 field offices and to improve collaboration and information sharing with other agencies. We currently have representation of 26 federal agencies and two state and local law enforcement officials who on this task force report to the FBI's command center.

We have undertaken a joint terrorism task force information sharing initiative involving the St. Louis, San Diego, Seattle, Portland, Norfolk and Baltimore field offices. This pilot project, which was first initiated in the St. Louis office, will integrate extremely flexible search tools that will permit investigators and analysts to perform searches on the full text of investigative files, not just indices.

Fourth, we created the Office of Law Enforcement Coordination to enhance the ability of the FBI to forge cooperative and substantive relationships with all of our state and local law enforcement counterparts. This office is run by a former police chief.

And we have established the FBI Intelligence Bulletin, which is disseminated weekly to over 17,000 law enforcement agencies and to 60 federal agencies.

As a result of these initiatives, and despite some of the testimony that this committee has heard, we have received numerous letters of support and gratitude from state and local officials, and most particularly from the International Association of Chiefs of Police. And I'd like to submit some of those letters to the committee and ask that they be included as part of the official record of this inquiry.

GRAHAM: Without objection, so ordered.

MUELLER: We are also addressing the shortcomings of the bureau's information technology. Over the years we have failed to develop a sufficient capacity to collect, store, search, retrieve, analyze and share information. Prior testimony before this committee has described the problems the FBI is experiencing because of outdated technology.

Thanks to the support of Congress, the FBI has embarked on a comprehensive overhaul and revitalization of our information technology infrastructure. That process is well under way, but I want to caution you that these problems will not be fixed overnight. Our technological problems are complex and they will be remedied only through careful and methodical planning and implementation. We have made progress in the past year and we have laid the groundwork for significant progress in the months and the years to come.

My prepared testimony sets forth additional details of the development and deployment of what we call the Trilogy Program, our revitalization of our technological infrastructure. We will create an automated system that will allow the FBI to share top secret and sensitive compartmented information internally and throughout the intelligence community.

In the wake of last year's terrorist attacks, the Congress has provided the additional funding we need to enable us to accelerate the implementation of some of these critical initiatives.

In conclusion, Mr. Chairman, let me say that in the aftermath of September 11th, the FBI quickly recognized that the organization needed to change in order to address the terrorist threat facing this nation. As I have indicated, the FBI has faced many challenges over the past 13 months, and I believe we have made significant progress in addressing these challenges. But there is still a great deal of work to be done.

I am, however, proud of the flexibility and the willingness of the FBI work force to do whatever it takes, to change whatever needs changing to prevent another terrorist attack.

I must say that, despite our accomplishments and some of the successes we have had in reorganizing the FBI over the last year and in addressing our shortcomings, the transformation must continue. We must develop a work force that possesses specialized skills and backgrounds, that is equipped with the proper investigative, technical and analytic tools and possesses the managerial and administrative competencies necessary to deal with a complex and volatile environment.

We are in the process of doing an internal reengineering to review and examine virtually every aspect of FBI operations, administration, policy and procedure. As a result of this review, we anticipate additional changes to FBI programs that will enable us to most effectively and efficiently utilize the tools and the resources Congress has provided.

Mr. Chairman, I am confident that we will ultimately prevail in our fight against terrorism. But we will do so only if we work together. Our agents must work closely with our local and state law enforcement partners. Our field offices must work with our headquarters. The bureau must work with the CIA and our law enforcement and intelligence counterparts around the world.

The counterterrorism components of the executive branch must have a meaningful and constructive relationship with our colleagues in Congress.

MUELLER: These relationships are the lifeblood of our campaign against terror and we must do everything in our power to sustain and to nurture them.

And finally, once more, let me say how immensely proud I am of the men and women of the FBI and all that they are able to accomplish under less than optimum conditions.

In closing, I would like to quote, and not a quote from me, but a quote from one of the individuals who testified before you in the hearings, a New York field agent.

When he testified before this committee, he presented his assessment of both the hearings and of his colleagues. And he said, "What has sometimes been lost in the media and in this inquiry process is that it's the same FBI which has been extensively criticized since September 11th, 2001, that is responsible for the investigation that led to the charges being brought against Zacarias Moussaoui."

And he concludes, "The FBI is, of course, subject to human factors and limitations. And we are occasionally hamstrung by legal constraints, both real and imagined. But FBI personnel, both in the field and at FBI headquarters, were committed to preventing acts of terrorism prior to September 11th, 2001. And we continue to be committed to that mission today."

Thank you, Mr. Chairman. And I'm prepared to answer any questions the committee may have.

GRAHAM: Thank you, Mr. Director.

General Hayden?

HAYDEN: Thank you, sir.

Chairman Graham, Chairman Goss, distinguished members of the Intelligence Committees, first of all, thank you for the opportunity to address you today.

And first of all, on behalf of the men and women of the National Security Agency, I want to extend our profound sympathy to the families of the victims and to the survivors of these terrible attacks.

We know our responsibilities for American freedom and security at NSA. Our work force takes the events of September 11th very personally. By the very nature of our work in SIGINT, our people deeply internalized their mission. This is truly personal for them.

Shortly after the attacks on the World Trade Center and the Pentagon, our director for signals intelligence, Maureen Baginski, visited and calmed an emotionally shattered counterterrorism office. That office is located near the top floor of one of our high-rise buildings. Now, for obvious reasons, we had tried to move as many folks as possible into our adjacent lower buildings, but we really couldn't afford to move the counterterrorism shop. When I visited them later that afternoon, not only were they hard at work, they were defiantly tacking up blackout curtains on their windows to mask their location. They remain equally hard at work today. Americans should be proud of these dedicated men and women who serve in the front lines of the war against terrorism.

This inquiry is very important to us. It's played an important role for NSA and for the country in determining why Al Qaida was able to attack on that day with little warning, and how we can better detect and defeat these kinds of operations in the future.

We've hosted your staff in our office spaces at our headquarters. We've shared data with them. And in response to their request have made available nearly 3,000 documents, 15,000 pages of material, and we have arranged about 200 face-to-face meetings. We've assigned some of our best people to work full-time with your staff. And we've done this because, like you, we're committed to finding the full story of what led up to September 11th and to eliminating the systemic problems that hamper our ability to aggressively collect against terrorists.

Now my goal today is to provide you and the American people with as much insight as possible into the three questions Ms. Hill raised earlier: First, what did NSA know prior to September 11? Second, what have we learned in retrospect? And third, what have we done in response?

Now, I'll be as candid, as prudence and the law allow me in this open session. But if at times I seem indirect or incomplete, I hope that you and the public understand that I've discussed our operations fully and unreservedly in earlier closed sessions.

You well know the frugality of all that we do in how efforts measured in millions of dollars and thousands of man years are turned to naught overnight when a story about communications intercepts appears in the press. Such leaks make the intelligence challenges that we face just that much more difficult and costly.

A painful example of inestimable consequences in the war against terrorism occurred when Osama bin Laden and his key lieutenants changed their communications practices following 1998 press reports of NSA intercepts.

You're also well aware that the nation's SIGINT efforts have successfully thwarted numerous terrorist attacks in the past. And while our successes are generally invisible to the American people, everyone knows when an adversary succeeds.

NSA has had many successes. But these are even more difficult to discuss in open session.

So to the first question: What did NSA know prior to September 11th? Sadly, NSA had no SIGINT suggesting that Al Qaida was specifically targeting New York and Washington or even that it was specifically planning an attack on U.S. soil. Indeed, NSA had no signals intelligence knowledge before September 11th that any of the attackers were in the United States.

(inaudible) the committees on one area where our performance in retrospect could have been better. Ms. Hill referred to this in her September 20th testimony when she said, and I'm quoting now, "Unbeknownst to the CIA, another arm of the intelligence community, NSA, had information associating Nawaf Alhazmi with the bin Laden network. NSA did not immediately disseminate that information, although it was in NSA's databases," end of quotation.

This failure to share, as it's been called, was not some culturally based failure. As you know, one of our value-added activities is sorting through vast quantities of data and sharing that which is relevant in a usable format with appropriate consumers. In this case, we did not disseminate information we received in early 1999 that was unexceptional in its content, except that it associated the name of Nawaf Alhazmi with Al Qaida.

This is not to say that we didn't know of him and report on him or of other individuals. We did. In early 2000, by the time of the meetings in Kuala Lumpur, we had the Alhazmi brothers, Nawaf and Salim, as well as Khalid Almihdhar, in our sights. We knew of their association with Al Qaida and we shared this information with the community.

I've looked at this closely. If we would have handled all of the above perfectly, the new fact that we could have contributed the time of Kuala Lumpur was Nawaf's surname, and perhaps that of Salim who appeared to be Nawaf's brother, that their surname was Alhazmi.

HAYDEN: Now, there's one other area in our pre-September 11th performance that's attracted a great deal of public attention. In the hours just prior to the attacks, NSA did obtain two pieces of information suggesting that individuals with terrorist connections believed something significant would happen on September 11th.

Now, this information didn't specifically indicate an attack would take place on that day and it didn't contain any details on the time, place or nature of what might happen. It also contained no suggestion of airplanes being used as weapons.

Because of the nature of the processes involved, we were unable to report the information until September 12th.

To put this into some perspective, throughout the summer of 2001 NSA had more than 30 warnings that something was imminent. We dutifully reported these. Yet none of these subsequently correlated with actual terrorist attacks.

The concept of imminent to our adversaries is relative. It can mean soon or simply sometime in the future.

Now, these two reports have become somewhat celebrated, so I'd like to dwell on them just for a moment longer.

Now, let me set aside the damage done to intelligence sources and methods when unauthorized information enters the public domain. I'll also set aside the impact on the morale of the work force I represent when something they have legitimately kept secret from our adversaries for the better part of a year suddenly leaps into the public domain.

What I really want to talk about is something that's missing in our discussion, and that's the nature of SIGINT and how it's done. Thousands of times a day our front-line employees have to answer tough questions like, "Who are these communicants? Do they seem knowledgeable? Where in the conversations do these key words or phrases come? What's the reaction to these words? What world or cultural events may have shaped these words?"

You may recall that Sheik Masood, the head of the Northern Alliance, was actually killed the day before. "How much of the conversation is dominated by these events? And are any of the phrases contained in them tied to them?"

And, frankly, if you're responsible for the management or oversight of NSA, you would have to ask some other questions like, "Where was the information collected? Were any of these communicants actually targeted? How many calls a day are there from such and such a location? In what languages? Khazar? Urdu? Pashtun? Uzbek? Dari? Arabic?

"Is there a machine that you can use to sort out these languages for you or do you have to do that by hand? And if there is such a machine, does it work in a polyglot place, where one conversation often comprises several languages?

"How long does it take NSA to process this kind of material? After all, we all recognize we're not the intended recipients of these communications.

"Does our current technology allow us to process it in a stream or do we have to do it in batches? When the data's processed how do we review it? Oldest to newest? Or newest first?

"And aside from how we normally process it, did the sequence change at 8:46 on the morning of September 11th?"

Without explaining the context in which SIGINT operates, unauthorized disclosures do not inform public discourse. They misshape it.

Now, that summarizes what NSA knew about the hijackers prior to September 11th. We've diligently searched our repositories and we'll continue to do so, and, of course, we'll provide your staff with any and all relevant information we uncover.

Now let me address the second question: What have we learned in retrospect? The primary lesson is that NSA was indeed on the right path, a path of transformation.

Congressional leaders told me at our first meeting more than three years ago that the agency had fallen behind and was in danger of irrelevance.

The challenge, above all, was technological. Chairman Goss, as you told me in our first meeting, "General, you need to hit a home run your first time at bat."

The volume, variety and velocity of human communications makes our mission more difficult each day. Look, a SIGINT agency has to look like its target. We have to master whatever technology the target is using. If we don't we literally don't hear him, or if we do we can't turn his beeps and squeaks into something humanly intelligible.

Now NSA had competed successfully for four decades against a resource-poor, oligarchic, technologically inferior and overly bureaucratic nation state. Now we had to keep pace with a global telecommunications revolution, probably the most dramatic revolution in human communications since Gutenberg's invention of movable type.

Now, to be sure, we were still producing actionable SIGINT, in some ways the best we'd ever produced, but we were accessing and processing a smaller portion of that which could and should have been available to us.

To put it succinctly, we didn't know what we didn't know.

Now, public commentary on this usually comes at us in the form of, "The agency has failed to keep up with technology," or similar phrases. Actually we've made some substantial progress, but I would agree that we have a long way to go.

We are digging out of a very deep hole. NSA down-sized about a third of its manpower and about the same proportion of its budget in the decade of the '90s.

That's the same decade when packetized communications, that's that e-stuff we've all become familiar with, surpassed traditional communications.

That's the same decade when mobile cell phones increased from 16 million to 741 million, an increase of 50 times.

That's the same decade when Internet users went from about 4 to 361 million, an increase of over 90 times.

Half as many land lines -- telephone land lines were laid in the last six years of the 1990s as in the whole previous history of the world. In that same decade of the '90s international telephone traffic went from 38 billion minutes to over 100 billion. This year the world's population will spend over 180 billion minutes on the phone in international calls alone.

Now, it was clear to us we were going to have to recapitalize if we were going to keep up. Now, the danger wasn't that SIGINT would go away, the danger was SIGINT would cease to be an industrial-strength source of American intelligence. It would, we feared, if we didn't keep up, begin to resemble an intelligence boutique: limited product line, limited customer set and very high unit prices.

HAYDEN: By the end of the 1990s, with a budget that was fixed or falling and demands from our customers that were unrelenting, we attempted to, what we called, churn about $200 million per year in our program. Now that meant taking money away from current, still active, still producing activities and investing those dollars in that recapitalization in future capabilities.

Now, $200 million a year was far short of what we needed. And in fact, I could make only about a third of that number stick as our program went through the executive branch and Congress.

Now, I went public with this -- with an aspect of this dilemma in an interview with CBS News that aired on "60 Minutes II" in February 2001. David Martin was pressing me about our technological challenges and he was using Al Qaida and Osama bin Laden as examples.

I pointed out that Al Qaida did not need to develop anything, and it certainly didn't need to develop a telecommunications system. All it had to do was harvest the product of a $3 trillion a year telecommunication industry, an industry that had made communications signals varied, global, instantaneous, complex and encrypted.

During that interview, David asked me for an assessment, specifically about Al Qaida. And I told him, and I'm quoting myself now here, "David, it's a dangerous world out there. I can't guarantee you, in fact, I would refuse to guarantee you that even if we were at the top of our game, ill things won't happen to Americans. These are very dedicated, very dangerous adversaries and we work very hard against them. And they obviously work very hard to protect themselves against us," unquote.

Shortly after September 11th, I had a meeting with our senior leaders. I asked them the following question: "Is there any part of our transformation road map that we should now change as a result of the attacks?" And unanimously they responded, "No, but we need to accelerate the changes."

With the money the president has requested and Congress has provided, we've done just that. We still have much to do, but these committees know better than most the performance of NSA in the current war. And I know in my heart that this level of sustained excellence would not have been possible without the business process, organization, personnel and operational changes we have set in place and you have supported.

Now, the final issue, what have we done in response? I'll give some specifics, although I may be somewhat limited by the demands of classification. And for familiarity, I would like to couch some of this in the terms that Congress has been using with us over the past year.

It is heartening, for example, to hear Congress echo the phrase of our SIGINT director, Maureen Baginski, in the belief that we needed to be, quote, "hunters rather than gatherers." She believed and implemented that strategy well before September 11th, and then she applied it with a vengeance to Al Qaida after the attacks.

Another part of our strategy for nearly three years has been a shift to a greater reliance on American industry for products and services they are better equipped to provide. We have been moving along that path steadily and we have the metrics to show it.

As you know, in Project Groundbreaker, we have already outsourced a significant portion of our information technology so that we can concentrate on mission. We've partnered with Johns Hopkins Applied Physics Laboratory for our systems engineering.

I have met personally with prominent corporate executive officers. Larry Ellison of Oracle confided to me one evening that the data management needs we were outlining to him were bigger than anything he had ever seen.

Three weeks ago, we awarded a contract for nearly $300 million to SAIC to develop Trailblazer, our effort to revolutionize how we produce SIGINT in a digital age. And last week, we cemented a deal with IBM to jointly develop a system to mine data that helps us learn about our targets.

In terms of "buy versus make," which is the terminology that Congress has used with us, we spent about a third of our SIGINT development money this year making things ourselves. Next year that number will be down to 17 percent.

Congress has also said that we had listened in on large volumes of phone calls from the part of the world where Al Qaida was located, but didn't focus on Al Qaida. That's, frankly, incorrect. Ms. Hill actually gives NSA good marks in her report for being aware of the DCI's declaration of war on Al Qaida.

We were focusing on Al Qaida. Now, did we have enough linguists and analysts focused on the problem? Clearly we could have used more. But let me be frank, if these hearings were about the war that had broken out in Korea or a crisis in the Taiwan Straits that had taken us by surprise, or if we had been surprised by a conflict in South Asia, or if we had lost an aircraft over Iraq, or if American forces had suffered casualties in Bosnia or Kosovo, in any of these cases, I would be here telling you that I had not put enough analysts or linguists against the problem. We needed more analysts and linguists across the agency, period.

In that light, we've been criticized for a failure to recruit, especially to recruit linguists and analysts. And I will grant you that NSA recruiting for the decade of the 1990s was minimal to nonexistent. The agency accomplished the down-sizing that was imposed on it in the easiest and most humane way possible: It shut the front door.

But as these committees know, we actually turned the recruiting corner in 2000, and 2001 was actually a record year for agency recruiting: the best in over a decade. In one day alone in February of 2001, we interviewed 1,700 applicants. Before the attack in September 2001, we had brought more than 600 new people on board.

Now, it is true on September 11th, we had paused in our hiring. We had already reached the legally authorized personnel levels that you had set for us.

With your help, we have sustained our recruiting efforts in 2002. Well over 800 people have come on board this year. And our goal next year, if Congress authorizes the additional billets we have requested, will be 1,500. In fact, we have already brought 85 more folks on board in the first 10 days of this fiscal year.

NSA has received over 73,000 resumes since the September 11th attacks, and we have been very aggressively seeking the best and the brightest. We know we have a rare opportunity to shape the path of American cryptology for the 21st century.

HAYDEN: I want to end by focusing on some comments made in recent hearings about what's been called NSA's unwillingness to share information.

I need to be clear on this point. We're a SIGINT agency. Our SIGINT mission is to provide information to all-source analysts, military commanders, policy makers and others in the U.S. government. Our only measure of merit is the quality and quantity of information that we push out the door every day.

As we speak, NSA has over 700 people -- 700 people not producing SIGINT, but sitting in our customers' spaces explaining and sharing SIGINT with them.

There have been some special concerns raised about our willingness to share SIGINT with law enforcement, and the fact is that NSA provides a significant amount of SIGINT to law enforcement. FBI headquarters routinely receives about 200 reports per day from us. And when this is further distributed within FBI, the recipient may not recognize it is SIGINT because it's handled in such a way as to protect sources and methods.

Much has been said in these hearings about a wall -- a wall between intelligence and law enforcement. Now I will speak only of NSA. I think it's fair to say that, historically, we have been able to be more agile in sharing information with some customers, like the Department of Defense, than we have with others, like the Department of Justice.

This is not something we created. It is not something that we chose. For very legitimate reasons, Congress and the courts have erected some barriers that make the sharing with law enforcement more careful and more regulated.

As a practical matter, we have chosen as a people to make it harder to conduct electronic searches for law enforcement purposes than for foreign intelligence purposes. This is so because law enforcement electronic searches implicate not only Fourth Amendment privacy interests, but also Fifth Amendment liberty interests. After all, the purpose of traditional law enforcement activity is to put criminals behind bars.

There is a certain irony here. This is one of the few times in the history of my agency that the director has testified in open session about operational matters. The first was in the mid-1970s when one of my predecessors sat here nearly mute while being grilled by members of Congress for intruding upon the privacy rights of the American people.

Largely as a result of those hearings, NSA is governed today by various executive orders and laws and these legal restrictions are drilled -- drilled into NSA employees and enforced through oversight by all three branches of government.

The second open session for a director about operational matters was a little over two years ago and I was the director at that time. During that session, the House Intelligence Committee asked me a series of questions with a single unifying theme: How could I assure them that I was safeguarding the privacy rights of those protected by the U.S. Constitution and U.S. law?

During that session, I even said, without exaggeration on my part or complaint on yours, that if Osama bin Laden crossed the bridge from Niagara Falls, Ontario, to Niagara Falls, New York, U.S. law would give him certain protections that I would have to accommodate in the conduct of my mission.

And now here I am for the third open session for the director of NSA explaining what my agency did or did not know with regard to 19 Arabs who were in this country legally.

When I spoke with our work force shortly after the September 11th attacks, I told them that free people always had to decide where to draw the line between their liberty and their security. And I noted that the attacks would almost certainly push us as a nation more toward security. I then gave the NSA work force a challenge: We were going to keep America free by making Americans feel safe again.

Let me close by telling you what I hope to get out of the national dialogue that these committees are fostering. And frankly, I'm not really helped by being reminded that I need more Arabic linguists or by someone second-guessing an obscure intercept sitting in our files that may or may not make more sense than it did two years ago.

What I really need you to do is to talk to your constituents and find out where the American people want that line between security and liberty to be. In the context of NSA's mission, where do we draw the line between the government's need for counterterrorism information about people in the United States and the privacy interests of people located in the United States?

Practically speaking, this line-drawing affects the focus of NSA's activities, foreign or domestic; the standard in which surveillances are conducted, probable cause versus reasonable suspicion, for example; the type of data NSA is permitted to collect and how, and the rules under which NSA retains and disseminates information about U.S. persons.

These are serious issues that the country addressed and resolved to its satisfaction once before in the mid-1970s. In light of the events of September 11th, it is appropriate that we, as a country, readdress them. And as the director of Central Intelligence said a few minutes back, we need to get it right. We have to find the right balance between protecting our security and protecting our liberty. If we fail in this effort by drawing the line in the wrong place -- that is, overly favoring liberty or security -- then the terrorists win and liberty loses in either case.

Thank you. I look forward to the committees' questions.

GRAHAM: Thank you very much, General.

For hearings of the joint inquiry, we have agreed that four members, two from each committee, will serve as lead questioners. Each will have 20 minutes. The designated lead questioner for today's hearings, in order, will be Senator Levin, Congressman Burr, Senator Thompson and Representative Harman.

Senator Levin?

LEVIN: Thank you, Mr. Chairman.

And first, let me thank both our chairman and our vice chairman for their steady and their determined leadership of this effort. And also add my thanks to Eleanor Hill and her staff for their extraordinary effort.

Mr. Chairman, after months of investigation and numerous joint inquiry hearings, both open and closed, a fair reading of the facts has led to a deeply troubling conclusion: Prior to September 11th, U.S. intelligence officials possessed terrorist information that, if properly handled, could have disrupted, limited or possibly prevented the terrorist attacks.

At crucial points in the 21 months leading up to September 11th, this intelligence information was not shared or was not acted upon. And as a result, numerous opportunities to thwart the terrorist plot were squandered.

I've put up here a blue chart and handed to each of you copies of those charts which track two of the hijackers, Almihdhar and Alhazmi, on American -- who were the hijackers of American Airlines flight 77, which attacked the Pentagon.

Understand from Mr. Mueller's prior testimony of September 25th that the travel of the 12 terrorists who constituted the, quote, "muscle," close quote, for the 9/11 hijackings may also have been coordinated by Al Mihdhar.

The charts contain, in chronological order, well-established and well-known facts.

The backdrop is that we know that in 1998 the CIA had essentially declared war on bin Laden and on Al Qaida. Then in December 1999, there was a heightened state of terrorist alert due to the millennium celebration. That was the environment in which the failures occurred.

The intelligence report was sent to the CIA and the FBI identifying four Al Qaida operatives with links the East African U.S. embassy bombings and stating that they were planning to meet in Malaysia. The Malaysia meeting was of significant importance, so much so that not only was the FBI notified, but the director of the CIA was briefed about that meeting on numerous occasions.

The CIA monitored the meeting in Malaysia, which took place from July 5th to July 8th, 2000 -- 20 months before September 11th. And as a result of the monitoring, the CIA learned some important information. On January 5th, the CIA knew the full name of one of the attendees of what they knew was an Al Qaida operatives meeting. His name was Mihdhar. The CIA also had his passport information, including a multiple-entry visa for the U.S.

Our staff has concluded that that information was not distributed to the FBI, but there's some dispute about that.

LEVIN: On January 9th the CIA learned the full name of Hazmi, another attendee at the Al Qaida operative's meeting, and learned that Hazmi had left Malaysia on January 8th with Mihdhar on the same flight, seated together.

But with this information and this state of concern, this high level state of concern and a declaration of being at war with Al Qaida, the CIA did not put either Hazmi or Mihdhar on the watch list. And again according to our staff conclusion the CIA did not tell the FBI all that the CIA knew, including that Mihdhar had a multiple-entry visa to the U.S.

I want to first focus, Mr. Tenet, on the question of the watch list which you've talked about in your testimony. What reason specifically here -- I don't want just a general answer here that there was a lot of workload and so forth...

TENET: No, sir.

LEVIN: ... but what reason was given specifically by the CIA person responsible for putting that name on the watch list as to the failure to do so?

TENET: For not putting the name on the list? Our judgment is this, in talking to everybody working at the time that there were uneven standards, poor training and we didn't...

LEVIN: Was that specific failure? All those reasons for that specific failure?

TENET: Yes, sir. We did not -- the people involved were people who have access, who we've talked, to acknowledged that there were uneven practices, bad training and a lack of redundancy.

That fact that they were swamped does not mitigate the fact that we didn't overcome that with either redundancy, a separate unit or better training for those people.

LEVIN: Have you identified the person or persons who were responsible to put that name on the watch list?

TENET: We know who was working this case.

TENET: My question is though do you know the name of names of the persons who were responsible for putting those names on the watch list? That's my question.

TENET: Yes, sir. I think I have.

LEVIN: All right.

Now, then we come to March 5th -- same year -- 2000. And the CIA learns some additional information, very critical information.

On March 5th, the CIA learns that Hazmi had actually entered the United States on January 15th, seven days after leaving the Al Qaida meeting in Malaysia.

So now the CIA knows Hazmi is in the United States, but the CIA still doesn't put Hazmi or Mihdhar on the watch list, and still does not notify the FBI about a very critical fact, a known Al Qaida operative -- we're at war with Al Qaida -- a known Al Qaida operative got in to the United States.

My question is, do you know specifically why the FBI was not notified of that critical fact at that time?

TENET: The cable that came in from the field at the time, sir, was labeled "information only," and I know that nobody read that cable.

LEVIN: But my question is, do you know why the FBI was not notified of the fact that an Al Qaida operative now was known in March of the year 2000 to have entered the United States? Why did the CIA not specifically notify the FBI? That's my question -- the FBI.

TENET: Sir, if we weren't aware of it, when it came into headquarters we couldn't have notified them. Nobody read that cable in the March time frame.

LEVIN: So that the cable that said that Hazmi had entered the United States, came to your headquarters? Nobody read it?

TENET: Yes, sir, it was an information-only cable from the field and nobody read that information-only cable.

LEVIN: Should it have been read?

TENET: Yes, of course, in hindsight.

LEVIN: Should it have been read at the time?

TENET: Of course it should have been read.

LEVIN: All right, my question is do you know who should have read it?

TENET: I don't know that, sir, but I can find that out.

LEVIN: Was somebody responsible to have read it?

TENET: Well, there's a group of people -- somebody should have read it, yes, sir. We need to also look where it came into, but I can find that out.

LEVIN: You don't know who that person was?

TENET: I do not.

LEVIN: Should they have been watch-listed at the time, both of them? now we're talking March of the year 2000.

TENET: Yes, sir. We've acknowledged that fact.

LEVIN: OK. Do we know why in that specific time? Now we know that Hazmi has entered the United States. This is another trigger point...

TENET: Yes, sir.

LEVIN: ... they should have been watch-listed. Who was responsible for watch-listing at that time?

TENET: I don't know the answer to that question, but I will provide an answer.

LEVIN: Next, on October 12th, 2000, bin Laden operatives attack the USS Cole. The FBI, which investigated that attack, learned that a bin Laden follower, Khalid, who was the principal planner of the Cole bombing, and that two other participants in the Cole conspiracy had delivered money to Khalid at the Malaysia meeting.

Now, the FBI told the CIA about those facts. That information came from the FBI to the CIA. The CIA went back, reviewed the facts that they had about the Malaysia meeting again. And as a result of that review, in January of 2001 the CIA determined that Khalid had actually been at the Malaysia meeting, and that Mihdhar and Hazmi -- then they knew, you knew -- had been involved with the planner of the Cole bombing, actually been with the planner of the Cole bombing at the Malaysia meeting.

The CIA again failed to put either Hazmi or Mihdhar on the watch list or to notify the FBI that Hazmi was in the United States. And my question is, do you know who was responsible for that failure?

TENET: Sir, can I take you back to the facts for a moment?

LEVIN: Sure.

TENET: First of all, in terms of the identification of Khalid, actually it was the FBI who provided the information to us because we were in a joint meeting at the time in a third country, because we were running a joint case with somebody who identified Khalid.

And indeed, in January of 2001, the legal attache from this third country writes messages to both our headquarters that after having been shown the surveillance photos Kuala Lumpur, he made an identification of Khalid.

LEVIN: I think that's...

TENET: So at that point, at that point, sir, both the CIA and the FBI know that Mihdhar was in Malaysia and that -- in this time period, and that Khalid was in Malaysia at this time period as well.

LEVIN: Now that's a -- that's irrelevant to my point. What you did not notify the CIA of at that point...

TENET: No, the FBI.

LEVIN: Excuse me. What you did not notify -- thank you -- the FBI of at that point is that you knew that Hazmi was in the United States.

TENET: That's correct, sir.

LEVIN: That's January now of 2001, another failure.

TENET: Sir, there are three instances as I note in my testimony, on three separate occasions...

LEVIN: I know. My question, do you know who was responsible to notify the FBI at that time?

TENET: I don't, but I will find out for you.

LEVIN: All right.

Now we have meeting in the year 2002 in New York City. And this is a meeting of a CIA analyst and FBI officials from the New York field office, which was the office investigating the Cole bombing, and the FBI headquarters, including the FBI analyst on detail to the counter-terrorist center at the CIA.

The FBI agents on the Cole bombing pressed the CIA at that meeting for information regarding Mihdhar and the Malaysia meeting. But the CIA representative denied them that information.

It's a very specific finding in the staff report that there was a refusal to share that information relative to Mihdhar and Malaysia and as to why the CIA was tracking Mihdhar at a June 2001 meeting on the specific request of an FBI agent in New York.

My question is, do you know why that CIA agent refused to tell the CIA agent what the FBI...

TENET: No...

LEVIN: Let me start over. Do you know why the CIA agent refused to tell the FBI agent what the CIA agent knew when the FBI agent specifically said, "Why are you tracking Mihdhar?"

TENET: We're going to have a disagreement on the facts here. And here are the facts as I understand them.

There were three people who left New York to go -- Washington to go to New York that day. It was an FBI analyst from FBI headquarters, an FBI analyst from our counter-terrorism center, and our analyst.

They went up to discuss the Cole investigation. The FBI analyst from FBI headquarters brought the surveillance photos with her. And at the end of the conversation -- and I've now talked to two of the people involved, Senator -- the FBI analyst from FBI headquarters handed the surveillance photos to the New York field office personnel. There was discussion about indeed, they were talking about different people. Mihdhar was not who they were talking about in this meeting.

When I asked our person at this meeting, as to whether he was specifically asked about Mihdhar and Hazmi, he believes -- he has no recollection of the subject ever being directed to him or ever coming up.

So there's a factual issue here, and I've only talked to two of the people involved. I haven't talked to everybody...

LEVIN: Let me read you the staff report. "The CIA analyst who attended the New York meeting acknowledged to the joint inquiries staff that he had seen the information regarding Al-Mihdhar's U.S. visa and Al-Hazmi's travel to the United States. But he stated he would not share information outside of the CIA unless he had authority to do so."

That's what he told our staff. Do you disagree with that?

TENET: Sir, I've talked to him as well.

LEVIN: Do you disagree that he said that to our staff?

TENET: Well, no, I don't disagree he said it to your staff. I'm telling you what he told...

LEVIN: Did he tell you something differently?

TENET: Yes, sir. He gave me a different perspective than...

LEVIN: So he told you and he told our staff something differently?

TENET: Well...

LEVIN: OK.

TENET: ... but I think it's important, sir, just...

LEVIN: Yes, but our time is limited. So let me just keep going. That's the answer, he told you something differently from what he told our staff.

Mr. Mueller, Director Mueller, at that June 11th meeting, did the FBI know that Mihdhar and Hazmi were at the January 2000 meeting of Al Qaida operatives in Malaysia?

MUELLER: I don't believe they did.

LEVIN: All right. So we still don't know in June of 2001 what the CIA has known for 15 months.

Director Mueller, after Mihdhar and Hazmi were placed on the watch list by the CIA on August 23rd, now, 2001 -- now they are on the watch list. It's August. It's less than a month before September 11th.

The FBI opened an investigation on Mihdhar, but not on Hazmi. Why did the FBI -- why did you not try to locate Hazmi?

MUELLER: My understanding is that the information related to Hazmi was being included in the file of Mihdhar and that efforts were made to locate both of them.

LEVIN: Your understanding is that there was an effort to locate Hazmi?

MUELLER: Let me just check my understanding.

LEVIN: OK. All right, I think that's something different from what is in our report, because the New York agent was asked to open an investigation on Mihdhar not on both.

MUELLER: Well, my understanding is that we made an effort to identify and locate both individuals regardless of whether or not the file may have been opened under one as opposed to the other.

LEVIN: All right.

Director Mueller, without alluding to names, I want to talk to you about the individuals that were mentioned in the Phoenix memorandum.

There were 10 individuals that were the subject of UBL, Osama bin Laden-related investigation. How many of those 10, none of those now were hijackers but some of them were standbys perhaps, sleepers perhaps, ready to participate perhaps.

MUELLER: We have no evidence of that, Senator.

LEVIN: All right, how many of them in your findings, in your investigations, how many of the 10 people listed in the Phoenix report were part of the bin Laden conspiracy?

MUELLER: My recollection, we have subsequently identified one of those as being associated with Al Qaida. Let me just check -- one second.

I would -- I have not checked.

MUELLER: It's a question I am not -- did not necessarily anticipate. So I have not gone and checked whether or not the investigations in each of the other nine.

One, I have in my mind, was associated -- we subsequently came to find was associated with Al Qaida. As to the other nine, I don't believe we have found that they have -- any one of them has been associated with Al Qaida, but I would have to check to make absolutely certain.

LEVIN: Is a very critical fact. You've got a Phoenix memo. You got 10 people listed by that FBI agent. You have a visit to the apartment house. You've got bin Laden pictures all over the apartment. You've got the agent saying, "This should be shared with the CIA." It wasn't shared with the CIA, that information.

You got 10 people named as going to flight schools. Great deal of suspicion. And, OK...

MUELLER: I think that is reading into that memorandum more than is there. We absolutely had an investigation going on an individual, a principal individual, and other associates. But in terms of -- I think you have to take each of those individuals and weigh the evidence against each of those individuals.

Not all of them were attending flight schools.

LEVIN: I agree. I agree.

According to our information, as of May of 2002, four of those were under bin Laden-related investigations. Do you have any different information from that?

MUELLER: I would have to back and determine -- it may well be that they are the subjects under bin Laden. In other words, we could open a file and in the file identify the individual as possibly an associate or a subject that should be investigated for the possibility of being associated with bin Laden. But that is far different than having evidence and information that the person is in fact a member of Al Qaida or associated with bin Laden.

LEVIN: How many are still under investigation for a bin Laden- related matter?

MUELLER: Out of that Phoenix memorandum?

LEVIN: Yes.

MUELLER: At least three.

LEVIN: I think this is highly significant information that you should be on top of.

This -- OK...

MUELLER: Well, Senator, we have a number of investigations going around the country.

LEVIN: I'm talking about that Phoenix memo.

MUELLER: In Phoenix, well...

LEVIN: I'm talking about the Phoenix memo.

Let me ask both of you -- I've asked you, Director Mueller, to release the Phoenix memo, to make it public, redacted. And to release the Minneapolis e-mails redacted. And they have not yet been released publicly. Why not?

MUELLER: Hold on one second.

Senator, the extent that there is no classification issue, we have no objection to them being released. My understanding is they are going through declassification.

LEVIN: All right. I requested you to release them some time ago, and they should be released by now.

MUELLER: Well, I do believe necessarily that we are holding up the declassification process, Senator.

LEVIN: Well, then who is?

MUELLER: Well, I would have to check in that. But I doubt -- we have not -- we have not...

LEVIN: Well, the committee has asked for this too, by the way. This isn't just my personal request. The committee has asked for the release of these documents, redacted, made available to the public.

If we want to change things -- the way things operate around here -- we're going to have to be open and we're going to have to hold some people accountable.

Last question. Director Tenet, how many people have been held accountable for failures?

TENET: I haven't held anybody accountable yet, sir.

LEVIN: Director Mueller, how many people have been held accountable for failures?

MUELLER: Well, it all depends on your definition of accountability. But I would say -- I would say that I have not held somebody accountable in the sense of either disciplining or firing somebody.

LEVIN: All right.

MUELLER: I have made changes as a result of what this committee has found and as a result of what we found in our investigation of what we did well and what we did not do well in the days and the months prior to September 11th.

LEVIN: If changes are going to be real and are going to stick, in addition to all the structural changes that you've talked about and all of the other things which you've described, we need openness. We need documents to be released, which should have been released by now, including the Phoenix memo and the Minneapolis e-mails. We've waited a year now for those.

And I believe people who failed in their responsibilities have got to be held accountable. This is not a matter of scapegoating. This is a matter of accountability. There has been, I believe, too little effort made to pinpoint the responsibility. You don't even know the names of the people who were responsible for failures and no holding people accountable.

We're not going to have real change unless we have that. And I'll close with that.

MUELLER: May I respond to that, Senator?

LEVIN: I think you should.

MUELLER: May I respond to that?

LEVIN: It's up to the chair, but I'd be happy to have you...

MUELLER: I'll respond to that.

When it comes to accountability -- you take something like the Phoenix memorandum that came back to headquarters, there were two analysts in two separate units that looked at that. The procedures in place at that time did not require the unit chief or the section chief to review that particular memorandum.

Now, I am not going to take in an analyst who is doing what she or he is supposed to do under those procedures and hold that person, quote, "accountable". But what I...

LEVIN: I'm not suggesting you should. Only the people who you find failed. I'm not suggesting that if someone didn't fail you hold them accountable. It's where someone, in your judgments, have failed, there should be some accountability. That's all that I am suggesting.

MUELLER: But going back to accountability, it is important, I think, to recognize that we have to put into place procedures to -- which assure accountability. And one of the things I mentioned in my opening statement was the requirement that the accountability be at headquarters, as opposed to not being diffused in the field.

So I think we are addressing accountability appropriately so.

LEVIN: I would ask unanimous consent, Mr. Chairman, that my list of the CIA failures and the FBI failures are relative to these matters to be placed in the record at this time.

GRAHAM: Is there objection?

(UNKNOWN): Mr. Chairman, I don't object to it, but I think that it would be noted that they are as prepared by Senator Levin.

LEVIN: That's correct. It's right on the chart that way.

GRAHAM: Without objection, so ordered.

Our next questioner will be Congressman Burr.

But before that, a couple of announcements. We now are past the originally scheduled break time. We've done a survey of our members, and there is a general consensus, although not unanimously, that we proceed without a lunch break. I'm going to suggest that in deference to our panelists who have been with us now for more than two and a half hours, that we have a break of five minutes.

And then we'll reconvene with Congressman Burr to be the first questioner.

Once we complete the designated questioners and turn to the five minute questions by individual members, let me list the first six who will question, Senator DeWine, Congressman Hoekstra, Congressman Peterson, Congressman Bereuter, Congressman Roemer and Senator Lugar. Those will be the six who will question immediately after the conclusion of the designated questioners.

We will take a five-minute recess.

(RECESS)

GRAHAM: Our next designated questioner is Congressman Burr.

BURR: Thank you, Mr. Chairman.

And my thanks to the ranking members.

In addition, let me take this opportunity also to thank the joint inquiry staff under the direction of Eleanor Hill for a difficult process that they've gone through, but one that has been very effective.

Mr. Chairman, I'm convinced that these public hearings were created to explore what, if anything, went wrong in the days and the events that led up to November the -- excuse me, September the 11th. I'm convinced that additional review is likely and probably needed and that we will establish an independent commission to carry on the work of this joint inquiry, and to review other agencies that were not the focus of this current inquiry.

What's gone on mentioned until today and I'd like to reinforce it, is how many times the system worked. Most members of this inquiry have spent time across this country and around the world with our intelligence community and law enforcement individuals, inquiring about what they knew and when they knew it, but more importantly, what they needed.

What we heard was crucial, I think, to this inquiry. But what we saw was invaluable to the American people -- members of our intelligence and law enforcement community working unthinkable hours in primitive surroundings without family or friends, things we all take for granted.

I mention this to my colleagues because our focus shifted for the last 12 months to what happened. Their focus has been and continues to be on protecting the American people from the evil that exists globally.

Though mistakes were made that contributed to the 9/11 attack, the men and women who work on our -- the American peoples' behalf -- around the world do this with the resources and authorities that we supply. And let's not forget, they are the best in the world.

As this committee, as this inquiry hands off the review to a commission, I hope we will, as members, refocus on what we can do to compliment the dedication of so many around the world with the resources that fill the gaps that all of us know exist.

And with having said that, Director Tenet, Director Mueller, let me ask you, one year later, in hindsight, what would you have done differently?

Also, recognizing the fact, Director Mueller, that you weren't in your capacity. But if you will, give us insight as to possibly where the bureau should have changed earlier, if they should have.

I'll turn to Director Tenet first.

TENET: I think that personally when I think about this, the one thing that strikes me that we all just let pass from the scene after the Millennium threat was this fellow who tried to cross the border from Canada into the United States.

There were no attacks. There were no Americans killed. We didn't have any hearings. We didn't talk about failures. We didn't talk about accountability. We just assumed the system would keep working because it prevented the last attack.

He tried to cross the border, and I think one of the things that everybody should have done is, is say, "What does this mean" more carefully, rather than just moving from this threat to the next threat, assuming it had been disrupted. What does it mean for the homeland? Should we have taken more pro-active measures sooner?

Hindsight is perfect, but it is the one event that sticks in my mind.

Second -- and again, hindsight is perfect -- we should have taken down that sanctuary a lot sooner. The circumstances at the time may have not warranted; the regional situation may have been different. And after 9/11, all I can tell you is we let a sanctuary fester. We let them build capability. And there may have been lots of good reasons why in hindsight it couldn't have been done earlier or sooner. And I'm not challenging it, because hindsight is always perfect. But we let them operate with impunity for a long time without putting the full force and muscle of the United States against them.

I just heard a discussion about, you know, which one of my people is accountable. I need to tell you something. We've gone through this exercise about how many people and how do you count them. And the truth is, the people that have been working this are absolute heroes. And if I were to reflect back on my own responsibility, I'd triple the size of CTC, quadruple the budget.

And hindsight, you know, I wish I'd said, "Let's take the whole enterprise down and put 500 more people there sooner." I couldn't make that choice at the time, because of all the other competing things, I had to do that everybody would hold me responsible against failing for.

But in hindsight, you know, I wish we'd thrown more people at it and some way to give those people the relief. Because, you know, the tempo and the pace and the exhaustion, notwithstanding the fact that on the watch-list issue, procedures have not been perfect, it's not an excuse. They were exhausted. There were never enough of them. There were never enough of us period, across the range of targets we cover.

So I think about that as well. The other thing I would say to you, quite frankly is, there was never a systematic thought process to think about how you play defense. It comes back to the guy trying to cross the border. You can disseminate all the threat reportings you want. You can do the strategic analysis about airplanes. You can do the strategic analysis about car bombs, truck bombs, assassination attempts, fast boats and everything else. And you can put all that out there to people.

Unless somebody is thinking about the homeland from the perspective of buttoning it down to basically create a deterrence that may work, your assumption will be that the FBI and the CIA are going to be 100 percent flawless all the time. And it will never happen. Notwithstanding all the improvements we've made with your help, it's not going to happen.

And I think one of the things that we've learned is, is in hindsight, the country's mind set has to be changed fundamentally. No more sighs of relief. We're in this for a long time. We have to get about the business of protecting the country with the private sector, the chiefs of police, the state and locals -- now. Because the threat environment we find ourselves in today is as bad as it was last summer, the summer before 9/11.

It is serious. They have reconstituted. They're coming after us. They want to execute attacks. You see it in Bali.

TENET: You see it in Kuwait. They plan in multiple theaters of operation. They intend to strike this homeland again. And we better get about the business of putting the right structure in place as fast as we can.

BURR: I will come back to you in a minute on the coordination and communication with local law enforcement.

Director Mueller?

MUELLER: Looking back at it and seeing what our greatest vulnerability was in retrospect, it was the fact that we had not hardened our cockpits. We had assumed that hijackers on a plane will want to get the plane on the ground. We, unlike the Israelis with El- Al, did not harden our cockpits.

And all the warnings that we got probably would not have led us, in that environment, to take the step of requiring airlines to harden the cockpits to prevent hijackers from coming in and taking over planes and crashing them into buildings.

That is it in retrospect when you look back at it. You ask what could have been done to prevent this attack; that is the one thing that as a country, as an industry that could have been done to protect this type of -- this type of occurrence.

BURR: Whose responsibility would that have been?

TENET: Can I say something to you, sir?

BURR: Yes.

TENET: The thing is, unless -- Bob, excuse me.

Unless the program is systematic, they watch all this very carefully. It's not just about fixing one thing. You have to think about it from a systemic perspective. It's not just harden the cockpits. You have to look at the whole system.

So if it's not being done simultaneously, the terrorist just sits back -- if you look at how these people behaved and understand how they've collected data against an open society for years, it's not just one thing or one system.

BURR: All right.

MUELLER: For the bureau -- from the perspective of the bureau, the two, I think, critical changes necessary were, one, to adopt a new way of looking at managing cases. The bureau traditionally has run cases through office of origin. Each individual special agent in charge is in charge of the cases that arise in that particular field office or that division. And there can be discussion and tension as to who gets the office of origin.

Well, New York did a terrific job as office of origin for UBL. But New York is one field office. When you're looking at international terrorism, it's important for us as an institution to have centralized all information relating to UBL, whether it comes from Portland, Oregon, or Portland, Maine, or Miami or from Hamburg, Germany, or someplace else.

Centralized -- not only centralized information flow, but also centralized accountability for assuring that investigations, wherever they may pop up, have the required manpower to be addressed.

And we as an institution have, over the years, placed the accountability in the field offices, where on the national program where we face a national security threat the accountability, in my mind, should be at headquarters.

That is coupled with the necessity of having the information in a centralized database with sufficient number of analysts and those analysts having the capability to generate the reports that an intelligence agency has traditionally done.

We have not filled that void in the past. We have to do a better job of gathering our intelligence, analyzing that intelligence and disseminating that intelligence.

And those are the two critical items I believe that the bureau has to address in order to prevent -- or do the best we can to prevent another circumstance such as that which happened on September 11th.

BURR: Director Tenet, there are a number of things that we saw in the '90s that would suggest that the likelihood of the attack was greater and every several years that happened. But there's no doubt that you personally believed that we had reached a new level in December of '98 when you made a statement that we were declaring war on Al Qaida.

From the time that you made that declaration, what specific things changed within the CIA to reflect your concern over an imminent attack?

TENET: Well, first of all, you actually had a strategic plan that you put in place about how to attack the target whose plan was not only to collect more intelligence, but to get in the sanctuary and attack it and gain as much intelligence as you possibly can.

I mean, we've heard all these stories about, "Well, they didn't speak the languages. They couldn't get in the targets."

So number one, you have to have a plan. You have to hold yourself accountable to the plan. You have to personally lead the execution of the plan.

We put more people on in it. We put as much money -- we asked you for more money. We asked the administration for more money. We created a worldwide coalition of partners who we relentlessly badgered to say, "You have to be in this fight with us," to augment our numbers.

And the other thing is is you have to -- it's not just what goes on at headquarters in the center, it's what's going on in the field and trying to grow more case officers while you're fighting this, trying to grow more analysts that you surge overseas, try to resurrect a clandestine human capability that, quite frankly, everybody had ignored. And we were in terrible shape.

So the whole focus is build your infrastructure and get after this problem. And bring as many people to the fight as you possibly can around the world to augment your own numbers. And keep your eye focused on the target. And figure out what the right balance is between the people at headquarters and the people in the field. Get the tools out there where the operations are run, where the tracing needs to be done in the technical operations.

And all I can tell you is if you can -- if you see the pace of operations that we are sustaining today, it's because the foundation was built, the plan was in place and the dollars that have shown up have made an enormous difference in terms of flexibility.

What we still don't have are enough people. So we're going to rob -- we're going to keep robbing people. We have 900 people in counterterrorism center today. It's probably not enough. Got hundreds more sitting overseas working this target almost exclusively. And what we need to keep calibrating is how much more can we do to do everything we know how to do to stop the next attack.

BURR: Director Mueller, in the '90s we had the World Trade Center bombing in '93, we had the threat of airline use for attacks that came out of the trials in '95, we had the threats on the New York tunnels in '95. And I think both you and Director Tenet have alluded to others.

At an earlier hearing, Dale Watson (ph), the head of CT at the FBI, said, "Prior to 9/11, there was a 98 percent likelihood the attack would be abroad."

Given the facts just covered and the targets being domestic, what process do you understand that the FBI went through to come to a conclusion that there was only a 2 percent likelihood that an attack would happen domestically here in the United States?

MUELLER: I'm not actually certain as to how we -- Dale came to the 2 percent. I do believe, and I have heard, not being myself familiar with it or familiar with the warnings that were coming out during the summer leading up to September 11th -- and my understanding -- and I think George can talk to it perhaps more than I -- most of those or many of those warnings related to attacks overseas. And that may have skewed the analysis to believe that, because we're getting these warnings in, they're talking about attacks overseas, there's less of a likelihood that it'll be in the United States.

BURR: Well, I think even Director Tenet said earlier one of the biggest mistakes was here we caught somebody crossing the border and we didn't ask enough questions or suspect what else might be there that was targeted here.

We'd already had example after example after example of domestic targets, whether the attacks were thwarted or not, and I guess my question is more, what do we currently do within the FBI to analyze what the domestic threat is?

MUELLER: Well, there are a number of levels, and it's -- I would reiterate it's not just the FBI because part of, one of the, I think, valid considerations or concerns are over the years is that we have treated our intelligence and law enforcement, on the one hand, separate from our foreign intelligence. In other words, we have a CIA that looks overseas, we have the FBI that looks within the United States. And for a long time that worked where you didn't have an issue such as counterterrorism which floods across borders.

And so when we look at the threat against the United States now, we take into account issues such as the bombing in Bali. That is significant with regard to the threat within the United States. We did not always do that, I don't believe.

Apart from that, we look at the vulnerabilities within the United States, we look at the various investigations, both preliminary and full, that we have around the United States to determine whether or not there is any threat information that comes out. Where we have an issue that comes to the fore where we believe that there needs to be additional analytical research given to it we now give it that analytical research.

If you can recall back in the wake of September 11th there was some belief that there was the possibility of using crop dusters, and that had come out in a couple of threat warnings. And when that happens we pull everything relating to crop dusters, we alert each of our field offices to go out and coordinate with each of the fields.

When something like that comes along, we utilize both our people in the field as well as our analytical capability to put together a picture of what the actual threat is and integrate it with what George has from his people overseas.

BURR: Let me stop you there. Unfortunately I'm running out of time and there are a couple of other areas I need to try to cover.

Director Mueller, we had the chief of police from Baltimore testify at one of the open hearings. And I think both you and Director Tenet, as well as I think most members on this inquiry, would say that we had a breakdown of communication and an inability to disseminate information and that contributed in some way, shape or form to September the 11th.

This chief of police said, "I thought after September the 11th things would change and the communication between federal and local would get better." And the fact was he came to testify to say that it hadn't.

Is that a surprise to you, and what is being done to try to open up that line?

MUELLER: Well, I did indicate in my opening statement that there were selected witnesses called to testify. I don't believe that this particular witness is representative of the feeling in the field.

Does his testimony surprise me? I would say probably not.

But I will tell you, every time that I have -- and I've reached out to this particular individual in the past and asked him to call me if there are any concerns. Whenever I've seen either publicly or in testimony before this committee or another committee that there is a police chief who is not getting what he or she wants I have called -- picked up the phone and called them to try to address those concerns.

BURR: But it is the intent of the FBI to open those lines of communication.

MUELLER: And let me finish by saying that I got -- and I don't know -- I'm not certain when this testimony was, it was probably in September, but it's a letter from William Berger, who's the president of the IACP, and the letter praises us for the changes we've made to address this particular problem.

And I'll just read one paragraph. "It is my belief that the steps you have taken have been very responsive to these concerns and clearly demonstrate the FBI's commitment to enhancing its relationship with state and local law enforcement in improving our ability to combat not only terrorism but all crime."

I was out at the IACP two weeks ago, I talked to the hierarchy and I believe that they are supportive.

There are isolated individuals throughout the United States who do not believe we're doing enough and there are areas where we still have a ways to go: getting clearances for chiefs of police, exchange of information all the way down and getting it back up. We have a number of joint terrorism task forces that are working that are working exceptionally well around the country and I think if you went to nine out of 10, or 99 out of 100, or 55 out of 56, you will find the state and locals police very supportive of the relationship.

There'll always be one, there'll always be two, and we try to address them as they come along.

BURR: Director Tenet?

TENET: Well, I think here's the place that I think that we can be very helpful to Bob and the FBI. I mean, look, let me just put it in a couple of ways.

There's nothing ambiguous about the strategic threat or the targets they're thinking about or what they're looking at. It's not ambiguous any more.

But who are the most important people in the battle? The most important people in the battle are the people on the street, in localities around the country who actually know their street, actually know their neighborhood, actually know people who are coming in and out of those neighborhoods.

And what we need to do is, basically, if you build the system that basically is based on the old rules then we're not going to meet their needs. We need to give them products that are content-rich, that reveal nothing about sources and methods and methodologies, that allows them to understand what we're looking at so they can be attuned to what they need to do to help us.

TENET: And it's critical for this to succeed. And some of the things we're doing together, there's a lot of strategic analysis, target-based analysis, all kinds of papers we're written, sharing with the FBI. We need to bring those people in, sit them down, educate them, and then provide training to their people about how to think about this target. And they've got a lot of other things to do.

The smartest guy is the cop on the beat because he or she sees things that nobody in a Washington bureaucracy is ever going to see.

BURR: Thank you.

Mr. Chairman, you have been extremely generous with the time. I would only ask, as I end my questioning, I wanted to get into the communications between CIA and FBI and the FAA. We have tried for some weeks now to get from both agencies the specific communications that took place in the calendar year of 2001 from either of the agencies specifically to the FAA or to airlines.

And if you two directors would help us at pushing that a little bit within your own organizations so that we can look at those documents and understand better what was shared with the FAA and/or airlines, it would be helpful.

TENET: We do know -- we will do that for the record, Mr. Chairman.

We do know -- the other thing you need to be aware of is is there was, in this time period, and continues to be, a very active counterterrorism group down at the NSC who convened all the stakeholders, reviewed the bidding and in part, I think, there were two advisories issued last summer. I mean, there was nothing specific, although there was a heightened period of alertness. And the result was two advisories. But you know, we didn't have a specific to help them.

And I think that we have FAA representatives in our center. And we'll come back to you because this is where Homeland Security is really going to make a difference.

BURR: Thank you.

Thank you, Mr. Chairman.

GRAHAM: Thank you, Mr. Congressman.

Senator Thompson?

THOMPSON: Thank you, Mr. Chairman.

And gentlemen, thank you very much and thank you for your public service.

Mr. Tenet, I'd say to you that Homeland Security will make a difference if it ever passes. I was stricken by the proposition earlier by one of the questions that we should have accountability. And frankly, I agree with that concept.

But I must say that if the type person in question was a part of the Homeland Security Department, under current law, you could look forward to one year's notice of their deficiencies, several levels of appeal, several hours or days before appeal examiners and an average of about 18 months before you could do anything with that person.

Now, this is the Department of Homeland Security that we're debating right now. And we've just been told by the director of the CIA that we're about at the same level of concern as we were last summer. And we're debating issues like that as to how many levels of appeal someone should have or whether or not the new office should have the flexibility to devise a new system that might have some semblance to this century. But we haven't gotten there yet. But perhaps your testimony today will help us get there.

I might ask you, Mr. Tenet, in view of your analysis of where we are in comparison with last year, I take note of what I believe I recall is the level of warning out of the Office of Homeland Security, a yellow level, I believe, nationally. It doesn't seem that that's really consistent with what you said. Do you think the level should be higher? Or are we talking about different things?

TENET: Sir, I'm going to be -- Tom Ridge and I will be meeting this afternoon. He's already taken measures in specific sectors where we're most worried about. There'll be another discussion this evening and tomorrow.

But I would note to you, when you see the multiple attacks that you've seen occur around the world, from Bali to Kuwait, the number of failed attacks that have been attempted, the various messages that have been issued by senior Al Qaida leaders, you must make the assumption that Al Qaida is in an execution phase and intends to strike us both here and overseas. That's unambiguous, as far as I am concerned.

The governor has taken measures already in specific areas where the intelligence was most credible and in sectors that we're most worried about. And so we'll continue to talk about this.

But I'm deeply concerned about where we are and the time period ahead of us.

THOMPSON: So you're looking at concerns both within the continental United States and abroad?

TENET: Sir, one of the things that we can never forget is the specificity of what we see overseas may not be matched by the specificity of what you see here.

If you go back to the narrative before 9/11 and you saw what was going on overseas, you must make the analytical judgment that the possibility exists that people are planning to attack you inside the United States -- multiple, simultaneous attacks. We are the enemy. We're the people they want to hurt inside this country.

So, we extrapolate, but in the world I live with, you have to pay a lot of attention to what's going on overseas.

THOMPSON: Well, I don't think you could be any clearer, Mr. Tenet. And I think you were pretty clear in the summer of last year. I don't know, in my recollection, how public you were about that. But my recollection is that within the intelligence community and with regard to the administration and others, you made that assessment at that time, too; is that correct?

TENET: Yes, sir.

THOMPSON: Let me ask you, along those lines, something that I think that we're all wondering, and that is what we have a right as a nation to expect out of our intelligence community.

It seems to me that on occasion the community has gotten very, very good intelligence. My recollection is that before the attack on the USS Cole that we had a lot of information that we were in danger in that area. We knew that Yemen was a hotbed. We knew that our presence was targeted and all that.

Before September 11th of last year, we also had lots of information. In fact, we had lots of patterns, patterns, dots, within a sea of patterns and dots.

THOMPSON: But yet there were some emerging patterns such as New York, such as Washington, D.C., such as our infrastructure, such as airplanes, things of that nature. And it built pretty much to a crescendo right at that time.

So it seems to me like, on more than one occasion, we have gotten a lot of information. A lot of it is in the ball park. A lot of it turns out to be good information. And that we've even been able to separate it out from all of the vast volumes of information that come in. But we can't pinpoint times and places.

We all know how difficult that that is. We all know that this information is coming in along with lots and lots and lots of other information. One of you gentlemen has said in times past that you were actually drowning in information.

We also had a lot of general information, I might add, about the nature of the attack, the fact that Osama bin Laden had held a press conference in '98 saying he was going to attack us. You declared war in '98.

In effect, all of that is out there, and yet the question is, How much good does that do us unless we can take that next step? Are we entitled to expect that next step? What do we have a right to expect of our intelligence community with regard to predicting time and place of a major terrorist attack?

Mr. Tenet, I'll ask you first.

TENET: It is -- the most difficult thing to do is have that date, time and place of event. We have -- you have to be able to take all of this data, you have to be able then analytically assess a target set that it might be applied against. You have to go protect that target set, because the truth is there will be dates and times and all kinds of information. And it will never happen on the date and time. And then the date and time will elapse. And then people will basically say, "I guess it's not going to happen."

You have to expect us to tell you honestly in strategic terms, "This is where I think the sector of the attack is going to be. This is what I know their training and methodology has been. This is my best judgment about what you have to go protect. Go protect it."

Now in the overseas environment today, and it would be useful at some point to come out and sit down, there is a great deal of specificity overseas about places and times and events and the pattern of racing to stop it has been pretty successful.

You go back and look at this recent French tanker and the reporting out there on the French tanker was two or three months old. But it was there. This is a place and a location that we are worried about commercial shipping and tanker traffic. And so you see, it stretches out over time.

What we owe you always, and what we have to work harder to do, is our best strategic judgment about what the it is. And then...

THOMPSON: Well, are we getting -- are we getting any closer?

TENET: Yes, sir.

THOMPSON: You talked about isolating sectors. Because before September 11th, with all of that information out there that you had collected, you still weren't at all sure that it was going to be domestic.

In fact, I think it's fair to say, most people thought it would be foreign. And right up until very close to the end you were talking about against the United States or Israeli interests. We weren't even sure it was the United States.

So are we getting any closer to pinpointing the sector, the country, domestic or foreign, city, anything of that nature?

TENET: Sir, you're getting -- by virtue of what you've done in Afghanistan, by virtue of the over 3,000 we've taken into custody around the world, by virtue of the senior leadership that we are all getting information from today, the texture and quality, when coupled to the real-time intelligence collection, is an order of magnitude different than it was before 9/11.

The quality and your knowledge is miles down the road and the pace of operations around the world has given us an enormous amount of information that really allows us to think about this in a much more strategic and focused way.

And we are getting better. But to come back to your Homeland Security point, you better get that done, because the strategic threat is unambiguous. You better have the mechanism in place to start locking down where we can tell you, and we think some high confidence, we can work with the private sector and go through sectors and identify vulnerabilities to say, "Go lock it down now. Don't wait for us to come tell you it's on top of you." Because you can't work that way, sir.

THOMPSON: I might point out too that some of the things we're trying to do in Homeland Security will not be within any continuing resolution. And passing of continuing resolutions is just going to -- even if we do do something later, it's just going to move the solution down the road.

Under the category of things we have learned, I'd like to try something out on you and get your various reactions. Anyone who wants to react.

It seems that our nation is dangerously slow to react to a major threat to our national security. You mentioned the sanctuaries. As I look at this in terms of accountability, I look at a lot of different places. I look at the executive branch. I look at the legislative branch. I look at the organizations that you gentlemen represent.

But with regard to the executive branch, we watched -- correct me if I'm wrong -- we watched Osama bin Laden build an army and indoctrinate, train and build an army basically for five or six years in Afghanistan, did we not?

TENET: Yes.

THOMPSON: Can we -- if we had a perfect intelligence community here, could be protect ourselves if we allowed sanctuaries such as that?

TENET: No.

THOMPSON: Well, moving down a little bit further, we know that it's not just Afghanistan.

THOMPSON: We know that there are friendly countries, friends of ours, that to one extent or another are allowing terrorist presence. They allow free passage. The Bremer commission has pointed this out. We depend on them, as you pointed out, and have depended on them for some of our successes and cooperation.

But I wonder, regardless of what kind of cooperation we might get on individual cases, these so-called friendly countries or allies, can we fully address the problem until we convince those countries, many of them with growing Muslim populations? I'm not sure that's going to reverse itself, some of them under political pressures, until they start cooperating more with us. I notice in 1996, Congress authorized the president to delineate these countries as not cooperating fully. I don't know that that's been really utilized at all.

Can we give our friendly countries a pass on this? Are we inviting another level of sanctuary? While it might not be a country taken over, but it doesn't have to be in order to pose a big danger. Where do we stand on this?

TENET: Sir, I would say that, number one, we do not have the luxury of basically walking away of any of these places, of not continuing to press them to do better all the time. There is no alternative. So engagement is absolutely the key here.

In the pre-9/11 environment, there were lots of people around the world who believed that this was all about either killing Americans or killing Israelis -- "It's not my problem." Everybody's mind set has now been transformed. You've got to do this with the carrot. And if there is a stick, you have to have a stick. But we have to stay engaged in places where you could -- you know, we could be 100,000 people all around the world. You need to get into those places and have those societies change their laws.

And there are a series of policy questions here, sir, as well, in terms of how the transformation of these societies occurs so that they don't remain as breeding grounds of terrorists. But you've got to engage.

THOMPSON: Well, let's move to Congress. It seems to me that we have had national intelligence estimates at least since the mid-'90s telling us about our vulnerabilities, mentioning vulnerabilities of places like Washington, D.C., and New York. We've had the various commissions talk about this. We've been very slow to react.

While some individual voices -- I remember Senator Lugar back in his presidential campaign mid-'90s was talking about these things. Nobody paid attention to those things. National security issues were like 3 percent in the public opinion polls. And we responded -- both branches of government responded accordingly.

You mentioned our history in terms of appropriations. And I wish you could clarify, perhaps all of you gentlemen, this issue a bit for me. I look at these charts that you have there and I see chart three, I believe, counterterrorism money appropriated to the intelligence community. And I know we can't talk about real numbers here. You got the big supplemental in '99.

TENET: Sir?

THOMPSON: Yes?

TENET: I don't have your charts. But...

THOMPSON: Well, let me generalize. I think you'll agree with me.

It looks like for the intelligence community generally speaking there's been an upward trend in terms of counterterrorism money. I think you acknowledged that earlier. The CIA, the last decade, your appropriation has been at least as much as your request in about every year, '95 was an exception. A lot of years, your appropriation was more than the request if you include supplementals in the later year.

Is it a fact that intelligence appropriations in general have been going down while counterterrorism funding has been going up? And if so, what are we to make of that? Does that mean that we should not have been hamstrung in any way in terms of our counterterrorism efforts? Were you robbing Peter to pay Paul? Does that mean that while we are all focused on counterterrorism issues that there are some extremely important things out there not being done that may turn around and bite us in future years? What are these numbers -- what are we to take from these numbers?

TENET: Well, it means all of those things. The other thing that I would take from those numbers is is when you look back and reflect on where this all started, we had to do three or four things simultaneously.

One, you had to pursue this target and the other targets that you say are important, and indeed are important. You had to fix your infrastructure. You had to grow your work force. And you had to resuscitate, in our case, you had to resuscitate your human intelligence capability because the peace dividend in the '90s basically said we're not doing this anymore.

TENET: Now, in 1997 we had a strategic plan to resuscitate all aspects of this and, you know, there's a cost associated to it. Now, there were budget caps...

THOMPSON: You had to rebuild your clandestine services, you had satellite difficulties that you otherwise wouldn't have...

TENET: Sir, the only point I would make about the supplementals is the reason we got what we needed is is Congress gave us those supplementals.

(CROSSTALK)

THOMPSON: But intelligence cannot live on supplementals, can it?

TENET: No, sir. The point is is it's either programmatic and it's deep and it's long or basically what happens when you get a supplemental, and then the question is the next year when the budget submission doesn't reflect the supplemental or its operational tempo we're starting all over again from the same place. You knew and we knew it.

THOMPSON: It is not conducive to long-range planning?

TENET: No, sir.

THOMPSON: Moving to your own agencies, you've talked about -- we've talked about the deficiencies. I think one of the greatest concerns that we have in looking forward and trying to decide where we need to make our improvements still has to do with the gaps.

You know, it's interesting that there are some memos, some public, some not public, that indicate that you've had -- each of your agencies have had outstanding people doing outstanding work and were right on the money and were pulling things together the way they should and drawing conclusions they should have drawn.

But some cases it wasn't disseminated properly, some cases it wasn't handed off to the right people, et cetera, et cetera. We know the story, but it's not like that there are not individuals out there that are incapable of doing this, it seems to be a systematic problem. And I'm wondering where we stand with regard to that.

My concern is this: that basically it's a coordination issue. We've seen instances and we know of other instances that we've not had public where there have been gaps. We've got a system -- we all know we have a system of foreign is over here and domestic is over here and we're supposed to hand things off.

We also know that we have a system whereby the lead agency here, the FBI, that is going to be charged with looking at this threat domestically and doing something about it has always been a law enforcement agency.

My concern is that we're asking the FBI to change its nature on a dime, as it were, from an after-the-fact investigative body, that has been legendary for years and years in this country, to a before-the- fact prevention body.

And we think perhaps that by making some organizational changes at that the top and by having some joint task force and things like that that will change the culture. But the FBI has certain limitations because it's a law enforcement body essentially.

For example, when you're looking at someone, you know, you look at them, if you don't have hard evidence, you can look at them in terms of a preliminary inquiry for how many days, so many days. Then you have to either open up a full field investigation on them or drop it all together.

I'm wondering what motivation in an organization that's like this, what motivation in an organization that rewards cases being made and people are known and rewarded and recognized for the cases that they're made and cases they work on, what motivation is it for people around the country in the various offices to be handing up tidbits of information that doesn't necessarily make any sense to them. They don't know whether or not somebody else needs it. They know maybe they're supposed to coordinate with everyone.

But our investigators are still talking to agents out in the field who don't feel any real sense of reprioritization out in the field. It's a culture. I'm convinced that it's not a matter of turf, as such. It's not a matter that people deliberately try to keep things from people. But you have practices such as sources and methods principles, need-to-know principles, things of that nature.

You're trying to change an awful, awful lot, Mr. Mueller, it looks to me like, to cure, you know, your own problems. And then you're going to have to take the extra step, all of you together, to fill in these gaps when each of you have your own analysts, each of you have your piece. We don't know whether or not it's going to work. I can't say it won't; you can't say that it will.

But it looks to me like that there's something to be said for perhaps another entity that is analysis oriented, that does not have law enforcement responsibilities or even collection responsibilities, but is analysis oriented, that has the authority to task gaps as they find them.

I don't think we have anything like that now. I don't know whether that's comparable to MI5 or any other models. I know it's difficult as we go along to maybe recognize that the structure that we know perhaps is not the one that needs to take us into this century. And I know that I'm laying an awful lot on the table here with one question.

I'll stop now and ask your thoughts on all of that. Do you really feel like the things you're doing now are going to cause this long history and these monumental difficulties to change? And can't we do better with a different pattern?

MUELLER: Well, let me start by addressing the issue of the culture. A lot of people talk about FBI culture, of not sharing and the like. And it was best expressed in my mind by Nancy Savage, who testified. She's head of the agents association. She testified with Appropriations last year. And on the issue she said, "The FBI culture is one of hard work, dedication to the citizens of this country and excellence in its endeavors," which I think is the best I've heard in terms of FBI -- for describing the FBI culture.

And let me start from distinguishing between collection and the analysis. I would be the first to concede that we have not done a good job in analysis. We have not had either the technology nor the analytical cadre of individuals that we have needed to do the analysis and which you're describing.

I'm not certain that a separate agency that a separate agency would satisfy that. In fact, I think it would institutionalize that which we're trying to prevent, and that is compartmentalization. Because I absolutely believe that the analytical cadre that is looking at the facts ought to have the tasking ability, ought to have integration with the tactical analysts, as well as the agents, so that they become familiar with the information that they're getting and digesting and upon which they are doing the analytical piece.

You look at an FBI agent when an FBI agent is good. An FBI agent is good at doing investigations. And those investigations can be in counterintelligence. We have done those for a number of years, where you run a counterintelligence investigation in trying to determine what attack the Russians, or some other country, is trying to make on our infrastructure.

THOMPSON: This is a different deal, isn't it? I mean, we know now that we're dealing with a different kind of enemy that lies there perhaps for years secretly planning that we've not been able to necessarily infiltrate very much.

THOMPSON: Isn't that a different situation we're facing...

MUELLER: No, you're looking at it from the intelligence point of view. And how do you expand on your knowledge of the persons? You don't arrest them right away because you want to find out who else is in that network, turn them against each other. And that is something we have been doing for a number of years.

But as collectors, I think the FBI agents are the finest collectors of intelligence in the world.

Now, one of the things that we have to do and I think is changing since September 11 is for agents who are very good in the criminal sphere to look at a piece of information and not run it through the sifting that you do to determine whether it would be admissible in court. In other words, is it heresy? Well, I'm going to thrust it aside. Do I lack a foundation? And therefore I am going to disregard that. And we are changing to have everyone in the organization understand that a piece of information is a piece of information that has to be put into a matrix and looked at as a whole.

But in terms of the collection, I don't think there are any better around. And to set up another institution to do collection with the United States is fraught with difficulties, in my mind. You then would have another institution that is developing sources in the community. And sources that may provide information on terrorist matters may be involved in criminal enterprises, whether it be narcotics or food stamp fraud, which we have found. And you would be divorcing those collection pieces from each other and again stovepiping it.

The use of technical resources where you're doing interceptions and the like. I have heard stories, not good stories, not necessarily horror stories, about other countries that have this dual setup where there has been the failure to pass on from the intelligence community to the law enforcement community that has resulted in disasters in terms of being able to prevent attacks.

One other thing that I would mention just for a second, and that is it's important in this day and age that we be integrated with our counterparts overseas. And in every country I have visited, Middle East, Southeast Asia, our counterpart will be either a primary law enforcement counterpart or an intelligence counterpart with whom George will have the discussions.

But it is important as we proceed and gather the intelligence that we develop these relationships with our counterparts overseas. And we have developed through our legates and our expanded legates those associations that enable us to get intelligence from our law enforcement components. If there is a separate entity in the United States, we will be lacking and missing, I believe, the benefit of all those contacts that we developed in the law enforcement community around the world to supplement what George has in the intelligence community.

THOMPSON: I take your point, Mr. Mueller.

I'm impinging on other's time. I apologize to the chairman and my colleagues.

GRAHAM: Thank you, Senator Thompson.

Congresswoman Harman?

HARMAN: Thank you, Mr. Chairman.

It's a long day for the witnesses and for others here who also have questions. So I'm going to try to stick within my time limits.

As I was sitting here, it occurs to me that over a quarter of a century ago, I was chief counsel and staff director of a Senate Judiciary subcommittee. At that time there were very few women in staff positions on subcommittees. I think, if memory serves, there was no woman member of the United States Senate. There was a very able Senate staffer named Fred Thompson who was extremely well known at the time in the Watergate investigation.

But the things that we did were hard, but I don't think any of them as hard as pulling together all the facts that relate to the plot of 9/11. And I just want to say as a matter of personal pride, as I sit here with Senator Feinstein and Congresswoman Pelosi watching Eleanor Hill perform, that this moment is a long time in coming. And I just commend her for her talent and dedication and for the amount of work she's been able to pull together for those of us who are part of this joint inquiry in an elegant and reasonably expeditious fashion.

I am very proud of the work that you do, Eleanor.

(APPLAUSE)

The purpose of this joint inquiry, as I have said many times and many others have said also, is to look backward for the purpose of looking forward, to bridge the gaps in intelligence capabilities and prevent the next attack. I am not as interested in the failures that happened pre-9/11 as I am interested in protecting, preventing, not having failures at a future time when we may be attacked again.

That future time, according to Director Tenet, and I strongly agree, could be in the next hour, tomorrow morning, tonight. The sniper incidents in Washington show us how vulnerable we are to attack. And so do the recent events in Bali, Kuwait and elsewhere.

At any rate, the thrust of my questions is to go forward.

Let me also add, as Senator Thompson did, that some of what needs to get done does not need to get done by the people at the witness table.

HARMAN: It needs to get done by Congress.

I think it is tragic that our fiscal year 2003 intelligence authorization bill has not been acted upon. It's held up because of a dispute about the precise powers of an independent commission. Those precise powers should have been agreed on long ago. Everyone supports the commission.

And what's being held up in addition to the commission is an information-sharing bill that passed the House 422-2 and has been introduced in the Senate, funding for a wide variety of things, some of which are classified and some of which are public. That bill should be law.

The same goes for the Homeland Security Department legislation, which we've all been discussing. Director Tenet talks about the back end. That bill is the back end. It's also some part of the front end because it would create an intelligence fusion center so that we'd get better at giving real-time information about the nature of threats to our first responders. If we don't get better about doing that, we're going to continue to be vulnerable.

So I could go on about what we haven't done. Those are two big things that we haven't done.

And yesterday, a bipartisan group from the House that were the original authors of the homeland security legislation held a press conference where we said it's time for the Senate to act, to vote its will on whatever version of civil service the Senate wants to pass and then for a conference to occur, the White House to buy in and for us to get a bill signed. And I strongly believe that's true.

But what I want to focus on for a few minutes today are things that are within your power, you the witnesses before us, to fix. And again, I'm not interested in why they were broken. I'm interested in how they get fixed.

I think the fair question, and you can't answer it the way I'm going to put it, but you can answer it as I break it into parts, is this one. On 9/11, 19 hijackers boarded four planes at Logan, Dulles and Newark and crashed them into the World Trade Center, the Pentagon and a field in western Pennsylvania. Could those attacks -- would those attacks be prevented today?

Now, of course, you can't say yes or no. But what I am going to ask you is probabilities. I want to know, based on all the things that you are fixing, and you documented them very carefully, what is the probability? How much improved is it over where you were on 9/11 that you could stop, not necessarily those precise attacks, but major attacks targeted at the U.S. homeland? How much better are you at doing this than you were pre-9/11?

And I'd like to ask General Hayden as well.

General Hayden?

HAYDEN: Thank you, ma'am.

A couple of things have changed and one thing fundamentally has changed. So let me begin with some of the perhaps less impactful changes.

One is additional resources, that's been very important. The committees here have given us additional monies that have been asked for by the president and some additional manpower. That helps a lot. You heard my reference earlier about transformation and chasing modern signals. That's good.

We've also, the three of us and some others not at the table, have improved procedures, largely in the area of how quickly and agilely we share information. That's also been very valuable and has an impact.

Now, let me tell you what I think the most impactful thing has been. And much has been made about the DCI's declaration of war against Al Qaida in October of '98 and what did we do about it and what difference did it make and so on.

Let me tell you a fundamental lesson I've learned. There is a big difference between George declaring war on Al Qaida and America declaring war on Al Qaida. The most fundamental difference between today and the circumstances that we existed under on the morning of the 11th -- I used this metaphor before in closed session. Let me quickly review it.

Prior to September 11, the model of your intelligence community was playing American football with the opposition on the two yard line and it was forever first and goal. They would run a play and our measure of merit would be if we stopped them from getting into the end zone on that particular play. And if we did, some metaphorical official would take the ball, put it back on the two yard line and declare it to be first and 10 again.

What has changed is that we are delaying, denying, disrupting and destroying portions of the Al Qaida network. Prior to September 11, time was infinite for them. It was always on their side. They could take whatever steps they needed to take in order to be secure. They can no longer do that.

Things are going bump in their night now. And that puts us at a great advantage. That's the big difference.

HARMAN: Thank you.

Time is short. So I just would like just a very short answer from Director Tenet and Director Mueller because I want to turn to something else. Probability, how much better are we?

TENET: You're a lot better probability. You're a lot better. One, every morning there is a common threat matrix where law enforcement and intelligence data comes together in one place with actions that have been assigned and everybody sees it and it's disseminated broadly.

Number two, some of the old classification rules have gone out the door. ORCON controls on HUMINT, controls on his raw traffic, controls on his criminal files. Because of the Patriot Act, all of that is moving to people quicker than it has before.

There is a speed with which this all is happening in terms of the hand-off between the disciplines. There is a greater awareness of what's going on in the country.

I can't give you probabilities. It's better than it was a year ago. It's a heck of a lot better. And I believe Governor Ridge has done a good job in his role in terms of trying to bring this process together. So, yes, we're better. Can I give you a guarantee? Absolutely not.

HARMAN: Right. Thank you, Director Tenet.

MUELLER: At the FBI, there are four things I'd say in areas in which we are substantially better. One, the shift in mission. I think there isn't an FBI employee, not just agents, out there who understand the necessity of pulling together pieces of information and regardless of how innocuous they may seem making certain that they are written up and pursued.

Secondly, the joint terrorism task forces in all the 56 offices. That has greatly expanded our capabilities, not only by having additional agents assigned to counterterrorism, but by leveraging that with the assistance of the state and locals and providing a mechanism for information to come from state and local as well as information going back to state and locals.

Thirdly, in personnel. We have hired a number of -- over 100 analysts and what we call IOSs and another 143 IRSes. Half of them approximately, in both categories, are still in the background process, but the others are on board and are doing that type of analysis. In terms of agents, we're putting 900 new agents through the academy and we've reassigned approximately 500 to counterterrorism.

And lastly, technology. One of the deficiencies we had in exchange of information was not having a top secret SCI network upon which we could shove or push to the analysts those classified documents and cables that we get from others outside, as well as within our building. We have put together a LAN that is going to enable us to do that. And within the next 30 days it will go up so it will complement the analytical capability we have in the form of analysts by giving them the basis for the sharing of the information within the organization, as well as between us and the CIA.

HARMAN: So probability is what improvement?

MUELLER: All I can tell you is we have, I think, certainly doubled our capability since last year, if not trebled.

HARMAN: OK.

New question. Senator Levin detailed the plot in his charts and talked about failures, most of which related to watch listing. My first information about that came from a Newsweek article June 10, 2002, which carefully documents this material as well. I'm not sure why I learned it from Newsweek first, but at any rate, that's where I learned it.

My specific question is watch lists. Director Tenet, in your testimony on page 18, you detail all the changes you've made. What I think we need to know, briefly, is how well the new -- and you deserve a sandwich. As one of the mothers on this committee, I think you deserve a sandwich.

(LAUGHTER)

How will the new watch list system work? Will it pick up all the stuff we need it to pick it -- need it to pick up? Will it be one watch list? I assume it will be based on TIPOFF (ph), the State Department system. Will it be run through a national watch list center or this identification classification system that Senators Feinstein and Wyden are proposing? Who will run it? Who will ensure that the information gets inputted? Who will have access to it? How will you make certain that the airlines are paying attention to this, or the trains, or, you know, pick any number of things?

I think the American people need to know not just that the watch list is being fixed, but precisely how it is going to be fixed. How it is going to be funded. How it won't disappoint us next time. And I don't know whether you can answer that question here, but I think it's very important for the combination of you, specifically the FBI and the CIA and maybe other agencies, but at least, since you're the witnesses, to provide this committee specific information about what is changing and better yet, what has already changed so that people who happen to be at strange meetings in Malaysia definitely get watch listed when the first person who notices this notices it.

TENET: And I will do that with some detail for you, Mrs. Harman.

HARMAN: OK.

MUELLER: Well, I would say that it is being worked on by homeland security. It's yet another reason why the Homeland Security Department would be helpful I will say, I think both organizations have changed their procedures with regard to watch lists, consolidating in one -- we have in the FBI consolidated one unit the information that goes into TIPS (ph), or the TIPOFF (ph) system. We have established our own watch list that is tied into NCIC -- which is a sub compartment of NCIC. And the importance is not only having a consolidated watch list, but also reviewing that watch list to make certain that persons get off of it when they have been run through the system and come out clean.

HARMAN: You bet.

MUELLER: So individually, I think both of our institutions have changed our procedures to make certain that what happened before prior to September 11th does not happen again. But it still does not totally satisfy the necessity for having one location within the federal government to address that.

HARMAN: You remind me, Director Tenet, of my favorite rant about e-mail. You push the button and you think people are supposed to know something and act on it and sometimes they don't. The watch list cannot become a push the button exercise. It has to be an active, interactive exercise so that consequences flow from listing names.

Last question, there is one member of the Tenet family who knows how to fix things. This is called "Dare to Repair". I trust that -- written by Stephanie Glakis Tenet (ph), who is the repairperson in the Tenet family.

TENET: She's fixing the watch list system.

(LAUGHTER)

HARMAN: Well, that makes -- you know, if you want to get the job done, put a woman in charge, so that makes me very happy.

TENET: She is clearly in charge.

(LAUGHTER)

HARMAN: I believe that.

At any rate, this is an introduction to my last question, which is, the many people in your agencies who have been trying to fix things, the heroes and heroines, pre-9/11 and post-9/11, not the big shots, the little shots who have been doing extraordinary work.

HARMAN: I have said from the beginning, again, that we had good people with inadequate tools. And I would like each of you to tell us one story about somebody that we won't know that had it right pre-9/11 and continues to do extraordinary work on behalf of the American people because I think that is a message that doesn't get out enough.

General Hayden?

HAYDEN: I point to the folks in our counterterrorism shop, particularly those analysts, linguists that have been working this problem for decades. The Army has a phrase, "It takes 18 years to grow a battalion commander." It takes about that long for us to grow someone so knowledgeable about this target that it can take the language and Koranic references and the indirection and the obscurity of a conversation and turning into something very useful for American intelligence.

That's a life's work. You don't get that off the street. Those are the folks who look at this -- who looked on the scene on the morning of the 11th I referred to earlier, not that they were responsible, but they had a sense of responsibility. And that's why we had to tell the, "It's all right, get back to work." I'd single out those folks.

HARMAN: Director Tenet?

TENET: Well, Mrs. Harman, I'm going to come back to this woman in the middle of the watch list who is one of the finest employees that we've ever had employed out there, who starts her day early in the morning, sifts through hundreds of cables, passes operational leads, is as vehemently opposed to these people who are trying to kill us as anybody you've ever met in her life. She is a real hero in this story.

And the notion that I'm going to take her out and shoot her is about the most ridiculous thing I've ever heard, because of her passion and commitment for her job. And I don't want her for a minute to believe that I'm going to come after her, or somebody is going to come after her because we overwhelmed her and didn't give her all the tools she needed.

I mean, I'd like you all to meet her sometime.

HARMAN: But you're going to give her better tools now, right?

TENET: Yes, ma'am.

HARMAN: And then she'll be accountable for a job that is a different job from the one she was asked to perform before?

TENET: I want to -- you know, I want to talk about that. Accountability is always important, OK. But we also need to be careful. There are people who are taking enormous risk, working at enormous pace. And we all talked about risk aversion. We've all talked about what people will or will not do, you know. So let's be careful, because none of these people believe that they were doing anything but the best job they knew how to do.

There was no intent to withhold information. There was no intent to lie, cheat or steal. They did everything they knew how to do and it wasn't flawless. You know, if anybody is going to responsibility, I take responsibility.

HARMAN: Well, I appreciate that. And that's part of leadership is taking responsibility. But I also think, in line with some of Senator Levin's comments, that we need to give people good job descriptions, good tools and then make certain that not just they try hard, which I am always for, but that they succeed in what I think is the most important endeavor that people are engaged in in the federal government.

Director Tenet (sic)?

MUELLER: I would pick an analyst also for the FBI who provided the following description of her day to me. She said,

"Imagine for a moment that you have been given a jigsaw puzzle in a plain box. Inside are thousands of pieces varying slightly in shape and color. But none give any indication of the picture that is to be formed from them. You have no picture on the box and do not know what the puzzle is supposed to look like. You are aware that the majority of the pieces don't even belong to this puzzle. But you are cautious in discarding pieces which could belong. The ones that so belong are not enough to complete the puzzle or even give more than a hint of the picture that they are meant to form.

Now imagine that this is not a game, but a matter of life and death where every threat could be real, every speculation could have merit, every source report can stop an attack. In your 12, 14, 16- hour workday, try to determine which pieces belong to the puzzle and where they fit. What does the picture look at? Who are the players? What are the patterns? What are we missing and how do we find it?

Now try doing this with insufficient personnel and technology", which comes to your point is we have to give them the personnel and technology. "You are overwhelmed with information, overburdened by case load, stymied by technology and constrained by laws and policies. And you try to supplant resources with longer hours, missing more time with family and friends, celebrating yet another holiday season a day or week late or not at all.

All of this is done knowing that despite your commitment and your determination, the pieces simply may not be there for you put together. It is done knowing that lives could be lost. And one day, you watch in horror with your fellow Americans as your worst nightmare is recognized."

(UNKNOWN): I remember that.

HARMAN: Mr. Chairman, I thank the hard working employees of these agencies and I wish them well. And tell them that they have the security of America on their shoulders. And I wish even better wisdom for the people who have appeared before us today and thank them for their testimony.

Thank you, Mr. Chairman.

GRAHAM: Thank you very much, Congresswoman Harman.

And this completes the designated questioners. The order for five-minute questions will be Graham, Goss, Shelby, Pelosi, DeWine, Hoekstra, Peterson, Bereuter, Roemer, Lugar, Reyes, Wyden, Boswell, Gibbons, Feinstein, Hatch, Bayh, Roberts, Kyl, Condit.

On October 7, over Mr. Tenet's signature, the CIA issued a declassification of certain information that had been previously contained in a national intelligence estimate. I am going to read two paragraphs from that declassification.

"Should Saddam conclude that a U.S.-led attack could no longer be deterred, he probably would become much less constrained adopting terrorist actions.

GRAHAM: "Such terrorism might involve conventional means, as with Iraq's unsuccessful attempt at a terrorist offensive in 1991, or chemical and biological weapons. Saddam might decide that the extreme step of assisting Islamic terrorists in conducting a weapons of mass destruction attack against the United States would he his last chance to exact vengeance by taking a large number of victims with him."

From what I read and speculate, there is a prospect that we might be underway with U.S.-led attack, which Saddam Hussein could no longer deter within the next 100 days. In that time frame, I want to talk about where we are defensively and offensively in protecting the people of the United States, especially here in our homeland.

First, on the defense, Director Mueller, what would you describe as our state of preparedness to deal with the embedded international terrorists who are within the United States, similar to the 19 who hijacked the airplanes on September the 11th? And how would you describe the acceleration of pace of attempting to identify the location, the scale, the skills, the nature of support and command and control for those terrorists who are living among us?

MUELLER: I don't have the figures in front of me. But I can tell you that since September 11th, the number of investigations that we have undertaken has doubled, if not tripled. The number of interceptions we have sought approval from the court for has at least quadrupled, if not more. The reallocation of -- or the reassignment of 500 agents to counterterrorism has substantially assisted in our ability to enhance our coverage of individuals in the country who would do us harm.

I will tell you also that with the issue of Iraq there, we have -- and without in open hearing giving too much detail, focused on that possibility. And are increasing our resources addressed to that particular -- addressed to those individuals who might be in our country that might find this as an occasion to commit some sort of attack were we to initiate some operation with regard to Iraq.

GRAHAM: So what -- if you could summarize, what do you think should be the level of assurance that the people of the United States would have that we would be successful in defending them against this probability that Saddam Hussein would be much less constrained in adopting terrorist activities?

MUELLER: Well, I think we are doing -- we are looking at every lead. We are looking at every possibility that comes to our attention of a terrorist -- not just a terrorist who may be associated in one way, directly or indirectly with Iraq, but others who might use this as an occasion to exploit the opportunity to undertake an attack.

I have a hard time -- I have a hard time telling the country that you should be comfortable that we covered all the bases in the wake of what we saw they were able to accomplish in September 11th. I mean, that was a watershed in terms of the accomplishment of a group of individuals to come together, utilize modern means of technology in terms of their communications, their planning, their organization, their travels, a type of discipline that prior to that time I don't think we had seen.

And so I am uncomfortable sitting here saying, look, we hare taking every step. But based on the fact that we are taking every step, you the American public should not be aware that there is a substantial risk out there that they could undertake. And by they I mean not just those associated with Iraq, but those associated with Al Qaida or Hezbollah or somebody else.

But I would be uncomfortable in saying that you should relax and say the FBI is taking care -- or the FBI or the CIA is taking care of that issue.

GRAHAM: For my next round, I'd like to go to the offensive and ask some questions of General Hayden and Director Tenet as to what we're doing over there against these terrorist groups.

Congressman Goss?

GOSS: Thank you, Mr. Chairman.

Director Tenet, how long have you been the DCI?

TENET: Five years and a few months, sir.

GOSS: That gives you longevity on the panel then of time held in the job. Is that correct?

TENET: I believe so, yes, sir.

GOSS: How many DCIs were there immediately preceding you in the period of the '90s?

TENET: I believe it was four in a period of seven years.

GOSS: Four in a period of seven years. So we have five DCIs and you've had 50 percent of it during the decade of the '90s. Is that about right?

TENET: So there was actually four in the '90s, four DCIs in the '90s.

GOSS: Four, a lot of change going on.

Some of those previous DCIs said that they didn't have much access to the White House. I think some recall a joke about -- now a bad joke, but a joke at the time, about a small plane that crashed near the White House as the director of the DCI trying to get in to see the president. Do you remember that story going around?

My question goes to this, you asked a -- you made a comment about the seriousness of the war. You've certainly made it clear to the oversight committees. I don't think there is any mystery in the oversight committees, those of us who were also here during the longevity of your tenure, about this problem. There is really not a whole lot new that's come out of this for those of us who have been focused on it.

My question that has haunted me, and I imagine has haunted you, is how come nobody listened in '98 at the right level?

GOSS: Why didn't we get -- out of OMB, why did not we get out of the people who are making the decisions an awareness that we need to reinvest; that we were dangerously under invested; that we were letting capabilities slide; that our technology was falling behind? It was clear.

I would -- I'd love to have your answer and I would be very happy to have Director Mueller's and General Hayden's as well. But I'm not sure Director Mueller had been there long enough.

TENET: Look, sir, I can't -- I can't speak -- I can't speak to what the reaction was to our requests. I think that, I mean, you really have to talk to people who were making judgments on what we were asking for.

I think that this is an endeavor where if you don't make the investments, you know, you can't function at the level you need to function at. I think we made that case as compellingly as we possibly could. And I believe that, you know, whether there was a deficit that was at stake, whether there were budget caps that were at state. Whatever the reasoning was, whatever the -- we just needed more support than we received.

GOSS: What's the primary function of the federal government? It is national security, isn't it?

TENET: Security, yes.

GOSS: Guarantee the safety, well being, liberty of the people of the United States of America.

TENET: Sure.

GOSS: OK. Shouldn't that be job one? And shouldn't the leaders be listening?

OK, my second question, then. General Hayden, you said something about bin Laden coming across the bridge, hypothetical, of course. But I take that to mean that if bin Laden did come there would be capabilities that we have that we can use elsewhere in the world that we cannot use in the United States of America. Is that correct?

HAYDEN: Not so much capabilities, but how agilely we could apply those capabilities. The person inside the United States becomes a U.S. person under the definition provided by the FISA act.

GOSS: Special protections, according to your testimony.

HAYDEN: Special protections then apply. It is -- there are procedural steps that one can identify such a person as the agent of a foreign power. But one's got to go through those procedural steps.

Now, take that metaphor and apply it to somebody without the persona of Osama bin Laden and you can see the challenge of trying to cover people inside U.S. borders, even if they will us harm.

GOSS: Well, lets -- again, I don't want to get into details. I'm aware of the public nature of this meeting. But let's just suppose this sniper is somebody we wanted to catch very badly. Could we apply all our technologies and all our capabilities and all our know how against that person? Or would that person be considered to have protection as an American citizen?

HAYDEN: That person would have protections as what the law defines as a U.S. person. And I would have no authorities to pursue it.

GOSS: So the answer is that person has some protections just by being in the United States of America. And if that act were actually taking place overseas, we would be able to bring more to bear to deal with it.

HAYDEN: Absolutely.

GOSS: That's a fair statement?

HAYDEN: Yes, sir, that's right.

GOSS: Thank you. I'm not sure everybody in this country understands just how many safeguards we have for American liberties. And I think it's very important to underscore that. There is a price for it. And we are trying to find the balance and what that price is. I appreciate your answer to the question, General.

GOSS: Finally, Director Tenet, you didn't seem satisfied with the amount of time you had to answer a question of some dispute about a matter in New York. Would you care to use the time to elaborate?

TENET: Not at this moment, sir. I think that there is a -- we have a different view of what happened there, but let's work through that.

GOSS: Well, for your comfort zone, let me tell you that I think that we do understand that there are two stories. And when you put it all together, it does make some sense to what different people who are doing their job responsibly thought and I don't find an inconsistency in it.

The last question, which I will not ask as my time has expired.

Thank you.

GRAHAM: Thank you, Congressman.

Senator Shelby?

SHELBY: Thank you, Mr. Chairman.

Director Tenet, I am going to refer you to, I believe it's page 25 of your written statement. It's been made part of the record today. And I wanted to quote, I believe it's paragraph three, from it, page 25, paragraph three. I believe it's the second sentence.

"But when we realized surging wasn't sufficient, we began a sustained drumbeat both within the administration and here on the Hill that we had to have more money -- more people and money devoted to this fight."

Did the drumbeat begin in '98, or before?

TENET: I have to go back and look at my records, sir. But I believe it did, at least internally in terms of what we were requesting. But I'll check that for you.

SHELBY: OK.

I want to go back to part -- this is not classified, but this was in the appropriations hearing in '98. And the question to you -- directed to you and Director Freeh at that time, was about funding. And I'll leave out Director Freeh at the moment. He's talking about counterterrorism support. And then I will -- to you. And I believe it was Senator Arlen Specter, former chairman of this committee, was asking the question. And he was talking about resources.

And quoting you, you said, "Senator", responding to Senator Specter, "I would like to respond and just say I think we're already at war. We've been on a war footing for a number of years now. I do not think it's a question of money in our case. I think it's a question of focus, operational tempo, the aggressiveness with which we pursue this target. I do not have any doubt about the level of that effort today. And I would challenge your premise about the lack of human intelligence against the terrorist target. I think it's something we should talk about behind closed doors because I think that effort is better than it has ever been and growing. I think there are successes to prove it and some of the facts we've laid down in open session."

But what I -- my point is, you were saying, as we understood it in the context -- and I was in that appropriation hearing, being an appropriator, that it was more than just money. It was a "question of focus, operational tempo, the aggressiveness which we pursue these targets." These are your words.

TENET: Right. I believe we had all those things.

SHELBY: Do you disagree with that -- your statement in 1998 for the Appropriations Committee?

TENET: Was it after the Africa bombing, sir? Do you know when it was?

SHELBY: It was after -- it must have been after...

TENET: I'd also say that in roughly the same time period, you can go look at it for your record, Senator Kyl asked me a question in closed session about how much money we more needed for the community each year, every year. And I said between $900 and $1 billion in closed session for the years that followed. And I think that was in 1998 too.

SHELBY: And Director Mueller, you were not there on this occasion. You were not the director. But I'll read this in the record.

SHELBY: And this same question was asked -- basic question by Senator Specter at the appropriations panel to Director Freeh.

And Director Freeh, and I'll quote him from the record, responded as follows. "Senator", speaking of Senator Specter's question, "first of all, I appreciate all of your remarks and your support, particularly in the counterterrorism area, which goes back many, many years. We've grown in three years from a $93 million budget to a $243 million budget in counterterrorism.

"You and your colleagues were generous enough last year to give the FBI, I believe it's 1,264 new positions. We are hiring these people. We are training them. We are putting together both the human resources and the infrastructure to support the counterterrorism effort. We are in two or three times better condition in '97 than we were in '93 to undertake our counterterrorism mission. A mission, which as you point out, is a huge and growing one. We are in Saudi Arabia. We are taking fugitives back from Pakistan. We are in many, many places where we have not been, which is why we need our legates. We are doing everything we can to absorb this vast increase in resources." This is the bureau, your predecessor.

"I would rather absorb that growth before we start another huge influx of resources."

I don't know, Director Mueller, and I'll say again, you were not there. You were not the director. But you ought to familiarize yourself with this. I'll furnish you a copy of it.

MUELLER: Thank you, Senator.

SHELBY: My time's up. I'll wait another round.

GRAHAM: Thank you, Senator.

Congresswoman Pelosi?

PELOSI: Thank you very much, Mr. Chairman.

Again, to our distinguished witnesses, thank you for your testimony today, for your service to our country. I associate myself with the remarks of Congresswoman Harman in commending the people, the brave young men and women, and not so young men and women, who work with all of you every day to protect our country. And we are grateful for their courage and their patriotism.

I just want to throw out to the three of you some observations I have for your comment. When we first went into this inquiry and when we first -- in the aftermath of 9/11, it appeared that the hijackers were people who came to the United States, lived in isolation, as the director described, were not conspicuous, didn't break any laws, et cetera. And that at a certain moment, a button was pushed, a message went out and they went into operation.

In the course of the hearings and our reading and the rest, it appears that maybe they weren't living lives of such isolation and that they might have received comfort and support, witting or unwitting, from some people in our country, A.

B, from -- especially from Director Tenet's testimony this morning, I would observe that when we asked the question could this have been avoided? I am becoming more discouraged about that as I hear more testimony because it appears that if this wave of hijackers, for some reason or another, would have been apprehended, there may have been another tier to replace them. I don't necessarily mean a whole tier, just people to fill in different slots.

And so -- that this was so well orchestrated that -- and I don't what this to sound hopeless -- but that they had people to fill in if somebody got more than a parking ticket or if we knew of the people who met in Southeast Asia. We knew of that meeting and then we identified and somebody was on the watch list that that might have been a window on their activity that might have broken this. But it may not necessarily have prevented somebody from being in the wrong place at the wrong time in terms of the security of the American people.

I just throw those observations out. Were there more here than meets the eye in terms of the support system for these hijackers? And I would just add a third observation. And that is I have always thought that the apprehension of Moussaoui and the timing of 9/11 may not have been the natural course of events. That Moussaoui's arrest may have triggered the hijackers into going into action.

Now when I have asked this question in the past in hearings, people say "Oh, this hijacking was planned years in advance." It may well have been. But that still doesn't mean that the timing might not have been accelerated when the window on their activity was opened by the apprehension of Moussaoui. I put that out there for your comment. Thank you.

MUELLER: Well, I'll address the support within the United States. I think one critical distinction you identified is witting versus unwitting. I do believe, and we have seen a number of instances, they were provided identification, some sort of support by persons they come in contact within United States. But these are unwitting individuals. Some of them have been arrested and prosecuted for that support, for instance, providing identification to one or more of the hijackers.

And so, yes I think there were unwitting supporters within the United States.

MUELLER: And that's an important distinction to recognize.

As to whether or not -- as to the issue of are there others out there who would have filled the holes had there been holes? I think the answer to that has to be yes. I mean, we all know that in the camps in Afghanistan, approximately 10,000 individuals went through the training and are now dispersed throughout the world. We also had at least two individuals who attempted to get into the United States who we know to have been individuals who were knowledgeable and we believe part of the plot who were part of the cell in Hamburg, Germany who tried to get in. But their visas were denied and the accordingly could not be amongst the hijackers on September 11th.

So, yes, there were many others out there that I believe, and I think George would have his own views, who would have been able to fill those slots should the need have arised.

As to the last point you make in terms of the -- whether or not the arrest of Moussaoui might have triggered the date or determined the date, I'll leave that up to George. One of the problems we have is I can't get too much into the events surrounding Mr. Moussaoui because he is facing trial in Virginia this summer.

PELOSI: Thank you, Mr. Director.

Mr. Director?

TENET: Ms. Pelosi, I think, you know, with regard to your first points, as the director, you know, Binalshibh tried to get into the United States, visa denied, somebody else came in Hazmi and Mihdhar took flight training, didn't do well at it. Hani Hanjour came in and became a pilot. On we go.

With regard to Moussaoui, assuming I'm allowed to talk to Moussaoui, the one thing that I notice is nine days after he is arrested, everybody starts buying their tickets. So yes, these are well planned -- or 11 days. Yes, these are well-planned events. But they are determined by the operational security of the environment at the time. Now, why it happened that they started buying their tickets so soon after his arrest, I don't fully understand, but you have to pay attention to it.

And so they react. And they are resilient. And they make decisions based on their own sense of operational security.

PELOSI: Thank you, Mr. Director.

General, did you have any observation you would like to make?

HAYDEN: No, ma'am. It is very hard for us to comment. The core of the question is so much domestic that we have very little to add.

PELOSI: Thank you, General.

I just want to make one observation, Mr. Chairman, because I know my time is up. I direct all of us to page 20 of Director Tenet's testimony. And on that page, you are quoting the national intelligence estimate of 1995. And in it you say, "Our review of the evidence obtained thus far about the plot uncovered in Manila in early '95 suggests that the conspirators were guided in their selection of method and venue of attack by carefully studying security procedures in place in the region. If terrorists operating in this country are similarly methodical, they will identify serious vulnerabilities in the security system for domestic flights."

I point that out because I think that in looking into the causes of 9/11 and assessing the performance of agencies with a responsibility to protect American people from terrorist attacks, we focused very much on our intelligence community. But I do think that a statement of that kind points to a broader areas -- to broader areas of responsibility. And there is other statements in all of your testimony that speak to where we are -- where we have exposure, they will exploit it.

Again, an earlier page in the testimony, "A sign that our warnings were being heard, both from our analysts and from our raw intelligence we disseminated, was that the FAA issued two alerts to air carriers in the summer of 2001." I think that we will have an excellent product in our report of this committee. I think once again, it points to the need for an independent commission to review a broader range of agencies with a responsibility. Because you can have the best intelligence gathering, you can all share the information, General, you can do whatever it is you do that you can't talk about and you don't do it in this country.

(LAUGHTER)

But the fact is, is there is a great deal else where we have exposure and it seems that part of their modus operandi is to exploit the vulnerabilities, the security weaknesses that they may see.

So with that, Mr. Chairman, I thank -- once again thank the gentlemen for their distinguished service and yield back the balance of my time.

GRAHAM: Thank you, Congresswoman Pelosi.

The next is going to be Senator DeWine. And after Senator DeWine has asked his questions, I am going to call for a five-minute recess.

Senator DeWine?

DEWINE: Thank you, Mr. Chairman.

General Hayden, I thought the discussion that you had with Congressman Goss in regard to your powers, or lack of powers, in regard to the sniper was very instructive. And it is, as you point out in your testimony, the type of discussion that we should be having. You say in your testimony, and I'll quote, "I am not really helped by being reminded that I need more Arabic linguists or by someone second-guessing an obscure intercept sitting in our files that may make more sense today than it did two years ago. What I really need you to do is to talk to your constituents and find out where the American people want that line between security and liberty to be."

I don't disagree with that statement. But I think I would take it a little further. I think that we as a Congress, specifically this committee, these committees, have an obligation to do that. But I also think you have an obligation to do that.

We write the laws. You, or your lawyers, then interpret them and you issue very long regulations. And I won't bore anybody by reading some of these regulations, but they are long. And they are extensive. And then you take that down and you take those lawyer created regulations or rules and you take them down with the manuals down to the people in the field who have to actually make these decisions every single day.

And so I think you have an obligation, candidly, to come back to us and to say, "Senator, do you really want to do this? Do you understand what we are not doing? Do you understand who we can't target? Do you understand what information we can't get?" And I think you have an obligation to do that as often as you can.

Now, I will say that your comment that you made public testimony about bin Laden crossing the border between Canada and the United States, you did that. And I think you're right. You apparently didn't hear much complaint from Congress. So I will certainly give you that.

But I would just say that I think we all have an obligation to do that. As I have discussed with you and as I have discussed with some of your team, I'm not sure you're totally interpreting the law correctly. But that's something that we should be going back and forth on and being discussed -- and discuss. And so I would just make that comment.

Mr. Mueller, let me just -- you made a comment in regard to continuing resolutions and the problem connected with that.

DEWINE: You say a long-term, my emphasis, but I think it's what you meant. A long-term continuing resolution could have a significant impact on our analytical program. And let me ask all three of you if you could comment about the consequences of long-term continuing resolutions, particularly this year, but any time that you might get one. What it might entail? And we will assume that means basically flat funding.

HAYDEN: Sure. I'll go first, Senator.

DEWINE: Because I think that's something we need to know and we need to get out.

HAYDEN: Well, fundamentally, with a continuing resolution, we are prohibited from having new starts. And I have tried to emphasize in my testimony, this is all about newness, this is all about transformation. This is all about chasing a global telecommunications revolution.

To put us through some portion of the next fiscal year without any new starts, without any ability to pivot left or right, but just to continue straight ahead, that penalizes us.

DEWINE: Thank you.

Mr. Director?

TENET: I agree, sir. I agree with Director Hayden.

MUELLER: And also the delay in brining on additional analysts, as I pointed out, additional agents. And for us also support personnel. Those delays mean it would be that much longer before we get those individuals on board that we need to get the job done.

DEWINE: Good.

Thank you, Mr. Chairman.

GRAHAM: Thank you, Senator DeWine.

At this point, we'll take five-minute break and Congressman Hoekstra will be the first questioner when we reconvene.

(RECESS)

GRAHAM: We'll call the meeting to order.

GRAHAM: If the panelists could reassume their seats, I will repeat the order in which questionnaires will be called upon. After Congressman Hoekstra, it will be Mr. Peterson, Mr. Bereuter, Mr. Roemer, Senator Lugar, Mr. Reyes, Senator Wyden, Mr. Boswell, Mr. Gibbons, Senator Feinstein, Senator Hatch, Senator Bayh, Senator Robertson, Senator Kyl.

Gentlemen, I want to thank you very much. I know this has been a long day for you and also for the preparation that went into today. So, I thank you for your candid and very informative responses.

Congressman Hoekstra?

HOEKSTRA: Thank you Mr. Chairman and thanks to the panelists for being here for a very informative hearing. I think from Eleanor Hill's opening statement, at the end of that opening statement, there were a lot of questions that were raised that I hope this committee considers and we take a serious look at.

I want to focus on the comprehensive strategic plan. There's some question as to whether one of those existed prior to September 11. Department of Justice Inspector General's report recently said the FBI's never performed a comprehensive written assessment of the risks of the terrorists threat facing United States. A national intelligence estimate of the Al Qaida threat overseas was not done prior to September 11.

The question that I have is there now a comprehensive strategy document or plan in place that each of the three of you have had input in to that that you would agree on that this is a strategic plan, these are the roles that each of our organizations and agency plays, what are the fundamental components? And as you're talking about the fundamental components, there's been a lot of discussion about people who can get into the country and people who cannot. The integrity of our visa system and our border controls; does the strategic plan address the issue of the porousness of our borders, our Canadian border and our border with Mexico as it relates to illegal aliens and the significant number of people that cross our borders illegally without ever being detected?

Where do you want to start?

MUELLER: I can go ahead a start on the...

HOEKSTRA: OK.

MUELLER: We, in the FBI have in draft forms a comprehensive plan for looking at the threats within the United States of various terrorist groups. It is in draft form; it is nearing completion. It does not address certain areas that I know that have been address by others, particularly Tom Ridge in shop, and that is the borders' weakness and the borders, but ours is focused on the threat of terrorism and terrorist groups within the United States.

We have to date, particularly since September 11th, have done analyses of various portions of the United States where we think the threat is perhaps higher than elsewhere. But, as I said, we have in final draft form and will be completed within the next several weeks that plan to which the OIG report adverts.

HOEKSTRA: Mr. Tenet?

TENET: Congressman, I think from the perspective of the foreign intelligence community, Mike Hayden and I -- and the components of our community are still very much on that plan, very expanded that we lay down in 1998. Obviously, we now have expanded the relationship overseas with Mike and our folks and other people. But, you've now seen an explosion in operational tempo. You've now seen a far broader reach and some things I can't say in the open, but in essence, the strategy of the targeting that underlay the strategy of '98 is still now -- there's a difference.

Afghanistan has changed in a fundamental way. There are still issues we're working through there. But, when you look at the speed in case with which we're working together, there's a common understanding of the target. There's a common understanding of collection and targeting that we engage in everyday. It's very fast paced and iterative. So, that's how we're attacking this problem.

Now, they're intimately involved as well, because they also bring data to the table that allows us to work overseas and also allows them to work here. So, there's an integration between the foreign and the law enforcement community against the Al Qaida target overseas. And here, I might add, that I think is quite vibrant.

HOEKSTRA: The question I have though is this morning we've spent considerable time about holding some folks accountable for not watch listing individuals so that they would have been caught at the borders or coming in.

I have to believe that each of your organizations is concerned that the way that you have described Al Qaida and other terrorist organization is that they will gauge us, they will push and they find our weak spots. And if they find out, hey, we have this watch listing down, we identify somebody, they're on the watch list, they get to our port of entry, we find them right away, it's not going to take them very long to say, you know, let's just get into Canada or Mexico and we'll walk across.

Now, where does the comprehensive plan come into play that says, OK, the FBI's has their piece together, CIA has their piece, NSA has their piece, but you guys have your three pieces done, but nobody's taken a look at this border component...

(UNKNOWN): No, Homeland Security and Governor Ridge is looking at the border north and south and it is integrated there, sir. So, it comes to that table to integrate all of that.

HOEKSTRA: So, your plans are being integrated into their plans and you're providing written documentation. So, sometime in the future we can have perhaps a closed hearing where you can present your strategic plans on terrorism in more detail.

(UNKNOWN): Yes, sir.

HOEKSTRA: OK. Thank you very much.

(UNKNOWN): You bet.

GRAHAM: Thank you Congressman Hoekstra.

Congressman Peterson?

PETERSON: Thank you, Mr. Chairman and thank you gentlemen for your testimony and for what you and your folks do for the country. We appreciate it.

Director Mueller, I want to talk to you about the Moussaoui situation. I don't know how much you can talk about this, but there's been an ongoing concern in Minnesota about the facts of what happened there that's been an issue. You may or may not be aware of that.

In Ms. Hill's statement for today, the section on page 21 where it talks about the Minneapolis agent in charge, who I think was acting, I don't think it was at that time whatever the title is of the person that's in charge of the office.

MUELLER: Special Agent in Charge.

PETERSON: Yes. That he was, according to this statement, trying to get the people at FBI spun up, because he was trying to make sure that Moussaoui did not take control of the plane and fly it into the World Trade Center. And then further on it says that the person at headquarters doesn't remember that conversation.

When we had the gentleman here that was in Minneapolis, one of the people the other day. I asked some questions about this and there were some responses that were then later changed.

What I'm interested in, if it's possible to get on a public record, exactly what happened between Minneapolis and the radical fundamentalist unit or headquarters or whatever it was. Are you familiar with -- have you looked into that and are familiar with what happened with the acting agent in charge of Minneapolis and your folks at (inaudible)?

MUELLER: I am generally familiar with the facts, yes. Not the day-to-day conversations...

PETERSON: No.

MUELLER: ... but I think the breakdown came in that there was a desire to get a court order allowing the agents to look at the laptop and other provisions. There was a disagreement as to whether or not there was sufficient evidence...

PETERSON: Right.

MUELLER: ... that would rank Moussaoui, the individual, to a foreign power, which is a terrorist group. It doesn't have to be a country so to speak, a recognized country and there was some disagreements based on a faulty interpretation of the law at the lower levels. That's my understanding. And that...

PETERSON: Was that at Minneapolis or...

MUELLER: Pardon?

PETERSON: Was that at Minneapolis?

MUELLER: No, at headquarters.

PETERSON: Headquarters.

MUELLER: And a discussion with the agent at the Minneapolis office and it did not get elevated to where it perhaps should have been, either in Minneapolis or...

PETERSON: I'm not so much concerned about that whole issue, because I think we've been through that. But, it's my understanding that the agent in charge of Minneapolis actually went above maybe one or two levels above the place that he originally called to try to get somebody to listen. Because they were convinced that there was something going on here and they were very agitated that they couldn't get anybody in headquarters to...

MUELLER: Well, first of all...

PETERSON: Do you know if the agent in Minneapolis called other people beyond the first person that they called where they got into this whole issue about whether they had -- because as I understand it, there were calls made to people above that, I don't think at your level, but people at pretty high levels by this agent to try to get this...

MUELLER: I am not aware of that. Hold on just one second. After 9/11 there were. After 9/11, but not before 9/11, apparently.

PETERSON: Well, it's my understanding that there were calls made prior to 9/11 to people above -- and we keep getting conflicting information.

MUELLER: I will have to get back to you on that.

PETERSON: Would it be possible and I don't know what the legalities are with the trial and everything, but could you get me the chronology of actually what the contacts where between Minneapolis? And who was talked to and...

MUELLER: Sure.

PETERSON: ... so we can lay this to rest? Because there's been some press accounts and there's been some concern in the Minneapolis office about what the agent there did and didn't do and whether they did enough and so forth.

MUELLER: Well, a couple of things. I think everybody was concerned about Moussaoui. That's why he was arrested. They were very much concerned about what he might do, which is why the agent made the decision when this came to him to take Moussaoui off the streets...

PETERSON: Right.

MUELLER: ... on the immigration. So, he was incarcerated during that period of time and was therefore deterred and detained.

I was out in Minneapolis a couple of weeks ago and talked to the office and praised them with the agents there and the support in the analysts for the work that they had done in pursuing Moussaoui, because I think they did a terrific job.

The issue on the disagreements on whether or not you had sufficient information to go forward on a FISA at a particular time did not go as far in the organization as perhaps it should and we have changed that since September 11th. So, if the same situation happened today and there was a disagreement as to whether or not you had sufficient to go forward on a FISA, it would come all the way up to me, ultimately, if it could not be resolved at a lower level.

I do believe the agents in Minneapolis did an excellent job from day one pursuing it. There were miscommunications back at headquarters that were unfortunate. But, that's been resolved.

PETERSON: Well, if you could get somebody to get me the...

(CROSSTALK)

PETERSON: ... I would appreciate that.

Thank you, Mr. Chairman.

GRAHAM: Thank you Mr. Peterson.

Congressman Bereuter?

BEREUTER: Thank you Mr. Chairman. Gentlemen thank you for your testimony and for your responses to questions and your public service.

In the short time that I have available here, I'd like to focus on the future on the basis of the information we know about what has happened.

Director Mueller, I'll start with you just as a follow up to Congressman Peterson's question, because you made reference to a misinterpretation of the statute by the FBI attorneys related to foreign powers.

That was unfortunate. It was probably not crucial because of the length that had not otherwise been established. But, in any case, my question to you is whether or not the lawyers and agents across the country now understand the full definition of what is a foreign power so that a FISA determination looks more possible under the two elements of a definition of a foreign power?

MUELLER: Yes, sir. We've had training sessions, we also have sent out what we call electronic communications to clarify those issues. I will also say the Patriot Act is exceptionally helpful in enabling us to utilize that tool in ways we have not done in the past.

BEREUTER: Good.

MUELLER: There are those of us who have done this work in the past, when you get a criminal warrant, you generally go to the Assistant United States Attorney in the various district and then go right to the judge there. So, you have the Assistant United States Attorney, the lawyers working with the agents. Part of the FISA process is there's a FISA coordinate that sits here in Washington, D.C. And consequently, in putting together the package for the FISA court, you have to get that information from the field and meld that information with the knowledge of the court and the procedures of the court back at headquarters and then get the package up to this court.

And what we're trying to do is expedite that process by taking out some of the middle people that may not fully understand all of the aspects of the FISA court to make the process go swifter and to assure that we eliminate to the extent possible any room for misinterpretation of what is required under the statute.

BEREUTER: I think those are very important changes. I'm glad to hear of them.

Director Tenet, do you favor the Homeland Security Department, which we hope will be established, sharing in the tasking for foreign intelligence collections on threats facing the homeland?

TENET: Well, I think as a customer, we naturally will take analytical tasking and whatever help the Homeland Security Department needs, we will treat them the way we treat all of our senior customers. So, once we get into this back and forth, they'll be the recipients of our product in the morning. They'll be able to come back to us and say, can you help us with this and this? Can you do a piece of work on this and how it might apply to the homeland? We will naturally do that with them.

BEREUTER: I think that's a good accommodation, but it does seem to me that there are cases where the requirements for the Homeland Security, certainly the priorities on them, might be different than they are for the Central Intelligence Agency or the Department of Defense or the FBI. And I would hope that maybe the Senate will do what the House failed to do and give them a seat at the tasking table when it comes to foreign, I emphasize "foreign" intelligence collection. In fact, I offered that to our Rules Committee to make an order.

I'd like to turn to you, General Hayden. And I recognize what you had to say on pages 9 and 10 of your testimony which relates to your predecessor in the '70s and the message he got here from that Congress at that time, but we've learned that NSA apparently for policy reasons, decided not to target international communications of individual foreign persons in the U.S. say intentionally, even though it would have been possible, it appears, to obtain approval under FISA for such collections.

Why did the NSA adopt that policy, General?

HAYDEN: No, no, we do get FISAs, but you're right. There are several classes, I'll use the word targets in which we will pursue a FISA and there are others in which we would turn that over to the FBI.

A couple of reasons. One is as you've eluded to before. The history of the agency suggests it needs to exercise great care in what it does within the United States of America. Beyond that though, no matter who would get the warrant in collection, and in this case, NSA or FBI, you would create a seam between two organizations. If we were to get the FISA, the warranted collection for a protected person inside the United States, we would close the seam between our information, gained from SIGINT internally and the information we would get externally through our normal processes. That seam would be very tight. But, the seam would be quite wide between the SIGINT information being gained about that individual and the other information that would be gained by the FBI through all their other tools.

You have to make a call and I think in generally, the call is, except the scene between what I'll call domestically derived and SIGINT and SIGINT derived from overseas, so as to put all the information you're getting about this person inside the United States into one basket under an FBI rubric so that all the tools being used to gain information about this target...

BEREUTER: Including your assets?

HAYDEN: And then, when asked by the FBI, and this is commonplace, the FBI would ask us for technical support, but the action would be carried out under their authorities.

BEREUTER: Thank you.

My time has expired, Mr. Chairman. Thank you gentlemen.

GRAHAM: Thank you Congressman Bereuter.

Congressman Roemer?

ROEMER: Thank you, Mr. Chairman.

I just want to say that I really respect the difficult job that the three of you have in front of you. We have in our past, 50 or 60 years ago had an enemy that was trying to take over all of Europe and we knew how to go after that enemy.

We had an enemy in Vietnam, they used guerrilla tactics and we had difficulties there. And now we have an enemy that tries to train on our own soil, tries to infiltrate our own schools and tries to kill hundreds, if not thousands of Americans. And we count on you three to help protect the security of this country.

Now, while there are people, maybe on this committee, that think that the three of you may be to blame for many things, lots of things, every thing and there may be some people on this committee that think that you performed flawlessly before 9/11.

I come down on the side of I believe mistakes were made. I believe there were failures. I believe that there were inadequate communications between agencies, so we didn't have enough linguists and analysts, that we didn't have a good enough watch list system, that we could have had newer technologies in different parts of country in our field offices. But, I am for moving forward and trying to make sure in light of what happened in Kuwait, what happened Yemen, what happened in Bali, what happened in the Philippines today, killing six people, injuring 144 people, that it doesn't happen in this country again. And that we move forward and try to correct those mistakes.

And I think the three of you are the three people to help lead us there and get us there. I have confidence in the three of you.

I also think that this joint inquiry has done a magnificent job, Mr. Chairman, I'm proud to serve on it with the ranking members. And we have worked to uncover facts to try to make recommendations to solve some of the problems and fix some of the mistakes, while I'm not just saying this is a witch-hunt and a blame game.

Now we have in a bipartisan way come forward and said we need a joint commission. You folks are busy. You don't have a lot of time to look back, but we do need to correct the mistakes. We're about ready to go out of business with this congress ending. We have thousands of pages of documents that we still have to go through. We have some major institutional recommendations that we might need. We need an independent commission to finish the work.

We have agreed to do that in the House, in the Senate, in conference and they White House keeps moving the goal post on us. We solve one problem and they change the goal post and say well, here's another one. I would hope the White House would come forward and work with us. They've negotiated with us, but genuinely work with us to create this independent commission and help us help you three help the very good people that work for you that dedicate their service and their lives to protecting Americans to getting this right in the future.

I have just three basic questions, one for each one of you.

General Hayden, you said in your testimony that you don't need to be reminded about linguists. I think you do, with all due respect. In your 2002 Fiscal Year request, you asked for significantly less civilian analysts and linguists. I know you are a level 3 expert. You speak Bulgarian. We vitally need these linguists doing their jobs and these analysts doing their jobs. Strategic analysts and tactical analysts. I'd like to know why just in the latest '02 budget you haven't requested more than the previous year?

HAYDEN: The...

ROEMER: Let me get all three questions in.

HAYDEN: All right.

ROEMER: I've learned that on this committee that you have to get your questions in.

Director Tenet, I'd just ask you very quickly about sharing information. You mentioned in your testimony that you are acquiring some very significant information for us in Afghanistan of safe houses and other places. We hear some grumbling that that information is not being shared with other intelligence agencies, not only quickly enough, but at all. And I'd like to get your thoughts in fairness, is that a legitimate complaint, how are you sharing that?

And lastly, Director Mueller, I would ask you, do we have in place now a year and a month after September 11th, the necessary computer networks to compile counter terrorist information in common, common databases between our district offices and the FBI across the country and with headquarters and how do you disseminate that information?

General Hayden?

HAYDEN: I'll go first, yes, sir. The reason we don't need to be reminded, I think we get it. We agree with it totally. We need more linguists and analysts. We hired 120 in fiscal year '02, we've hired 11 so far in the first 16 days of fiscal year '03, we have another 101 in the pipeline and two of them we've already offered conditional employment.

So, we've got it, we're working hard on it. I take your point.

TENET: We've just sent a piece of paper to the committee, Mr. Roemer, about this so-called "Doc X" (ph) issue. I basically written a document that NSA, DIA, the whole community signed up to basically have a common repository. We will build a national center that we fund to basically train the right people and we have put in place procedures that make it clear what's in and what's out with the expectation that whatever limited information is kept out for real operational reasons will be striped and moved as fast as possible.

I know Mr. Burr has been briefed and we'd be happy to come brief you as well.

ROEMER: Thank you.

MUELLER: As to the question of whether the FBI has a technology in place now to share all common databases around the country, the answer is no.

I will tell you what we have done, however. We have and are redoing our technology. One of the key aspects of that is to migrate the data from what we call ACS into a new oracle 9-I, a database, and put on it a user interface that completely changes the way we have done things in the past. And the target date for that is December of '03.

In the meantime, however, because of the necessity to pull together data relating to terrorism, we have pulled in at least three data streams into a database. One of those streams are all of those, approximately 23 million pages of images that relate to terrorism throughout the FBI.

On the second part, the second data stream will be any of our electronic documents from ACS from 1993 on that relate to terrorism will go into that database.

And the third stream is the cable traffic from the intelligence community both internal and from the intelligence community and actually the fourth data stream is the information that we picked up from Afghanistan.

All of those data streams will be in a common database within the next 30 to 40 days. We will have with that database structure, the capability of utilizing the search tools that we have not had the capability to use before.

The other aspect of that is we have not had a capability; we have not had a land, a local area network within the Bureau that is at the top secret SCI level. We have put in that or are in the process of putting in that land so that our analysts can have that access to that database on the one hand and have new information that comes in, pushed to them according to certain profiles in a way that occurs in the CIA.

So, even though across the FBI we will not be where we would want to be in the next 30 or 40 or 50 days, within the counter-terrorism sphere, we have made strides.

ROEMER: Thank you for the extra time, Mr. Chairman.

GRAHAM: Thank you, Congressman Roemer.

Congressman Reyes?

REYES: Thank you, Mr. Chairman.

Gentlemen, I would like to associate myself with the comments of many of our colleagues here that are appreciative of your service and the leadership that you show. I also agree with Congressman Roemer that you're the exact three individuals that are going to be very instrumental in helping us address this challenge.

I'd like to start out by telling all of you and in particular, Director Tenet, my colleagues that referred to the Homeland Defense legislation that is pending.

I wanted to reference also General Hayden's comments about not having to be reminded about Arabic linguists and that we have a role to play in terms of determining where the lines of privacy rights verses government's need to protect the homeland are. And that you referenced Director Tenet's comment that we need to get it right. And I absolutely agree with that.

Mr. Chairman, I voted for homeland defense, but I will not support homeland defense if the national police force amendment is in there. I will not support homeland defense if we don't have the protections of civil service and labor in there as well. And I won't support it because of a concern that I've expressed to you gentlemen, and that is diversity.

I go back 33 years ago when I first came back from Vietnam after serving my country. I was hired by the border patrol. There were only three of us that were Hispanic in that class. Had we not had the protections of civil service and labor rights, I would not have had a 26 and a half-year career in the U.S. Border Patrol.

I just wrote a letter to the president this week telling him that the flexibility that he seeks is one that I think will do minorities in the 21st Century from participating in homeland defense, in the FBI, in the border patrol and in all the federal agencies. And I say that because of my experience. So, I support the homeland defense agency, but again, will not support it if we don't have those kinds of protections.

I was intrigued by a comment that you made, Director Tenet in terms of the alerts and the information that's out there and the fact that we have to sensitize our country to understand that the threat is real.

We've had testimony here that has told us that the safest place for a terrorist is in this country, because of all the protections that we have and your reference, General, to Bin Laden crossing the border and then all of a sudden getting the protections. But, I strongly believe that that's what has kept us as the best experiment in democracy that we're being attacked for.

So, it reminds me a lot, Director Tenet, of the alerts. For 13 months I was in Vietnam. It became a joke that if we were told that we were on red alert that our base was going to be hit, you could bet that we weren't going to get mortared or rocketed that night. But, if we weren't on alert, we'd get hit.

So, my question to each of you and General, I also want to include you in here, is regarding threat assessment, I know that Director Mueller, last week the committee received a copy of the Justice Department's IG report where it noted that the FBI has never performed a comprehensive written assessment of the risk that terrorists present to this country.

I'm wondering are you engaged in that now and also, Director Tenet, what is your role in that process? And also, General Hayden if you would -- I know that five minutes is not long enough to cover all the things, but I want to make sure that we're not going to get in a situation where we treat the symptoms and we don't treat the disease.

So, if you would address...

TENET: Sir, we're preparing just such an estimate that the FBI and NSA will be playing into the linking process in the next few weeks, so we will have that kind of a comprehensive judgment and we'll take Bob's information, obviously, the other intelligence information and have it in a package. Obviously given the importance, we'll update it regularly.

REYES: Will that include recommendations of how to fight the threat? As someone in Congress, after spending 26 and a half years in federal law enforcement protecting the border, I don't want our country to have to deal with marshal law. Everybody's worried about the sniper in this region right now and they're talking about bringing in the military assets and all of these other things, but I think terrorist win when we subject ourselves to marshal law and those kinds of issues that I've mentioned before in my opening comments.

Will that include...

TENET: Sir, we won't typically put policy solutions in the estimate, but I'm sure we can then use it as a vehicle with Homeland Security Council and sit down and walk through it and see what additional measures that may be required as a result of what we can tell.

(UNKNOWN): Let me just -- one thing you mentioned about the use of military resources and you mentioned it with regard to our current investigation into the sniper and let me just say that the resources are limited to support in terms of giving us the capability that we did not have. But, law enforcement remains law enforcement and the military is not playing a role in the law enforcement function on the ground.

(UNKNOWN): I'd just repeat what I said in my prepared statement. One of the charges I gave to our work force is we're going to keep America free by making Americans feel safe again. I know there will be unbearable pressures to limit our civil liberties if we have a repeated event of 11 of September.

REYES: Thank you, Mr. Chairman.

GRAHAM: Thank you Congressman Reyes.

Senator Wyden?

WYDEN: Thank you, Mr. Chairman.

Let me begin if I might with you, Director Tenet. I have been digging into the process for how intelligence documents become classified. And I'm increasingly concerned that the CIA and other agencies are designating too many documents as classified and in effect, out of reach of the public.

Now, my concern has really been heightened by the fact that after 9/11, the president of the United States and correctly, in my view, has been urging the public to help win the war on terrorism, to get involved and contribute and assist in any way.

But, that's going to be pretty hard to do when key information is kept from the public that would let me, in effect, pick up on the suggestion the president made.

And what I'd like to do is get your sense, particularly with respect to threat analysis and threat analysis in my understanding is generally classified as secrete or even higher.

Now, with threat analysis there's a substantial amount of analysis that in effect reviews terrorists' tactics and procedures in a pretty general sort of way. Information could help the public for example know what the terrorists have done in the past, what they may be considering in the future, but it isn't going to compromise a sensitive ongoing operation by providing excessive detail about a specific threat.

So, my sense is that if we got away from this process of over classification and provided this information to the public, we could do more of what the president of the United States is suggesting and act in the public interest. So, my question to you is why can't more of the terrorist threat analysis, the kind of information I'm talking about, be declassified and shared with the public?

TENET: Well, sir, I think you missed my statement earlier. In my long statement I said a couple of things. One, it's very clear we have to move information to a whole different set of customers in the context they need to receive it in. I'm talking about police chiefs and other people that fall outside the intelligence community.

The important thing is that we have to find ways to write things that are content rich, which compromise none of those things and we ought to be able to do it, because otherwise, I think we can isolate all this information.

Today, when Governor Ridge or anybody speaks, we do that for them, but it's very clear that the information that we possess or the FBI possesses has to go out certainly to the lowest denominator of the country working the problem: police chiefs, governors, mayors, others, the public and we're committed to trying to do that.

When the fate of the country's at stake, we have to do a better job of moving to that customer base the way we take care of the military or the State Department or others, we have to figure out a way to do that.

WYDEN: Will more terrorist threat analysis be declassified? I continually hear about how we're going to make changes and we're going to look down the road at this and that, but I don't see anything actually happening.

I'm asking you about a specific area that I think could be declassified in a very specific way. So, if you would respond that that. Can we expect to see a change in classification policy with respect to terrorist threat analysis?

TENET: Sir, we will do our best, yes. We're working with Homeland Security and I'm committed to trying to do this.

WYDEN: Well, I will follow up because we only have five minutes. I wanted to clear today to you and also to Director Mueller, this is going to be a central focus of my work on this committee.

I think that too much is being classified now, runs directly contrary to what the president has wisely counseling. I think it has to change.

The only other point I wanted to make and I know time is short, Director Tenet, as you know, I and others have been working on putting a terrorist identification classification system into the intelligence authorization with Senator Shelby's support and Chairman Graham's support I think we're going to be able to do it.

It would stand in sharp contrast to the State Department's tip off system, which really only gives limited information to a limited number of federal customers and really doesn't even get to the state and local people.

Tell me if you would in the time I have, how you would meet the requirements of this legislation and get the necessary information out, not just throughout the federal government, but to the state and local people as well.

MUELLER: Well, I'd like to see the legislation and I'll work with you to figure out how we do that, sir. I don't have an answer off the top of my head, but I'll sit down and talk with you and figure out how we'll work this together.

WYDEN: Well, we'd like to do that and we have supplied it to you and we'll do it again.

Thank you, Mr. Chairman.

MUELLER: Mr. Chairman, could I just have a second to respond...

GRAHAM: Yes.

MUELLER: ...to Senator Wyden's concern about getting information out to state and locals and the legitimate concern about how we can strip out this information from sources and methods pushed out.

We had started in the wake of September 11th, a weekly bulletin that goes out every Wednesday to every one of the police departments in the United States that provides that type of information. It probably needs to be expanded on, but it does provide the information that the police officers need on the beat as to what tactics, what they should look for in terms of what terrorists are doing. And I'd be happy to provide you the series of bulletins that we put out over the last several months.

GRAHAM: Thank you, Senator Wyden.

We've now completed this first round of questions, starting the second round and we'll try to wrap this up in the next 30 minutes or so.

I'm going to ask questions which follow up on my first round of questions, which had to do with how we're going to respond to this probability of Saddam Hussein reacting to our attacks against him, but I'd like to make a couple of comments building on statements that our members have made.

First is to Director Mueller. It's my understanding that the issue that both Congressman Hoekstra and Congressman Reyes raised relative to the comprehensive study of the terrorists who are embedded in the United States was initially requested in 1999. If that's correct, is that a correct statement?

MUELLER: I'm not certain, but I have not looked at the testimony. I know that we've had it in process and it's in final draft form.

GRAHAM: Yes, I think that is critically important because if our people start to see as the CIA intelligence estimate of speculates or states is a probability, which I understand in CIA terms means a 75 percent or better chance of becoming a reality. If they start seeing these increasing waves of attacks here within the United States, there's going to be hell to pay. And we need to do everything that we can in the time that's available to us to try to build the strongest protection.

My second comment goes back to my initial question and that is that this program of trying to deter the international terrorist has both the defensive component here at home and the offensive component abroad. I think we've done quite a good job of dismantling of the capability of Al Qaida although we now seem to be in a stage of some regeneration.

My questions have to do with what are we doing now, particularly in terms of preparing through enhanced intelligence assessments to begin to dismantle the other terrorist groups who might be the linkage for Saddam Hussein to attack us here at home groups, such as Hezbollah that had been mentioned in your earlier testimony.

When I was in -- Mr. Tenet, you made a very appropriate comment about sanctuaries being the key part of this. We know what an important role they play for Al Qaida and Afghanistan. Today, substantial numbers of the sanctuaries are not in Central Asia, but in the Middle East and places like Syria, the Syrian controlled area of Lebanon and Iran, yet in a meeting that Senator DeWine and I had with the president of Syria, he denied that there were these training camps under his control.

One of the things I would suggest is we ought to do to Syria what apparently we did in North Korea within the last few days, and that is lay down the evidence we have, which I think is quite compelling, and confront them with it and maybe it will cause those governments, which are currently housing those sanctuaries to take a greater sense of responsibility in dealing with them. And if they don't, I think they should know that we're prepared to do so.

I wondered if you could comment on that string of suggestions.

TENET: I understand the argument about the sanctuary. Obviously, I meant it with regard to Al Qaida. I think you're asking a bunch of policy questions, not our questions. It's safe to assume we're working against all those groups without going into here.

But, I think you have to also -- we're in a big war right now. I think the sequencing and thinking and obviously when we talk about terrorism we're not limiting it (inaudible) extremism. We're not limiting it to just one set of groups.

I think the points you make about you ultimately have to put more pressure on people to rid themselves of people, whether they allege they command and control or don't, still use the territory as safe heavens. And all you have to do is talk to our friends, the Israelis to understand the implications.

These groups continue to operate there.

GRAHAM: Are you satisfied today with our efforts and specifically what you've been tasked to do to put us into a position...

TENET: Sir...

GRAHAM: ... to begin to dismantle these terrorist groups abroad and deny them these sanctuaries?

TENET: Sir, I'd like to talk about that with you in closed session.

GRAHAM: OK.

Senator Shelby?

SHELBY: Thank you, Mr. Chairman.

Just picking up on your word here, it's one thing, Director Tenet to perhaps dismantle them and I think you have or we have and they have, all of you in some ways. But, at the same time by dismantling them, you've dispersed them.

TENET: That's an opportunity, sir.

SHELBY: OK. Opportunity?

TENET: That's an opportunity.

SHELBY: OK.

TENET: When you get people moving, that's opportunity.

SHELBY: Because they're on the run?

TENET: Yes, sir. That creates plenty of chaos in the system.

SHELBY: Sure. I want to get into something else. I want to pick up a little bit on what Senator Levin was talking about earlier. And this afternoon, late here, I'm not here to get into a semantic debate on the meaning of the word or term accountability. Obviously the word accountability means different things to different people. To some people it has no meaning, literally no meaning. To others, where you have real feelings and responsibility, accountability means perhaps responsibility in that context.

And it's troubling to me and it was to Senator Levin and to others on this committee that it seems from your testimony and other evidence that the staff has collected that no one is responsible in the CIA.

TENET: No one's responsible for what?

SHELBY: For the failures. In other words, no one is accountable, no one is responsible, no one is responsible at the Bureau at the FBI, and no one's responsible. In other words, it's no one's responsibility. That's troubling, very troubling.

To each of you, what does the term accountability mean to you? I'll start with General Hayden. In this context, if you have a job to do and if you do it and you do it in a slipshod way, and there's no measure of performance or if it is, nothing happens. Go ahead, General. What does accountability mean to you?

HAYDEN: Sure. There's a difference between a job not being done...

SHELBY: Absolute.

HAYDEN: ... and a job being done in a slipshod way.

SHELBY: That's right.

HAYDEN: And I think that what Director Tenet was pointing out that the issues that this committee in our dialogue has uncovered are systemic issues. That we put people in situations in which they had inadequate tools or inadequate circumstances to succeed.

SHELBY: But, not always -- now, we've had -- General, we'll all concede that you need more resources and we worked with you, Senator Graham and other members of the committee, to revamp as a priority NSA and you're working toward that goal.

HAYDEN: Right.

SHELBY: We have to. It's a (inaudible). We worked with Director Tenet.

TENET: Yes, you have.

SHELBY: I'm not only Judiciary Committee or this Criminal Justice Appropriations, but I know others have worked in that regard. I know you don't have too many resources, but a lot of this is decision that people make or fail to make.

Director Tenet?

TENET: Well, sir, let me just say...

SHELBY: What's accountability mean to you?

TENET: Well, sir, when you look at this, I look at it in the following ways. Look at anybody's performance and say -- tell me about the integrity of individual, how hard they were working, tell me about their understanding of their job, tell me about whether they were slipshod, tell me about whether they were paying attention to detail and doing everything they knew how to do.

Now, when somebody...

SHELBY: Stop there a minute. Let me just say in knowing everything they knew how to do, but what if you had people in these jobs that didn't know what they were doing and didn't know the standard? I know some people at the Bureau; we had testimony here that didn't know the FISA standard, even lawyers over there, Director Mueller. I'm not saying it's your fault, I'm just saying that they're inadequately trained.

Go ahead Director Tenet. I'll try not to stop you again.

TENET: No, it's OK, sir, keep going. I've lost my train of thought, I apologize.

SHELBY: Maybe you'll pick it up again.

TENET: I was on a roll.

SHELBY: What is -- you thought you were.

TENET: No, I was on a roll, sir.

SHELBY: I don't think so.

Director Mueller, what is your feeling, how do you feel about the word accountability, the term accountability, is that responsibility in the context, what does it mean?

MUELLER: I think it's giving people both the responsibility and the authority to do a job, to set up parameters, what you expect from people and if they do not live up to those parameters, then you hold them, quote "accountable". You hold them...

SHELBY: (inaudible)

MUELLER: Yes, absolutely.

SHELBY: OK.

MUELLER: But, the ultimate accountability is me. I have to set the standard. I have to give them the tools to do the job. It does not make any sense for me to hold somebody accountable if I have not been given them the responsibility, the authority and the tools to do the job. That is just -- that's wrong.

And so, in terms of something like the training on the FISA issue, it's a responsibility of me to assure when I see something like that that we put into place the mechanisms to get those individuals trained. If we did not give them the training, I cannot hold accountable that person who was inadequately trained, because I did not provide the person with that training.

SHELBY: I want to pick up lastly on Senator Levin's statement, paraphrasing, has anyone in the CIA, the FBI, been held accountable for the failures thus far of September 11th or the events leading up to it?

Director Tenet?

TENET: No. And there's a reason.

SHELBY: What...

TENET: We're in a middle of a war.

SHELBY: Oh, wait a minute.

TENET: We're in the middle of a war, sir...

SHELBY: That's not much of an excuse...

TENET: ... and I'll tell you...

SHELBY: Mr. Tenet, let me tell you...

TENET: Sir, wait a minute, no that's my judgment to make.

SHELBY: Well, I know it's your opinion. Let me tell you what happened. Do you know in the Second World War when we were in the war that there were just dozens and dozens of generals and captains of ships, especially the submarines that were replaced immediately? Have you ever heard of Kasserine Pass, Anzio Beach? Those things, they jerked generals out of the war and put people in. Patton went into Kasserine Pass after Rommel defeated the American forces there. Anzio Beach, I forget the general's name, but he was supposed to be the up and coming general. He was brought back stateside.

I think there has to be accountability. That's what Senator Levin was talking about. I think you ought to go back and look at the real meaning of the word.

Thank you, Mr. Chairman.

GRAHAM: Thank you, Senator Shelby.

Congresswoman Pelosi?

PELOSI: Thank you very much, Mr. Chairman, gentlemen. I want to also commend the members of our committee for their very wise judgments that they're bringing to this joint inquiry and wisdom is what we need now because certainly we have to have accountability internally within the agencies and externally up the chart to the president of the United States.

We also don't want to find a scapegoat and say we've solved it, but for that, we would have not had September 11th. We really have to protect the American people in the future. So, we have to be, I think, judicious in how we evaluate any one piece of information and how it all relates to each other and what the accountability is.

I have serious concerns that part of our civil liberties may be part of the price we pay for falling short in areas we should have done better. So, I think after we go through all of this, step back and try to make some evaluation without declaring something the cause, which would be a false sense of security to the American people.

I have a couple observations. First of all, I don't want the day to go by, Mr. Tenet, without saying that I looked at the legal -- what we want is to find the truth. And that's why many of us have advocated things that we've talked about earlier in terms of the commission, et cetera. And we want more openness wherever possible. And certainly we don't want to jeopardize sources and methods or legal cases or whatever, but we want the truth and we want openness.

I looked at the legal justification for keeping classified the government positions to which certain intelligence information was provided and I think the legal arguments that were made were not compelling, in my view and I think it's a misapplication of the classification standard.

Moving on from that, again, back to my main point about opportunities that were there, which may or may not have been dispositive of this issue as to whether we should have known, could have presented and are helpful in the future. But, there are certain windows. The Moussaoui window. Windows of people coming into San Diego.

I happened to think that we're trained in this committee, as all of us are, I think that forced protection is our first priority to protect our young men and women in uniform wherever they are, not only when they are in battle, but also wherever they are. And I would hope that in the future we would see the vulnerability we have when somebody comes into San Diego for example, which is rich with service people and installations that we would be even more careful, because of the exposure we would have to our forces there. Recognizing, of course, we want to protect all of the American people.

It's interesting to me, Mr. Director Tenet that I conclude correctly that the arrest and apprehension of Moussaoui may have hastened these folks to move on more quickly.

TENET: It's just a judgment, Ms. Pelosi, and I could be wrong. It was a personal judgment.

PELOSI: I appreciate your reinforcing that judgment. In your testimony it contains many instances, Mr. Tenet, where strategic warning was provided about the possibility of a terrorist event or attacks. Your testimony contains though few, if any, instances in which tactical warnings were provided about a specific attack to occur at a specific place and specific time. Tactical warning, of course, is by definition, actionable. A strategic warning suggests general action, if any. Strategic warning tells us something bad may happen somewhere at some time, what action should flow from this type of warning.

What is the value of that type of warning and how can we act upon that?

TENET: Well, Ms. Pelosi, what we've tried to do when you read through the testimony and look at the disruptions and all the things, we tried to change the balance. We couldn't get a tactical warning. We tried to get things moving so that we could generate more information to stop things.

There's a stream of things that we're stopped here. No numerous places and attacks and individuals that we apprehended who were going to -- so what you're trying to do through this kind of planning is make your lock, be disruptive enough to collect the additional information, have operations, drive analysis to give you the ability to figure out if you can ever get that tactical warning. And that's the hard part of this business.

Now, I'd say, if you look at where we were last year compared to this year, we're much better in that regard overseas. The disruptions and information we've collected have not only given us tactical warning of events that were going to occur overseas, they've given us real, real and valuable strategic insights into targeting and planning that we can then provide perhaps to Homeland Security or other means. So, it's a dilemma. It's always that when is the date, time and place of an event.

PELOSI: Or even something narrower than -- we always say in California that people predicted ten of the last two earthquakes. They're always saying there's going to be an earthquake...

TENET: Right.

PELOSI: ... and a couple of times it happens. But, that's pretty good, two in ten. That's pretty good. At least then we have some idea of where these things may happen because of the fault line.

We have to have a better idea of the fault lines in the U.S. so that we can have our strategic warnings can be narrowed down to more tactical warnings.

It appears that my time is up. But, if anybody would like to make any observation on that, I'm sure the Chairman and his generous gavel would allow it.

HAYDEN: Ma'am, I understand exactly what you need and frankly we did very well in the summer of 2001 with strategic warning. It was tactical warning that was missing.

But, the analogue to the fault line, it's one step short of a perfect analogy and it's simple this. Our fault lines changed their minds. Our fault lines decided not to crack because of our issuing warnings about the fault lines. So, it's a more difficult thing for us to measure.

PELOSI: I appreciate that General, but we do have areas of exposure. As a mom, as a person who protects her children, her grandchildren, my husband and I, you know where your exposure is, so you have to make sure that those windows are closed and locked and whatever else that you do to protect your family is taken care of. And I think that we had exposure internally, even. We had exposure with the Cole, we had exposure of the East African embassy, we had exposure to Khobar Towers, and internally we had exposure at our airports, which brought such tragedy and sadness to the American people and to the family.

Thank you, General. Thank you, gentlemen. Thank you, Mr. Chairman.

GRAHAM: Thank you, Congresswoman Pelosi.

Congresswomen Harman?

HARMAN: Thank you, Mr. Chairman. I just want to mention that from here I can barely see, but I can see the pictures of some who perished on September 11th and I appreciate the fact that you bring those pictures into these hearings, because it keeps us focused on something that's very central to what we're looking at.

I want to change the subject to something mentioned in General Hayden's testimony. I think only in General Hayden's testimony, and that is technology. He was clear about the fact that about a third of his technology is in-house and that will go down to about 18 percent shortly and he was describing some of the new contracts he's let with the private sector.

I represent the district that probably makes more of our intelligence architecture than any other district in the country. And if it doesn't now, it certainly will under my leadership. But, nonetheless, I think it does now. And I think that that's wonderful and I commend the people who make it. I think that the cutting edge technologies reside outside of the capacity of your departments. You obviously know that at NSA. The CIA knows that, that's why you set up INQTEL (ph), which is a venture capital firm that partners emerging technologies for you. And I think that has been a very successful venture and I commend you for doing that. Again, a lot of Californians are on that board. It's a good board.

For you, Director Mueller, when one thinks about technology, you were the one who has to play the most catch up. I think most people think -- that's not a food, the way I pronounced it -- most people think that the FBI was in the dark ages or maybe pre-dark ages before 9/11. And the notion that you didn't have e-mail systems or I don't think you did or you didn't have interoperable anything is pretty horrifying. And I know, Director Mueller, that you're moving fast to correct all that.

But, my question in my two remaining minutes to all of you is how do you assess the importance of technology and not just for your individual agencies, but the importance of figuring out the digital systems that we will need to connect us together, connect humans together, connect the information dots together and do the kinds of data mining and other things that will augment what the overworked human forces that you have there can possibly produce even under the best guidance.

HAYDEN: Ma'am, it's the war winner for us and I don't mean just because it happens to solve this particular problem, which is does. It is an expression of the strength of the American people. As an airman, I'm fond of saying the American Air Force is the military expression of the American Aviation Industry.

With regard to NSA, we are the security expression of the American computer and telecommunication industry. We as a nation need to play to our strengths. That's our strength.

TENET: I can't add anything better than that.

MUELLER: And we have two of the adopting technology in the FBI going from a paper driven organization to digital organization will free us up and make us more horizontal, remove a lot of bureaucracy that we've heard about in the course of these hearings, give us new opportunities, investigative tools, but I will add one caution, that with that new technology has to come training and has to come user friendliness, there has to be changes in job descriptions, there has to be changes in procedures.

It is one thing to bring in boxes, you can bring in the computer, you can bring in the software, and you can bring in the hardware. But, if you do not provide the changed business practices, if you do not provide the training, if you do not provide the user friendly interfaces, then you will be going no place.

So, while people talk of technology, you can't technology divorced from what you're doing throughout the organization and to the extent that we can adopt the technology and change the organization, it will give us the freedom to be far more agile, flexible than we've been in the past.

HARMAN: Well, I agree with that. My light is on, but I would just add that we are confronting a digital foe. Those who threaten us know how to use the technology. The don't necessary own it, but they embed messages and other communication's architectures and we're discovering that finally and it's a good thing that we are. But, we need to be one step ahead of those folks and one of the additional features of the Homeland Security Department legislation we keep talking about is a front door for emerging private sector technologies that should help us get one step ahead of the terrorists.

(UNKNOWN): Could I make one response to that if I could, Mr. Chairman? And that is while I say we are behind in providing our agents the technology they need to centralize, analyze and disseminate the information, we are on the cutting edge, I believe when it comes to investigating any aspect of computer crimes, whether it be denial of service attacks or worms or viruses or hacking attacks and the like. We have to build on that expertise that we have in-house as we developed the technology throughout the organization.

HARMAN: Thank you, Mr. Chairman.

GRAHAM: Thank you, Congresswoman Harman.

As Senator Shelby has already done, I'm going to have to leave at this time. I wish to again, express my appreciation for the service that each of you gentleman is rendering to our country and for your service to our joint inquiry today.

I am going to turn the gavel over as directed by Co-Chairman Goss to Congressman Bereuter who also will be the next questioner.

After we complete this last of our public hearings, our task will turn to preparing a final report with recommendations. We had three assignments. One was to attempt to determine what happened on September 11th. Second why it happened and third, and I believe most important, what should we do about it.

To that end, the committees will meet again possibly during the adjournment of the Congress in accordance with the rules that govern the convening of the meeting of the two committee to commence the process of completing our task, by completing our report and final recommendations.

As this might be the last public opportunity to do so, again, I want to express my deepest appreciation to Ms. Eleanor Hill and to our outstanding colleagues who have placed us I think in such an advanced position to have tolled the American people with a clarity and cohesion that I do not believe that had previously had, what did happen and why and now accept the challenge of answering the question: What are we going to do about it?

With those challenges still ahead of us, I say thank you.

BEREUTER: Thank you very much, Chairman Graham. We just have a few members yet, it appears, to complete the questioning of the second round and the hearing. And I'll begin my comments by saying that I think we should try to learn what we can from foreign counterparts to the extent that it might be relevant and consistent with our own values and a governmental system.

Accordingly, I have a couple questions in that vein and Director Mueller, I would like to direct the first one to you. Scotland Yard has a system of special branches that pass sanitized intelligence information to the police and to the private sector. The British Securities Service sent staff to the special branch offices. This gives them a national reach. Do you believe this approach could work in the United States? Why or why not?

MUELLER: Well, I think aspects of it certainly could work. I think our Joint Terrorism Task Forces that we've set up around the country are a variation of that type of system. We are far larger than Great Britain and we have something like 18,000 police departments throughout the United States. And we're unlike Australia, Canada, which has the RCMP, or Great Britain and that distinction makes a big difference. We are a democracy and we have democratized our policing within the United States. And the Joint Terrorism Task Force is in my mind, our mechanisms where by we can accomplish the same type of sharing that is done by Scotland Yard.

One of the things we are doing is we are integrating in the task forces individuals from the CIA in the country so that we have ready, on scene that type of information that is inside the CIA computers that can match up with the information we may have at the state and local level, which in my mind goes some distance towards accomplishing what the MI5 model does in Great Britain.

BEREUTER: Thank you, Mr...

MUELLER: I think we have to do a better job of that, but we are making strides there.

BEREUTER: Thank you, Director Mueller. You're certainly right to point out the differences in our system and especially the size of our country and the number of police departments. But, I've noticed that the information technology, which you were just getting into at the end of your comments, that is being employed now and being put in place in the United Kingdom seems to fill some of those needs, even for a vast country like our own, with different political subdivisions and responsibilities. And I noticed this being down largely with American consulting, NIT firms.

MUELLER: Can I add one thing there?

BEREUTER: Yes.

MUELLER: It's always been my cherished hope that we could throughout the United States standardize computer input for police departments. We tried to do it on the east bay, it's being done in St. Louis and the like, because from county to county, police department to police department we have no standard for the input of things like names, dates, and the like. Standardized fields, standardized records. Were we to have that in the United States, we would have the foundation upon which to exchange the information that we want to exchange among the various law enforcement entities, but we are far away from doing that.

BEREUTER: Thank you.

General Hayden, the attorney general, as you may be aware, recently approved new guidelines to govern the conduct of counter- terrorism investigations under the new U.S.A. Patriot Act and the FISA statute. I understand that the Department of Justice has established a training program for that and the CIA is a participant in it, a full participant as I understand so that this kind of information sharing about the proper use of these tools will be available.

Are you aware of the training and furthermore, most importantly, is NSA going to participate in it?

HAYDEN: Absolutely sir. And let me tell you for our narrow purposes of what the Patriot Act and the foreign intelligence value derived from FBI vices. That has been a major step forward for us.

BEREUTER: Thank you.

Director Tenet and/or Director Mueller or both of us, the MI5, again, back to the United Kingdom and it's sister foreign service, the Secrete Intelligence Service work on international terrorism jointly. They determine which service is best placed to handle a target and pursue targets collaboratively. Because international terrorism respects no borders, the service responsibilities in this area are blurred. This eliminates the need for hand off from one service to another, which has been at times, a problem in our own country.

What are your views on how this could be implemented in the United States?

TENET: We do it today, sir, in terms of working overseas with Islegates (ph) and working with our chiefs of station. We started this four or five years ago. We do this today. I mean...

BEREUTER: You feel that...

TENET: ... we do this hand off...

BEREUTER: Do you feel that there's any difference in their ability to avoid a hand off problem because of their arrangement that you cannot or are not now matching?

TENET: No, sir. I don't know the precision of what their arrangement is, I'll go take a look at it, but I know that our arrangement in terms of how we exchange information and make determinations of where promissory lies and how we hand off to each other has been working quite well for a number of years overseas. We're very pleased with where we are.

BEREUTER: Director Mueller, do you have any comment with respect to...

MUELLER: I would agree with that. We need to do it better; we ought to have enhanced exchanges. I think with the FBI's transformation of its technology capabilities that it will much enhance our ability to be integrated, integrate our analyses, integrate our systems, but I think we've come a tremendous ways, particularly in the last four or five years and I guess especially since 9/11. We are doing things we didn't do prior to 9/11. And I think the hand off is very good now, certainly far better than it was prior to 9/11.

BEREUTER: And the hand off problems that we focused on are primarily on homeland security issues during the course of this investigation.

But, my time has expired so I'm please to yield now to the gentleman from Indiana, Mr. Roemer for five minutes.

ROEMER: Thank you Mr. Chairman.

Again, we very much appreciate your time. You've been here for six and a half hours and skipped your lunch. We hope you don't skip your dinner as well.

I want to be brief in asking a couple questions about progress in the war on terrorism and maybe you can be brief back with me too.

My constituents often ask me how do we gauge the success in this war? It's tough to quantify and it's tough to explain. Director Mueller, how would you explain it to them in regards of what progress have we made on the Anthrax investigation? Can you update us on that?

MUELLER: Well, there are several aspects to the investigation. One is looking at particular individuals; we still have individuals that we are looking there. Another aspect of the investigation is identifying the chemical composition of the Anthrax that was found in the Daschle and Leahy letters and comparing that Anthrax to the Anthrax that was found in the letters that were mailed to the Post in New York and to Brokaw.

And the chemical and the DNA analysis of those samples is ongoing. We are utilizing that process to compare those samples to other that are known to us from a variety of laboratories.

ROEMER: Have we narrowed the field down to...

MUELLER: We are narrowing the field down, yes, but I will in the same breath say that until we have somebody identified against whom we have brought charges, I would not exclude any possibility. We always keep our mind open for any other possibility, although the investigation may be leading us down one trail and we may look like we're going in a particular way, we always have to be open to the possibilities of another source of responsibility.

ROEMER: Is there a time frame on this as to when you hope to conclude it?

MUELLER: The chemical analyses will probably be going on for several more months. I would have liked to concluded it yesterday. I would have liked to concluded it a year ago. And I am comfortable and confident that we are doing everything possible to identify the person responsible for those Anthrax attacks.

It is, and I will tell you with sniper attacks now, is yet another drain on man power for this region, but nonetheless, we understand the necessity and desirability, the importance of doing everything we can to bring the person responsible for those Anthrax deaths to justice as soon as possible.

ROEMER: Do you still believe to the best of your knowledge that this is a domestic type of attack with the Anthrax or is that still open?

MUELLER: Well, the reporters often report what they think we believe.

ROEMER: You're telling me.

MUELLER: I've tried not to state what we believe. They have speculated that and I know at one point we had a profile of an individual that we did publish and we have not changed that profile, but I, in the same breath will tell you, that just because the FBI -- and they're very good at it -- put out a profile, a profile is not proof.

ROEMER: OK.

MUELLER: A profile is not facts indicating a particular person was responsible for that act.

ROEMER: So, you didn't answer my question and that's OK, but you still don't suspect -- you're not excluding anything in this.

MUELLER: Not excluding anything.

ROEMER: The profile is domestic, but you're not excluding a foreign source or a terrorist source.

How about in terms of the sniper case? Do you have any suspicions on that? Your personal opinion on this as to what you think.

MUELLER: Well, I would not to express...

ROEMER: George give that every now and then, he gives his personal opinion.

MUELLER: But I will tell you at the outset, I believe the investigation is going exceptionally well. There is a combination of the work of state and local coming together in ways that are the way we have to do business in the future. And Charles Moose, the police chief in Montgomery County is doing a superb job and we have a special agent in charge there that's working with him, as does ATF.

Getting to your question as to my opinion, I don't think it appropriate that I give you an opinion. What I do think it appropriate is when we have evidence, we present it to the prosecutors so that an arrest can be made. But, all resources...

ROEMER: (inaudible) are being devoted and you're confident that everything that the FBI has is being devoted to the case to help the local and state officials pursue this sniper.

MUELLER: And not only what the FBI has, as the newspaper report it to the extent that we believe the capabilities with the Department of Defense, we've reached out and sought those capabilities. We have almost 450 agent who are now participating in that investigation. I believe ATF has close to 200 and I don't have a figure myself for the number of state and local law enforcement authorities who are also participating.

I will tell you we've had thousands of leads, whether it be on our tip line or others that we are investigating and there are hopeful leads amongst those that we have received over the last week.

ROEMER: I thank the Director. I know my time is up. I was hopeful to ask some questions to Mr. Tenet about the progress on Osama Bin Laden, but maybe Mr. Reyes will do that.

BEREUTER: Time of the gentleman has expired.

The gentleman from Texas, Mr. Reyes is recognized for five minutes.

REYES: Thank you, Mr. Chairman.

Actually I only have one question though. I'd be glad to yield my time to my colleague, but the only question I had was for Mr. Tenet and that was relevant to the testimony on page 9 that you gave where you developed in '99 a plan to target Osama bin Laden in Al Qaida globally. And I'm going to assume that the plan includes specific resources, personnel equipment, training, associated cost. And my question is, could you furnish us a copy of that plan? I'm very much interested in helping the agency on several levels, including on the budget level.

TENET: Of course.

REYES: So, could you furnish that to us?

TENET: Of course. Yes, sir.

REYES: Thank you very much. And I'd like to yield my time to...

ROEMER: The next time the Director's up to our committee, I'll ask him about Osama bin Laden.

BEREUTER: I thank you, Mr. Roemer.

The gentleman from Oregon, Mr. Wyden is recognized.

WYDEN: I thank you, Mr. Chairman.

Director Tenet, as you know, your October 7th letter to Chairman Graham generated a fair amount of discussion.

TENET: I know.

WYDEN: And I was interested in asking about a part of it that really hadn't. The last graph in the letter says and I quote, "Iraq's increasing support to extremist Palestinians, coupled with growing indications of a relationship with Al Qaida suggests that Baghdad's link to terrorists will increase even absent U.S. Military action."

Now, I wanted to ask you about this...

TENET: I don't have it.

WYDEN: ... because Al Qaida's desire to overthrow secular Arab states and replace them with Islamic governments would threaten Saddam's regime itself. So, my question would be in your view and based on the information that you have, what does Saddam gain in the long term by helping Al Qaida? Because the question, for me at least, and I'd like you to kind of walk us through it is that a stronger Al Qaida puts them in a better position to overthrow his own regime and Al Qaida has a desire to overthrow secular Arab states and threaten them with Islamic governments and just if you would, take me through the analysis there.

TENET: I actually have a different view. I actually think...

WYDEN: I want to hear it.

TENET: ... these distinctions between Sunnis and Shiias and seculars and fundamentalists in the current environment we find ourselves in, are bad distinctions to make in terms of looking at behavior for the future.

What does Al Qaida and Iraq, what would they have in common? Us, the Saudis, others. And the point I would make to you is if you look at Al Qaida and focus on Iraq or Iran or wherever you want to focus on, in a clandestine relationship where things are obscured and your hand is hidden, there are enormous advantages.

And so, I think that distinction that you're making is -- now people make that distinction, sir. There are some people who believe...

WYDEN: I just wanted to get your sense of...

TENET: I don't personally buy into it. I actually think we should think about Al Qaida as a front company that will take capability wherever it can get it to further its own operational goals and where's there's a confluence of a target that's common and interesting, everybody benefits.

So, letter (ph) in terms of the things we've seen that we've declassified, senior level contacts, trainings in poisons and gases, among WMD relationships, et cetera. You've seen the letter.

When you peel this story back, I don't know where it's going to take you. And as is often the case in these terrorism looks when you peel the onion back, you find more and more all the time. The only thing I would say is keep your mind open and don't get -- we shouldn't just think about this in conventional terms, because they don't think about that way.

WYDEN: Well, I don't have an quarrel with your analysis and I think the distinction really is and you seem to suggest that these people are just thinking short term, short term and looking for every possible opportunity and their short term interest is to be against the United States. But, somehow we have to reconcile that with some of the long-term considerations as well. And that's what I was asking about.

The last point I would make, just as we're wrapping up these hearings and I guess I'm in a position to be the last to wrap up the public hearings is that, when I look down the road to where we ought to be, it seems to me we have to create a new balance. And there is a clear need to protect the people of this country and that requires that sensitive information not be out across the streets of this country.

At the same time, there is a public right to know and in effect there is a public need to know, which is what I was trying to address with respect to what I think is the clear over classification concern that I brought up.

What we're going to try to do up here is to give you all the tools to do it. That's what initiatives like the terrorist identification that I've developed is a part of and we need you all to meet us half way. And that means getting at the abuses for example, in the classification area. I tried to skim over your testimony; again, I didn't see the word classification come up.

Now, I will accept you at your word, because you have been blunt and straight with me at the past that when you say you're going to follow up on it, you do. But this has got to change. There have been abuses -- Pat Morningham's been talking about that for years. And I think that what we're talking about is a new balance between ensuring that sensitive information that can't get out that would threaten this country while being as protected, but that we also take steps to ensure that the public's right and need to know is addressed. And suffice to say, there is a lot of work to do to secure that new balance.

TENET: I'll work with you Senator.

WYDEN: I thank you both. Thank you, Mr. Chairman.

BEREUTER: Thank you Senator Wyden.

That will complete the questioning at this hearing. You have heard, the members have heard and the audience in general has heard the Chairman's plans for the continuation of our effort for the remaining of the 107th Congress.

To you gentlemen, I thank you not only for today, but also for the fact that you've been helping us in closed hearings and otherwise now for some time. And looking at all the tasks that undoubtedly that are on your desk, hundreds of things, I know the amount of time that we have received from you is substantial, but what we're doing of course, in this public hearing and others is maintaining and securing and enhancing the confidence and support of the American people.

And I do believe, as I'm sure you do, that despite the difficulties of maintaining a secure environment in our very open society that we will prevail that we will make this country safer for our citizens here and abroad.

I thank you very much, gentleman.

TENET: Thank you, sir.

BEREUTER: The hearing is concluded.

END

NOTES:
[????] - Indicates Speaker Unknown
[--] - Indicates could not make out what was being said.[off mike] - Indicates could not make out what was being said.

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