Joint Inquiry:Part One Section III C 3

❌ Between the end of the Cold War and September 11, 2001, overall Intelligence Community funding fell or remained even in constant dollars, while funding for the Community’s counterterrorism efforts increased considerably. Despite those increases, the accumulation of intelligence priorities, a burdensome requirements process, the overall decline in Intelligence Community funding, and reliance on supplemental appropriations made it difficult to allocate Community resources effectively against an evolving terrorist threat. Inefficiencies in the resource and requirements process were compounded by problems in Intelligence Community budgeting practices and procedures. Discussion: [Throughout the Joint Inquiry, numerous officials at CIA, NSA and the FBI testified that the greatest constraint in their effort against al-Qa’ida was the availability of too few resources, compounded by too many requirements and priorities. Regional and global issues were identified as some of the other important issues that competed with counterterrorism and made heavy resource demands]. TOP SECRET 46 TOP SECRET These other policy priorities demanded the support of the Intelligence Community and made it difficult to transfer people or funds to counterterrorism. DCI Tenet testified that: As I ‘declared war’ against al-Qa’ida in 1998 – in the aftermath of the East Africa embassy bombings – we were in our fifth year of round-the-clock support to Operation Southern Watch in Iraq. Just three months earlier, we were embroiled in answering questions on the India and Pakistan nuclear tests and trying to determine how we could surge more people to understanding and countering [page 50] weapons of mass destruction proliferation. In early 1999, we surged more than 800 analysts and redirected collection assets from across the Intelligence Community to support the NATO bombing campaign against the Federal Republic of Yugoslavia. [Similarly, NSA Director Hayden testified that NSA was focused heavily on several other high priority intelligence targets. An FBI budget official told the Joint Inquiry that counterterrorism was not a priority for Attorney General Ashcroft before September 11, and the FBI faced pressure to make cuts in counterterrorism to satisfy his other priorities]. The Joint Inquiry’s review of available budget and resource data confirmed that, overall, the Intelligence Community budget peaked in fiscal year 1992 and thereafter fell or remained even in constant dollars. The FBI is an exception to the overall resource picture. Its overall funding increased for much of the 1990s, though most of this went to the Bureau’s non-intelligence programs. [In all, however, Intelligence Community capabilities declined over time. At the CIA, for example, the Directorate of Operations cut the number of its personnel deployed overseas by almost [ ] and closed down a portion of facilities in one part of the world – where much information relating to terrorism could likely have been available. In addition, the necessary support “tail” for counterterrorism, such as communications and training, suffered from the decline in resources]. Specific funding for counterterrorism was, however, at least one exception to the overall budget decline. Within existing budgets, counterterrorism spending generally TOP SECRET 47 TOP SECRET increased while funding for other issues generally fell or remained steady. The counterterrorism component of the overall Intelligence Community budget, for example, at least doubled at most agencies. Former National Security Advisor Sandy Berger emphasized the added funding that was provided for counterterrorism: [page 51] . . . the Clinton Administration more than doubled the federal government’s counterterrorism spending from $5 billion in FY [Fiscal Year] 1996 to over $11 billion in FY 2000) at a time of strong bipartisan effort to achieve balanced budgets that resulted in highly constrained spending for most programs. . . [T]he FBI’s counterterrorism staff budget increased by 250% and their counterterrorism budget increased by nearly 350%. Similar increases were made in the CIA counterterrorism budget. In general, personnel allocated to counterterrorism also increased. Although specifics are imprecise, this Inquiry’s review and estimates provided by various agencies indicate that the number of personnel working on terrorism steadily increased despite overall decreases in Intelligence Community staffing. Nevertheless, the number of counterterrorism personnel prior to September 11 generally remained small and paled by comparison with post-September 11 levels. During the course of the Joint Inquiry, Intelligence Community officials identified a number of factors that limited their ability to allocate greater resources for counterterrorism, despite the funding increases that occurred in that area. These included, in addition to the overall general decline in funding for intelligence, outdated and unrealistic intelligence priorities, and an overburdened requirements process. The Intelligence Community’s current strategic-level guidance for national security priorities was established by Presidential Decision Directive (PDD)-35 in 1995. Former National Security Advisor Anthony Lake described PDD-35 as follows: “It formally established our top intelligence priorities and placed terrorism among them, led only by intelligence support for our troops in the field and a small number of states that posed an immediate or potential serious threat to the United States.” In an effort to rank the myriad post-Cold War threats facing the United States, PDD-35 established a tier system of priorities. The tiers were broad and concentrated at the upper levels of the scale. For example, there were both Tier 1A and Tier 1B priorities, but the highest priority was assigned to Tier Zero. TOP SECRET 48 TOP SECRET [Page 52] However, as several Intelligence Community officers told the Joint Inquiry, in practice, the lack of adequate separation between the tiers made it very difficult to choose between priorities, and the intelligence prioritization process was often confusing. Former National Counterterrorism Coordinator Richard Clarke noted that the White House “…never really gave good systematic, timely guidance to the Intelligence Community about what priorities were at the national level.” Deputy National Security Advisor Steven Hadley responded to Joint Inquiry questions by stating that Bush Administration officials were told by Clinton Administration officials during the transition that “this priority-setting process [PDD-35] … was not effective for communicating changing priorities over time.” Joint Inquiry interviews with Intelligence Community officials indicate that many felt that the prioritization process was so broad as to be meaningless. Moreover, PDD-35 was never effectively adapted before September 11 to meet the changing nature of the threat, despite specific language in the document that required an annual review. As certain threats, including terrorism, increased in the late 1990s, none of the “lower level” Tier 1 priorities were downgraded so that resources --money and people-- could be reallocated. For much of the Intelligence Community, everything became a priority since its customers in the U.S. Government wanted to know everything about everything all the time. The growing inadequacy of the PDD-35 structure fueled an overburdened and increasingly ineffective requirements system within the Intelligence Community. At NSA, for example, an official described the PDD-35 requirements system as “cumbersome.” NSA analysts acknowledged that they had far too many broad requirements -- some 1500 formal requirements by September 11 -- that covered virtually every situation and target. Working from these 1500 formal requirements, NSA had developed almost 200,000 “Essential Elements of Information” that were desired by its customers. While they understood the gross priorities and worked on the requirements that were practicable on any given day, several NSA analysts acknowledged that the [page 53] priority demands sometimes precluded them from delving as deeply into certain areas as they would have liked. TOP SECRET 49 TOP SECRET As counterterrorism became an increasingly important concern for senior Intelligence Community officials, collection and analytic efforts did not always keep pace because other requirements competed with terrorism for attention, and real priorities often were not clear. In Joint Inquiry interviews, CIA officials said that, because overall resources were finite, any increased focus on counterterrorism meant that other issues would have to receive less attention. At the FBI, where overall funding had increased, officials said that substantial efforts focused on investigating terrorist cases overseas, critical infrastructure protection programs, and other priorities not directly related to strategic intelligence or al-Qa’ida activity within the United States. [The Director of NSA testified that prior to September 11, other priorities frustrated his attempts to acquire capabilities to process modern communications used by terrorists and other intelligence targets: It required a significant redirection of investment for us to acquire the capabilities to exploit modern communications. I mentioned. . .trying to churn. . .within what was then a fixed top line about $200 million. . . . And we could only get about a third of it to stick because the people who were using the products we created out of traditional means were unable to give up those product lines to allow us to reinvest those dollars for the new age signals environment. . . . I was unable to move some money because we were going to erode our coverage of [another intelligence target] as part of this effort.] Even within the CTC, the staff and resources dedicated to counterterrorism could not keep pace with the amount and scope of incoming intelligence reporting. The DCI attributed CIA inaction on a cable pointing to al-Hazmi’s travel to the United States to the fact that overworked CTC personnel did not have time to read “information only” cables from the field: The cable that came in from the field at the time, sir, was labeled "information only," and I know that nobody read that cable. . . . Sir, we weren't aware of it [page 54] when it came into headquarters. We couldn't have notified the [FBI]. Nobody read that cable in the March time frame. . . . It was an information-only cable from the field and nobody read that information-only cable. [In hindsight, of] course it should have been. TOP SECRET 50 TOP SECRET Another CIA official indicated, post-September 11: “The second thing that was clear, as I showed [CTC personnel] the cable from March 5, [2000] -- just the look on their face told me everything I needed to know. They just hadn't seen it. It passed them by.“ The former CTC Chief added: We have asked everyone have you seen this and what action was taken. It did not attract appropriate attention so that they could have been watchlisted. I think the Director has already mentioned that that was not done at the time. I think that it was reasonable by certainly March 5 that we would have been in the position, we should have been in a position to firmly watchlist this. I just have to underscore that we do this hundreds of times a month. It should have been done. It was not. We have very good people working this issue. It was not done, and it was not done because of the press of lots of other work. We probably should have picked up on this in early March, but we'd gone by for two months. The delay in that, sir, was the [ ], took about six weeks to get that information to us, and in March we should have picked up on it. All things being equal, they should have been watchlisted; I think that month we watchlisted about 150 people. It should have been done. It wasn't. It was a fact of life. And I think what contributed to that was these same officers watching this operation were also doing a lot of other things. So it's like balls in the air. There gets to a point where you don't treat each one with the attention that it deserves. There was also a March 6, 2001 cable from the field that called attention to the portion of the March 5 cable regarding al-Hazmi’s travel to the United States, but CTC personnel also did not read that cable at the time. Senior NSA and CIA officials have acknowledged that, in hindsight, they would have devoted many more personnel resources to the al-Qa’ida target and expedited the development of certain collection capabilities. However, they testified that the operating environment prior to September 11 – a combination of escalating requirements and limited resources – limited their ability to respond to the growing terrorist threat. [Page 55] Those problems were aggravated by shortcomings that existed in the Intelligence Community’s budgeting practices. The President annually submits to Congress an Intelligence Community budget for the coming fiscal year. Included in that request are both ongoing and new programs that are subject to long established, well understood oversight and accountability procedures. Supplemental appropriations usually are granted in reaction to unforeseen events that are not part of the President’s budget TOP SECRET 51 TOP SECRET request. Since it is temporary by nature, supplemental funding is not meant to pay for additional personnel or for structural upgrades in future years. The Intelligence Community received large supplemental appropriations from 1998 to 2001 to fight terrorism. These additional funds were provided by Congress following several major al-Qa’ida attacks and to support the effort during the Millennium celebrations. In particular, most of CIA’s and some of NSA’s efforts against al-Qa’ida in the late 1990’s were funded from supplemental appropriations. In Joint Inquiry interviews, Intelligence Community officials were critical of this reliance on supplementals for counterterrorism programs. A former CTC Chief, for example, told the Joint Inquiry that reliance on supplementals made it hard to create a stable counterterrorism program. He noted that it is far more difficult to develop plans for hiring and training personnel and to pursue long-term technical programs that require years to develop without a stable year-to-year funding basis. Despite such limitations, the Intelligence Community agencies sought additional supplemental appropriations to sustain its counterterrorism effort rather than alter the President’s budget request to provide annual counterterrorism funding. This is because altering the annual budget request would have required the Intelligence Community agencies to make substantial reductions in other programs, a course they were reluctant to follow because of the many other intelligence priorities for which they were responsible. Certain other Intelligence Community budgeting practices and procedures further impeded efforts to ensure an effective allocation of resources to counterterrorism. A lack [page 56] of transparency in agency budgets made it very difficult to determine whether the counterterrorism mission was properly funded because counterterrorism is not an explicit Intelligence Community budget category. Instead, each Intelligence Community agency budget consists of a compilation of funding levels desired for specific capabilities, such as the cost of a particular number of intelligence officers or satellites. Many of these capabilities are useful for more than one mission. For example, a CIA operations officer may collect intelligence on the internal politics of a country, a weapons shipment, and terrorism. The CIA considered having its personnel record the time they TOP SECRET 52 TOP SECRET expend on various missions, as do FBI field officers, but this was rejected due to the perceived administrative burden it would impose. This makes it very difficult to measure the amount of resources that the Intelligence Community allocates to a particular mission such as counterterrorism. As a result of this ambiguity, the Intelligence Community often does not know how much it spends on different issues and, therefore, is unable to compare the funding levels it is devoting to one mission versus another. For example, the CIA had great difficulty determining for this Inquiry precisely how many of its personnel worked on al-Qa’ida in recent years. Moreover, different components of the Intelligence Community use different measures when they do try to determine how much they spend on missions such as counterterrorism. To further complicate matters, there is no agreed-upon way to measure the level of indirect costs, such as communications, that is devoted to counterterrorism versus other mission areas. Congressional overseers as well as senior Intelligence Community managers thus find it difficult to judge whether agency resource allocations reflect overall intelligence priorities. In Fiscal Year 1999, the Office of Management and Budget began to require that the Intelligence Community identify counterterrorism spending in each agency. However, this information is gathered after money is spent, rather than as a planning and accountability tool for Intelligence Community managers. In addition, the information is [page 57] collected manually, is not subject to systematic controls and does not constitute much more than an educated estimate. Finally, the Joint Inquiry confirmed through interviews that several other budgetrelated problems hindered Intelligence Community efforts to satisfy counterterrorism priorities and requirements: • The DCI’s Community Management Staff has little authority to ensure compliance with the DCI’s priorities. It cannot withhold funding from the Intelligence Community agencies if they do not comply with those priorities; TOP SECRET 53 TOP SECRET • Managers within the CIA often found the budget planning and execution process confusing, making it harder for them to articulate their needs; and • Intelligence Community officials complained that reprogramming money is difficult due to a slow Congressional approval process for even small changes.