4 February 2001
Source: http://www.nssg.gov/phaseIII.pdf (1.5MB, 149 pages)

See also:

Executive Summary: http://cryptome.org/nssg3-01.htm

Introduction and Part I, Securing the National Homeland: http://cryptome.org/nssg3-02.htm

[4 pages.]

III. Institutional Redesign

F. THE INTELLIGENCE COMMUNITY

The basic structure of the U.S. intelligence community does not require change. The community has implemented many of the recommendations for reform made by other studies. This Commission's focus is on those changes in intelligence policy, operations, and resources needed for the full implementation of recommendations found elsewhere within this report.

While the intelligence community is generally given high marks for timely and useful contributions to policymaking and crisis management, it failed to warn of Indian nuclear tests or to anticipate the rapidity of missile developments in Iran and North Korea. U.S. intelligence has, at times, been unable to respond to the burgeoning requirements levied by more demanding consumers trying to cope with a more complex array of problems. Steep declines in human intelligence resources over the last decade have been forcing dangerous tradeoffs between coverage of important countries, regions, and functional challenges. Warfighters in theater are often frustrated because the granulated detail of intelligence that they need rarely gets to them, even though they know that it exists somewhere in the intelligence system.

It is a commonplace that the intelligence community lost its focus when the Berlin Wall fell. Since then, three other problems have compounded its challenges. First, the world is a more complex place, with more diffuse dangers requiring different kinds of intelligence and new means of acquiring them. Second, its resources-personnel and monetary-have been reduced. Third, the dangers of terrorism and proliferation, as well as ethnic conflicts and humanitarian emergencies, have led to a focus on providing warning and crisis management, rather than on long-term analysis.

The result of these three developments is an intelligence community that is more demand-driven than it was two decades ago. That demand is also more driven by military consumers and, therefore, what the intelligence community is doing is narrower and more shortterm than it was two decades ago. Given the paucity of resources, this means that important regions and trends are not receiving adequate attention and that the more comprehensive analytical tasks that everyone agrees the intelligence community should be performing simply cannot be done properly.

This Commission has emphasized that strategic planning needs to be introduced throughout the national security institutions of the U.S. government. We have also emphasized the critical importance ofpreventive diplomacy. Both require an intelligence community that can support such innovations, but current trends are leading in the opposite direction,

This Commission has also stressed the increasing importance of diplomatic and especially economic components in U.S. statecraft. The intelligence community as a whole needs to maintain its level of effort in military domains, but also to do much more in economic domains. In a world where proprietary science and technology developments are increasingly the sinews of national power, the intelligence community needs to be concerned more than ever with U.S. technological security, not least in cyberspace. And here, too, the trends within the intelligence community point not toward, but away from, the country's essential needs. Resources devoted to handling such economic and technical issues are not increasing, but declining.

To respond to these challenges, some have recommended strengthening the Director of Central Intelligence (DCI) through organizational changes, such as vesting greater budgetary authority in him and giving him greater control over personnel throughout the community. We believe, however, that current efforts to strengthen community management while maintaining the ongoing relationship between the DCI and the Secretary of Defense are bearing fruit. We recommend no major structural changes, but offer certain recommendations to strengthen the DCI's role and the efficiency of the process.

The National Security Act of 1947 gave the National Security Council responsibility for providing guidance with respect to intelligence functions. In practice, however, administrations have varied widely in their approach to this function-sometimes actively setting priorities for intelligence collection and analysis and sometimes focusing simply on coordinating intelligence response in times of crisis.

To achieve the strategy envisioned in our Phase II report, and to make the budgetary recommendations of this section most effective, more consistent attention must be paid to the setting of national intelligence priorities. To do this, we recommend the following:

In recommending this, we echo the conclusion of the Commission on the Roles and Capabilities of the United States Intelligence Community (the Brown-Rudman Commission). While we do not want to dictate how future Presidents might use the National Security Council, we believe this is a crucial function that must be filled in some way. The President's authority to set strategic intelligence priorities should be exercised through continuous NSC engagement with the DCI, from which the DCI can establish appropriate collection and analysis priorities. Such an approach would ensure consistent policyrnaker input into the intelligence effort and, if policyrnakers come to feel a part of the intelligence process, it should enable greater support for the intelligence community, as well. We believe that this function would be best fulfilled by a true strategic planning staff at the NSC-as per our recommendation 14, The point is that policy and strategic guidance for intelligence should be formulated in tandem.

We have emphasized the importance of securing the homeland in this new century and have urged, specifically in recommendation 4, that it be a higher intelligence priority. Making it so means greatly strengthening U.S. human intelligence (HUMINT) capability. This involves ensuring the quality of those entering the community's clandestine service, as well as the recruitment of foreign nationals as agents with the best chance of providing crucial information about terrorism and other threats to the homeland.

Along with the National Commission on Terrorism, we believe that guidelines for the recruitment of foreign nationals should be reviewed to ensure that, while respecting legal and human rights concerns, they maximize the intelligence community's ability to collect intelligence on terrorist plans and methods. We recognize the need to observe basic moral standards in all U.S. government conduct, but the people who can best help U.S. agents penetrate effectively into terrorist organizations, for example, are not liable to be model citizens of spotless virtue. Operative regulations in this respect must balance national security interests with concern for American values and principles. We therefore recommend the following:

The DCI must also give greater priority to the analysis of economic and science and technology trends where the U.S. intelligence community's capabilities are inadequate. While improvements have been made, especially in the wake of the Asian financial crisis, the global economic and scientific environments are changing so rapidly and dramatically that the United States needs to develop new tools merely to understand what is happening in the world. The Treasury Department has made important strides in this regard, but it has a long way to go. Treasury and CIA also need to coordinate better efforts in this critical area. We therefore recommend the following:

In order to maintain U.S. strength in traditional areas while building new capabilities, the President and the Congress should give priority to economic and science/technology intelligence. We need to increase overall funding in these areas significantly and the DCI needs to emphasize improvement in the collection and analysis of this intelligence. This will require, in turn, a major investment in the community's long-term analytical capacities, but these capacities are crucial in any event to supporting the strategic planning that we have emphasized throughout this report.

Better analysis in non-military areas also means ensuring that open-source intelligence is a vital part of all-source analysis. Many new challenges, but especially economic, scientific, and technological ones, call for greater attention to the wealth of openly available information. Analyses of the failure of the community to anticipate India's nuclear tests, when clear indications were available in open-source publications, demonstrate that this capability has relevance for traditional security issues as well.

We thus urge the strengthening of HUMINT capabilities, the broadening of analytical efforts across a range of issues, and the incorporation of more open-source information into all-source analysis. Meeting the nation's future intelligence needs, however, will also require changes in the community's technological capabilities.

Technological superiority has long been a hallmark of U.S. intelligence. Yet some agencies within the National Foreign Intelligence Program spend as little as three to four percent of their budget on all aspects of research and development, and as little as one percent on advanced research and development. This reflects a decline in overall intelligence expenditures in real terins, while salaries and benefits for intelligence personnel have been on the rise. Concerted effort is needed to ensure that research and development receive greater funding.

At the same time, the intelligence community must think about its technological capabilities in new ways. During the Cold War, the National Security Agency (NSA) and other agencies derived a great wealth of information through signals and communications intelligence. In today's Internet age, global networks, cable, and wireless communications are increasingly ubiquitous, with attendant improvements in encryption technologies. Together these trends make signal intelligence collection increasingly difficult. The United States must possess the best platforms and capabilities to ensure that it can collect necessary information consistent with respecting Americans' privacy. It must also have high-quality technical and scientific personnel able to respond to future challenges. To these ends, we recommend that the DCI should provide the President a strategic assessment of the effectiveness of current technical intelligence capabilities to ensure the fullest range of collection across all intelligence domains, particularly as they relate to cyberspace and new communications technologies.

Should the U.S. intelligence community lack a full-spectrum capability either in collection or analysis, the United States would forfeit the depth of intelligence coverage it enjoyed during the Cold War. Maintaining this edge will require greater funding and expertise in the information and communication sciences. We must also pursue innovative approaches with the private sector to establish access to new technologies as they become available.

This Commission, in sum, urges an overall increase in the NFIP budget to accommodate greater priority placed on non-military intelligence challenges. Military intelligence needs also remain critical, however, so a simple reallocation of existing resources will not suffice. To ensure the continuing technological strength of the community, and to build cutting-edge intelligence platforms, there is no escaping the need for an increase in overall resources for the intelligence community.

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