in this book do not reflect your recent The charts and text used es not decision to fill the second deputy post at Defense, but this do affect our analysis.

## Action Required

I recommend that you call a meeting Review this Decision Book.

of the NSC (including the Attorney Genera 1) soon after your return from Vail, to discuss this issue.

Approve "expanded". NSC meeting Disapproved

## Next Steps

If you meet with us upon retu i-ning from Vail to present your views on these intelligence issues, we will then present another final decision memorandum (in under a week).

R
)
N
.

.

At that time, you may wish to meet again'with an ""expanded" NSC
and, perhaps, separately with others such as the Joint Chiefs.

Once you make your substantive decisions on the foreign intelligence matter, we will prepare a i'strategy' paper on the altermatives for presenting your positions to Congress and the public.

## Principles And Policy

The purpose of this chapter is to assist you in developing goals and principles concerning the Intelligence Community.

They will provide direction for the Community and serve as
"guideposts"
as you make your decisions on the issues which follow.

This chapter focuses on:

*
The need
for charters
to increase
accountability which
is necessary
to restore public confidence
in the
Intelligence Community.
The need to.clarify the relationship
between
the Congress
and the Executive.
*
The need
to clarify relationships
within
the Executive Branch.

## A, Introduction

The focus of all invesfigations of the Intelligence Community
(principally by the House and Senate Select Committees)
has been on abuses, domestic and foreign.

On the other hand, other recent studies have addressed the problem of improving the organization ana management of the.Community.

Certain consumers of intelligence have focused on the need to improve product quality and to meet emerging needs in non-Defense areas, such as economic intelligence.

And, finally, critics outside the Administration and Community leaders have recog;
nized the need to improve protection of secrecy and, at the same time, to provide for wider dissemination of intelligence product to those who have a need to know.

The -current attention focused on the Community p;ovides you with the opportunity to deal with these issues.

1In reaching decisions on the more detailed issues, there are five goals which you maf wish to adopt:

-~
Abuses should be eliminated and this must be clearly
. understood by the Congress
and the public.
-
The organization and management of
the Community
'
should be improved.
-
The quality of the intelligence product should be
: improved.
-
Secrecz,
including sources
and methods, should be
protected,
consistent with necessary dissemination
of
the Community's product
to policy officials.
-~
Establish more effective relations with Congress
involving the Intelligence Community.
To achieve these five goals, you must restore public confidence in the Community, its legitimacy and its adherence to the law.

Unless this confidence is restored, the soitndest decisions will never result.in achievement of these goals.

The decisions necessary to achieve these goals should, if possible, be taken comprehensively and at the same time.

Steps to achieve one goal will necessarily have an impact on another.

For example, decisions on organization and manage--
ment will necessarily affect quality.

Preventing abuses

 through excessive restriction
of Community collection
activities
may lead
to
a demoralized and ineffective Community,
thus reducine the gquality
&6f the product and of
the people
attracted
to
the Community.
Lack of concern
for protection
of secrecy sources
and methods
could severely damage
the
continuing effectiveness
of the Community.

## Problems

The analysis of ways to achieve .these five goals has shown that there are three underlying problems which must be solved.

The first of these is the lack of adequate charters for the key agencies that make up the Community.

This lack has made it possible to criticize the Community for actions taken in the past that were consistent with the needs of the time, but that are not acceptable today.

Further, there have been ambiguities and imprecision in the role and functions of certain elements of the Community, as'
pointed out by the Rockefeller Commission.

And lastly, because neither the National Security Agency nor the Defense Intelligence Agency has been created by statute, critics have been able to impugn their legitimacy.

Restoration of public confidence in the Community may require a more explicit charter, and particularly a set of restrictions on the Community to eliminate and prevent abuses.

The second fundamental problem has been the relationship between Congress and the Executive.

This relationship has gone undefined throughout his;ory, and the recent House and Senate intelligence investigations have strained relations between Congress and the Ekecutive.

Congress has asserted a need for more information to be able to judge our foreign policy, but that need must be balanced with the need of the Executive to conduct that foreign policy without necessary or damaging restrictions.

The third underlying problem is the ambiguous relationship among intelligence officials and agencies within the Executive Brahch, particularly between the bepartment of Defense and the Direcfior of Centrai Intelligence.

In 1971, the DCI
was designated the leadef ofbthe Community by Presidential Directive, but many argue that he was not given the tools to do that job.

The need to deal with the first two problems makes this a propitious time to take another look.at that relationship and to decide to what degree management and organizational changes are desirable.

This is an historic opportunity to make changes that probably would be impossible in normal times.

## Strategy

In dealing with these three underlying problems, there are certain questions of strategy which must also be addressed.

One is the degree of public discussion and attention which you should give these issues and these changes.

Another is the appropriate strategy with respect to Congress and the form your decisions should take:
ne legislation, new Ekecutive Orders, classified instruetions to the Community, public statements, or combinations of all four.

These issues will be dealt with in more
.

made detail after you haveflthe substantive decisions.

## B. Athe Need For A Charte_R

In discussing the charter of the Intelligence Community, there is a need to distinguish between two very different activities, policy-making and providing information and services.

~If one views the CIA and the Intelligence Community as primarily policy-making organizations, ways would have to be found to increase the participation by the heads of intelligence organizations in major policy decisions.

However, this will probably be characterized by some members of Congress and the Press as having unfortunate consequences.

However, the other side of this ergument is that the intelligence agencies are and should remain service agencies, and their role of providing intelligence should not be tainted or biased toward attempting to make their bosses!

policies come true.

The lack of a charter for specific components of the Intelligence Community
(such as the NSA and the DIA)
and the lack of a detailed charter for the CIA, have led to ambi-
'guities and unclear guidelines.

In dealing with the broad question of the Community's charter, two subsidiary policy questions can be posed:

## Issue: Should The Charter Of The Community Institute Greater Accountability?

A key concept running through the analysis to date is the degree of accountability in the Community -
accountability to the President, to statutes, to the Constitution.

Accountability is at fihe heart of the
: euestion of achieving the overriding objective of improving public confidence.

The most obvious aspect of accountability is raised by covert actions, but the concept applies to all functions of the Community and its management.

## Options:

1.
Visibly increase
the accountability within
the
Executive by streamlining the chain of command
to insure
that specifically identified individuels
are responsible
for specifically defined Intelligence Community actions.
This will help prevent
abuses
and encourage efficiency and excellence
in
performance.
(For example,
decisions concerning
electronic surveillance are made throughout the Community and it is difficult to fix responsibility.)

2.
Do
not move toward greater accountability since
the existing mechanisms
(ificluding NSC/40
Committee structure)
can be improved sufficiently.
Much of the criticism of the approval of covert actions hasAcente;ed on a few examples which were not in fact in any way the result of inadequate approval mechanism or staff work.

Even if the present systefi were scrapped, something ;imilar would have to replace it., Some changes could and_should be made administratively, but they need not alter the present system and we should oppose attempts on the part of Congress to repeal the flexibility given under the National Security Act of
1947.

The following charts demonstrate the complex relationships in the Intelligence Community and diffusion of accountability.

ISSUE:
Do the Community's statutory and administrative charters adeguatelz deal with covert action?

This is currently one of the most controveisial aspects of the Community's operations.

A great deal of.

information has come to light on the Community's covert operations.

You have addressed several aspects of them as they have emerged through your creation of the Rockefeller Commission, your public response to its Report, comments on the Assassination Report, etc.

You have defined your position on this issue in public statements.'
You are following two principles concerning covert actions:
First, they are necessary in the national interest afid therefore should not be prohibited across-the-board by statute or Executive action;
and,
.

Second, there have been abuses in the past
(e.g., assassination planning)
and you have stopped abuses and will prevent them from occurring in the future by Executive Order.

## C. The Need To Clarify The Congress - Executive Relationship

ISSUE:
Should any new charter for the Intelligence Community be primarily statutory or administrative?

The lack of a statutory charter for specific components of the Intelligence Community
(such as the NSA
and the DIA), except CIA's very &ague charter in the National Security Act of 1947, have led to difficulties between Congress and the'Executive.

The prime reason for
.seeking a new charter for elements of the Community would be. to assist in eliminating and preventing abuses.

Many argue that this is needed to rebuild public confidence in the Intelligence Community.

The present charter does not edequateiy deal with the reporting relationship to Congress.

Further, Congressional ovefsight is now an issue.

The effect of this has been a perceived lack of accountability to Congress.

## Options:

1.
Arguments why
the charter should be primarily
.
statutory:
-
The Constitution requires Executive action
to be based on statute
in most areas
of
government.
-
Congress
is bent on exercising its will
and
therefore will want
to write
new laws.
-
A statute
is more permanent and thus
the
.Community could better predict
the standards
by which
it will be judged.
-
In
the nature
of things Congressional attempts '
to write
a charter will essentially
focus
on
past abuses.
-
TIf you propose a statutory charter
for the
Community,
you show initiative
in dealing
with
the problemn.
-
In writing legislation
(as opposed
Eo
the
Select Committees'
investigations)
the necessity
for
a "general" charter will be recognized.

## Arguments Why The Charter Should Be Primarily

administrative
(a series of Executive Orders and
guidelines by agency heads, supplementing minimal modification of existing legislation).

I

-
'Under
the Constitution,
foreign policy and thus
foreign intelligence,
is
an Executive responsibility.
-
The Community has had
a mixed statutory
and
administrative charter
for
the last
30 years
and
it has worked well.
-
It
is impossible
.to
foresee
all
of
the actions
that will
be necessary,
and relying on detailed
. legislative authority
for authorization
ie risky:
the President must mainfain flexibility
to operate
in foreign affairs without detailed restrictions
from Congress.
-
The public will receive some assurance
from the
mixed charter,
though perhaps not
as
great
as
from
a statutory charter, depending
in part on
fhe
firmness and perceived intent of the
Presidential statement.
(If your'intent
is.
perceived
to be
to limit the Community's
o}
-

)
activities
and
to gain control over
it,
U
\
e?
Vv
then the public will be less concerned by
C.n
Y
>
=
the
form of the charter.)
ISSUE:
Should a new Congressionalexecutive'relationshig

## Sh Cbu 7


Q\gg
provide
for greater Executive Branch aceountabilitz,

## An 5\ $ To Congress? ' (\" ) Options:

v
F<
1.
All efforts
of Congress
to institute new forms
of
N
N
accountability should be opposed since foreign policy

## 7 O3 "

and intelligence
is essentially
an Executive Branch
matter.
-
Exclusive Presidential authority over intelligence
is
a plausible though controversial interpretatiog
of the Constitution.
-
With increased accountability to Congress will
necessarily come greater Congressional control
and interference.
~
Whatever merits of this position,
it is doubtful
that it can be maintained for long,
given the
degree of public and Congressional concern over
Community abuses.
2.
The Executive Branch should be more accountable
to '
Congress,  and this
should be defined through negotiations between
the Branches.
(This may be the Hughes
Amendment requiring reporting of covert actions,
supplemented by some approval on specific actions, budget approvals, etc.)

-
We have already crossed the bridge of Congressional
involvement
in intelligence matters',
and it will
be difficult
to exclude Congress
in
the future,
particularly on covert actions.
-
The traditional oversight mechanisms
are
no
longer valid
(because of the collapse of
Congressional leadership)
and the Executive
must take the lead in working out new arrangement
-
Congressional oversight
is
in fact not likely
in
the
long run
to prove onerous,
since attention
of
Congress will tend
to flag as these things
become more routine.
-
Nonetheless,
there will always be
a countervailin
pressure of individual Congressmen
to release
information gathered,
thus frustrating the
intent
6f the Executive.,
Also,
the
leaks which
have occurred from the Select Commitfees.on
Intelligence
at the very least raise a strongi
presumption that sensitive national security
information
is comprofiised once given
to Congress
-
The Angola matter demonstrates that
the present.
system
is
inadeguate.
You do not have sufficient
support to gain approval of your positions
in
Congress.

## D. The Need To Clarify Relationships Within The Executive Branch

Many of the key issues in the Organizetion and Management section of this book, and in other studies, turn on the relationship between the head of the Intelligence Community
(now the DCI)
and the Secretary of Defense.

This relationship is key because it affects:

1)
the amount of "competition"
in
the analysis which
produces intelligence;
2)
where
the balance is struck
in allocating resources
between
"national" and
"tactical" intelligence;
and
3)
'the efficiency in collecting information
and producing
intelligence.
There are some subtle problems.which this relationship raises.

For example, to the extent the DCI
is viewed as an adviser
(and hence stripped of his menagerial and/or policymaking roles)
his intelligence product is more credible because he is not perceived as biased towards one institution.

However,;
once he loses his institutional
"base", he is likely to become less effective in bureaucratic struggles with the Defense and other Departments and eventually could end up with very little, if any, real control over the Intelligence Community.

Another management variable which greatly impacts the functioning of the Intelligence Community, is the process of presenting intelligence to you and your senior edvisers.

Here the role of the NSC
and its staff is critical.

The DCT
has direct access to you, but the NSC and its staff are involved in specifying requirements for studies and production, managing the consumer/producer dialogue, approving
(through the
40 Committee)
covert operations, and using the product as a basis for its own evaluations and assessments.

The Assistant to the President for National Security Affairs is a primary channel for intelligence to the President.

In making your Executive Branch organization and management decisions, you may wish to use the following as guideposts:

(1)
There needs
to
be
a strong and independent heaa of
the Intelligence Community who
is
not
so committed
to one bureaucracy that he loses
his objectivity.
(2)
The Community leader should have
enough
of
an
institutional
"base"
so
as
to maintain his independence vis-a-vis members
of your Cabinet.
(3)
There should be
"competition"
in
the production
of intelligence,
with
good coordination between
the agencies.
(4)
You should have direct access
to
an intelligence:
official who does not have major foreign affairs
or defense policy responeibilities.
(5)
Any organizational changes
should
be designed
to promote technological creativity,
such
as
that which
led to development of the U-2's
and
the Glomar Explorar.
To assist you in placing the above in context, the following charts are presented as examples of how information flows through the Intelligence Community.

## Oversighet And Restrictions

This chapter discusses the need to prevent
-abuses by agencies involved in foreign intelligence.

The following issues are covered:

*
The domestic
jurisdictions
of the
F3I
and the
CIA.
*
The method
of imposing restrictions
on
the intelligence activities
of
the
FBI.
'
|
*
Substantive issues concerning your
:
proposed Executive Order imposing
restrictions
on the
foreign intelligence agencies.

The need
for more effective oversight
by
the Executive Branch.
*
The nature of Congressional oversight
and
its relationship
to prerogatives
of 'the Executive.
)
that some in the Congress have raised a gquestion eoncerning the foreign intelligence jurisdiction of the FBI.

## Issue: Sshould The Jurisdictional Arrangements Between

the CIA and the FBI
be revised?

During World War II, the FBT had certain o&erseas intelligence responsibilities in Latin America.

With the creation of the CIA, the FBI jurisdiction was limited te the Un;ted States, and the CIA was given certain domestic reeponsibilities only with reepect to protection of sources and methods
(in fhe DCI).

The CIA, of course, gathers information overtly in this ccuntry through interviews with travele:s and businessmen, protects-the integrity of CIAVpremises and conducts security investigations of its employees.

'The guestion has besn raised whether the CIA should have
'the responsikbility for gathering foreign intelligence from any source, U.S.

or Zorsign?

One argument for change is that agencies involved in law enforcement should have absolutely no foreign intelligence responsibilities or authority;
[0}
H
[1]
-h o H
U]
ot
=3
<
[0]
o o}
ot
[ie]
15
he CIA the foreign intelligence activities currently undertaken by the FBI
domestically.

## Options:

1.
Arguments
for maintaining existing jurisdictions.
-
None
of
the
abuses which have been uncovered
would
be prevented
by realigning jurisdictions.
-
The geographic jurisdictional distinction
is
an
easy one
to maintain.
-
Giving
the CIA domestic responsibilities is
a
major
concern
that many
in Congress
and
the
public have
(although,
paradoxically, the sue
gestion
that the CIA sfiould
do
foreign intelligence
activities here at home comes from liberal elements in the Senate Cdmmittee.)
This would probably lead to duplication of efforts since the FBI would not easily give up its own activities and responsibilities;
it bwould certainly lead to staffing duplicatien;
The existing system has proved sufficient and adeq*ate to meet both foreign and domestic that the F3I
has proven to be no better at respecting individual rights and liberties, and perhaps even wo?se than, the CIA.

A firm distinction can be drawn betweeh
"intelligence"" gathering and "investigation for prosecution."
The difference is in the use to which the information is made.

Inforfiation being eathered for law enforcement purposes should be fhe eubject of stricter control than information being gathered for foreign intelligence purposes.

The distinction drawn in
1947
is an artificial one and assumes that geogrephy rather than purpose is the more important distinction.

The duplication would be minimized since the CIA
already has domestic offices and installations, the FBI overseas installations, attaches, and connections with foreign and international police n org nizations.

## - . Methgls Roq %) Restricting Fbi Activities

SIn The Att
9]
o
<
zeneral has under study draft guidelines
-
imposing res Q
0
tricti on FBI activities.

The question arises as to wheths g H
r the oper form for FBI restrictions is in a riment regulation, Executive Order or a statute.

This
alternative
1.
Justice Department regulation.
TeEoovs
Peperlthient regulacion.
leaves the most flexibility in terms of'subsequent amendments.

Amendments to Justice regulations can be adopted with less bureaucratic and public co#
troversy.

However, it is'exactly'for this reason that such a form for FBI restrictions mey give the least assurance to fhe'pfibliC'thet the FBI
is in fact being placedbunder effective control.

Executive Qrder.

This form provides greater assurance to the public that the FBI
is being controlled N
Since restrictions on ehe rest of the Intelligence Community are beifig imposed, the FBI
should be treated similarlyvas to form.

On the other hand, an Exgcutive Order, as opposed to regulations issued by the autfiority of the Attorney General, a2y have ths appearance of.asserting direct pcwer over the FBI, circumvefiting ard perhaps diminishing the authority of the as ths Atterney General's judgmepts of wise solicy and discretion, but the judgments ef the highest legal officer, the Attorney General, ag to tfie FBI's legal authority and obligations.

T
the purpose to be served by an Executive Order is to lend the weight of the President's authority to.the guidelines effort, it might better be accomplished by a clear expression of support to the Attorney General, directing him to issue detailed gui?elines.

Statute.

Statutory restrictions on FBI authority would give the greatest assurance to the public that there are legally binding limitations bn the Bureau's efforts -and thus protections against abuse.

They would, however, be inflexible after adoption, and could well contain unreasonable restrictions due tc
"anti-FBI"
forces in Congress.

Furthermore, the Exscutive Branch would have much less control over

4.
Mix
of
statute,
Executive
Order
and regulation.
The Attorney General has publicly suggested that the guidelines now being developed by the Justice Departvending on the guidelines'
function and content.

Statutory enactment may be most appropriate for defining clearly the FBI's functions and jurisdicfion -
1)
w i s atutory basis that is now ambiguous and deficient.

14
$
k1
:xecutive Order may be the most appropriate way of channeling and controlling White House-FBT
contacts while regulations may be the best way of establishing intsrnal Justice Department and Bureau procedures and investigation standards.

## C. Restrictions On Foreign Intelligence Community

ISSUE:
What Substantive Restrictions
should be
2oF
oogsvahit
Ve nestrictions
should be
placed on Intelligence Activities other E-ome o s SPCNACR ACTIVIGies other than FBI?

The Rockefeller Commission recommended that certain restrictions be imposed on the activities of the CIA, primarily related to the domestic collection of foreign intelligence and the collection of information on the domestic activities of American citizens.

In early September you decided that v an Exscutive Order imposing such restrictions should be Jnt
[
broadenad to cover all intelligence agencies ekcept the FBI.

>
H B
A draft of such an Order and Press fact sheet are presented at Appendix
2.

The proposad Executive Order prohibits or imposes following activities by foreign intelligence restrictions on agehcies other agency
-
except the FBI .-- when engaged
-in intelligence
.or counterintelligence activities):
and analysis of information on the
.

.

domestic G United States citizens and permanent resident aliens.

.
2.
ZFhysical
or electronic surveillance
of United States
'
.
s
.
.
:
.
citizens
and permanent resident aliens within
the
United States. g:g
0
3.
Opening
of United States mail
in violation
of law.
.
)
4.
Illegally obtaining federal
income
tax returns
or
)
]
information.
5.
Infiltration
of domestic groups
for the purpose
of
reporting
on
them.
6.
Experimentation with drugs
on humans without the
subject''s
informed consent.
7. Operation of a proprietary company which competes with United States businesses more than the minimum amount H
[oN
necessary to establish commercial credibility.

8.
Collection
of inteiligence
from United States
citizens and permanent resident aliens within the United States without discl true identity of the collecting agency.

$.
Sharinc among agencies information
on
the domestic
States citizens or permanent resident activities of the iance with stringent safegquards.

aliens except in comz Strong substantive disagreements still exist among
[0}
the various concerned ag ncies and your advisors with respect to some of its provisions.

Most of the major disagreements concern eptions to the general prohibitions.

The major issues for your decision are:

ISSUE:
Whether
to include
an exception which would allow
the collection,
analysis
and dissemination
of
information
on the domestic activities
of U.S.
-c%tizens
reasonably believed.
to
be involved in
international terrorist
or narcotics activities
or working
in collaberation_with
a foreign nation
or'exganization,
but only
if collected abiroad or
from foreign sources.
(Section II(i):(l)).
involved in international terrorist or narcotics activities have committed any crime but are working with crganizations or governments.

The

include
an American supplying nontion
to
a foreign government,
for example,
classified
inforxm
- on the movement of civilian ships from
a U.S. port.
support of the exception.
ion recognizes that international and narcotics activities are legitimate
s of interest for foreign intelligence

cans working
for foreign governments
or
organizations
are
of counterintelligence interest.
-
It contains
the limitation that the excepted
information must have'been collecfed abroad
or
fyxom foreign
sources.
Often foreign intelligence
agencies
are
the only elements
of our government
who
can obtain information from these useful sources.
Arguments against the exception.

-
The exception
1is
too broad.
Any person who deals
with
foreign corporations would be covered.
-
The
CIA,
prohibited
by
statute
from having
/
any
"police,
subpoena,
{or)
law-enforcement
powers, "
shouid
not
be
involved
in identifying
Amer
ans participating
in narcotics
or
t activities.
[
9]
0 "
i
]
.
o adopt
an exception which would permit
shzring
of information
on domestic activities
of
U.5.
citizens among intelligence agencies
federal agencies under guidelines
of
Lttorney General.
permit the CIR
to obtain information from other federal agencies the domestic activities of U.S.

citizens which it would not otherwise be permifted to collect under this Order.

The provision cf the draft Order
(Section Iv)
aliows sharing of information only when the information is of a type which the receiving agency wquid itself have been permitted to collect under this Order.

## Arguments In Favor Of This Exception.

-
This exception would give
CIA and other foreign
intelligence agencies access
to data helpffil
in
determining whether various demestic groups have
contacts with foreign governments
or organizations.
-
Possible abuses
of this exception wouid be limited
by
the Attorney General's guidelines.
law enforcament agencies on o
=3
(]
oY
Q
mestic activities of U.S.

citizens which the intalligence agencies themselves would otherwise be prohibited from collecting under the Terms
f this Order.

t would permit reestablishment of Operation CHAOS.

3
{CZ208
was the program under which CIA collected information
-- largely from the FBI

on domestic and U.S.

citizens.

The exposure of this

ram resulted
in
the
forming
of
the Rockefeller
sion and
the Congressional Intelligence
'
R
.
.
=
Such
an exception would likely undermine the
credibility of the Order.

EXECUTIVE
BRANCHE OVERSIGHT
ublic disclosure of intelligence abuses have raised the
.

question
f the adequacy of Executive Branch oversight.

Issuance
+
of guidelines on proper conduct of intelligence activities will go a long way toward preventing impropriety, but there will be a continued need for mechanisms which discover questionable activities and assure adequate deliberation and accountability among appropriate policy-makers.

Congress will no doubt be playing a mers active role, encouraged by its successes of the recent oif reviewing CIA activities, blocking further aid to

## Effactive?

In the past, the head of each operating component Community was held responsible for the propriety of its activities.

Inspectors General and General Counsals assistad each operating head.

The Rockefeller Commission found zoth the CIA's'Inspector General and its not have adequate access to details of though the DCI
is charged with leadership Community, he has never been responsible lligence organizations other than the CIA.

=]
So the questio
:s, who should be accountable for oversight within the Ifitelligence Community?

Directer Colby sent to you on August
30,
1975, his proposed new regulations and managerial changes to implement Rockefeller Commission rec
.

A ommendations concerning the Inspector General and General Counsel.

No actions have, however, been taken with respect.

to a more general Community-wide inspection responsibility.

.
Establish
a Community Inspector Genmeral working
for the
DCI
as examined
in the NSC/OMB
stgay.
{8uch
an Inspector would
not,
however,
inspect
the
FBI,
as
it
is outside
of
the
foreign intelligence
Zstablishment of
such an Inspector
antagonism between
the
DCT
and other
intsiligence organizations.
 Disputes could be
expected over
the authority and access
of
the
Inspactor.
DCZ,
3
that he would be in a position to advise tiz Fresident on propriety throughout the Community.

however, antagonism could develop if Inspector were asked to report outside of their parent agencies he other hand, neither alternative were chosen, no one person within the Community could be accountable for propriety throughout the Community.

## Issue: Does Effective Oversight Call For Mechanism Outside The Intelligence Community To Advise The President On Propriety?

The question is, to what person or organization should responsibility be assigned for advising the President on propriety of oversight of'the.Intelligence Communityr In the past, there has been no esntral focus for consideration of propriety of intelligence activities outside the intelligence_
Community.

## Cptichs:

The NSC/02
study sets forth fihree alternatives Zor Executive oversight:
(1).the Atto?ney General;
{2}
a Special Counsel to the President;
and
(3)
a Gevernment~wide Inspector General.

A fofirth al~
ternative could be use of the NSC structure..

Each"
I thes= cptions could have ite own inspection or cility, or rely on Inspectors within the Thaix prima;y purpoSe would be to providg indspendsnt advice to the President based on their
"EO'iedge of Community activities and consideration of legal and moral issues relevant to the activities.

The Attornsy General already has responsibilities as chief legal officer.

The NSC already has the statutory responeibility of integrating domestic and fcreign.pdlicies, but its lack of independence from.the White House might lessen its effectiveness.

Eu:ther, a poeential problem with any special White House adviser with
" oversight responsibility is the difficulty it could create for the President if the adviser approved actions which were subsequently found to be illegal by the Zttorney General..

ISSUE:
Should public eonfidence
in Executive oversight
by enh
2d
by use
of non-government overseers?
Should
an outside advisory board
be given intelligence oversight responsibilities, and,
if
so,
e
should
it
be
the PFIAB?
[vi]
oth the Rockefeller
and Murphy_Commissions
recommended that the President's Foreign Intelligence Advisory Board
(PFIAB)
ba given the new responsibility of overseeing intelligence activities to prevent abuses.

Aprointment of outside overseers could help reassure the public that intelligence activities are receiving adequate .

scrutiny and consideration within the Executive Branch.

This would especially be true if the advisory board made periodic public reports.

Eowever, a group of part-time advisers, even with a full-time staff, might have difficulty learnlng all they needed to know to do an adequate over51ght Job.

A particular problem arises with assignment of this responsibility to the PFIAB.

.Oversight might dilute, and even conflict with, the Board's traditional role of bushing the Intelligence Community to greater intelligence collection efforts.

Also, PFIAB does not have a great deal of credibility ameng the
"foreign affairs community"
and some in Congress.

An alternative would be to establish an.indepefident"
oversight board.

iThis will, howe&er, require duplicating the staff capability of PFIAB.

'ISSUE:
How can adequate deliberation of covert action How can adeguatt CEL-DEratlof L. cove-r avro e proposals be assure@?

One type of Executive oversight
-- approval df covert actidns
-- has traditionelly been centralized in the White House.

The NSC's
40 Committee has been criticized by the Murphy Commission and Congressional spokesmen for -
inadeguate deliberation.

## V Options

Greater assurance of deliberation within the
40 Cormittee could be afihieved through:

-
Reinstituting formal Committee meetings on all
significant covert proposals;
-
Redesignating the Attorny General
ae
a Committee
member
(in
fiis
legal adviger's
role)
afid edding
representation
from other_departments
as.the
eubject demands;
and
-
Adding
N3C
staff
to provide non-departmental
analysis
on need,
risk
and potential benefits
of
each action.
Each of these procedural changes would help to promote more deliberative decision-~making, but would also restrict flexibility and increase the number of persons involved in sensitive activities.

A particular problem might.arise if.

the Attorney General were asked to serve both as policymaker on the
40 Committee and as the President's chief intelligence"
overseer.

## Z. Congressional Oversight

The Intelligence Community's old, comfortable relationship with a small number of senicr Congressmen who had been delegated responsibility for oversight and budget approval, no longer exists.

Even after the conclusion of the current special inr2ss is likely to be interested, at a
<

0
o+
.

(e}
O
3
Vsl
[Ve)
V)
ot
-
O
]
n minimum;
in budgstary and financial_issfies, impact of intelligence agencies on the rights of Americans, covert_action, and the qualify of the Community's intelligence product.

1In addition, Ccngresss will be demanding more substantive intelligence from the Community.

## Issue:

New committee structures for oversight of the Intelligence Community are anticipated.

The concept of a Joint Intelliigence Committee in Congress is
20 years old, and its time may hae>come.

It is almost inevitable that Congress will seek to remove some jurisdiction in the oversight area away from the Armed Services and,vperhaps,vapropriations Committees.

Of course, we have no control over the internal rules and procedures of Congress but they have a critical effect on Executive efforts to safeguard classified ihformation.

This conflict with respect to jurisdiction may be especially troublesome in the area of authorization legislation for appropriations.

At'present,.appropriations for CIA.

(and
'most appropriations for other intelligence agencies)
do not require'periodic authorizatioch, Ho%ever, a requifement fof peiiodic or annual authorization may result from increased Congressional interest in controlling intelligence funding.

If so, the conflict between the Armed Services Committees and any new intelligence committee as to jurisdiction over this Congressicnal oversight is complicated by the need need to limit knowledge about sensitive intelrequires that both the quantity and quality of informaticn given to Congress be limited in order to reduce the potential for damaging disclosures.

Limits on information b flow to Congresss, however, create difficulties for oversight Congreesmen.

The overseer can be credible only if he ls aware of the tctal spectrum of intelligence activities.

Silence about  these activities, however, can be construed as ecquiescenc in their conduct, even though vigorous sfeps were taken privatel to oppose them.

A second'and more difficult dilemma faces
' Congressmen who may oppose the propriety or efficacy of a given activity.

Public opposition to a specific intelligence program will eertainiy cast the_activity-;n grave jeopardy.

. Acceptable means are needed by which members can be assured of an adeguate
.voice in the decieion-making process within the responsible committees.

One possibility would be to include a confidential the committee (perhaps to Congressional for such an
"appeal channel" would require, for sffactiveness, new rules of each House which would provide for ewpulsion of any member who flagrantly reveals truly sensi information.

Such expulsions, however, might m be judicia iawable under the doctrine of Powell v.

McCormack.

n sicnal oversight of intelligence activities is gre
3]
Co ultimately limited by the Constitutional doctrine of separation s President's Constitutional duties and powers of powers and in the arez of ZJzfense and foreign affairs.

'That is, for ex~
M
ample, a regui that specific intelligence operations receive priocr rization of a Congressional Committee would raise Const guestions.

Alth
; be inappropriate for. the Executive Branc to suggest praciselv how Congress conducts its oversight role, it should consider the principles which ought to be important t Congress.

These include:

1.
Avthorizing
a
limited number
of Congressmen
to
act
fortall.

'The risk of disclosure of any information available to
535 Congressmen and their staffs is too great to allow such wide disseminatien of sehsiti&e secrets.

Although the old system which limited
.

kfiowledge to just a handful of Congressmen is no longer Viable, the principle of delegation of oversight responsibility to e limited number of Congressmen remains sound.

Branch from a ceniralized perspective, Congress will understand the Community if it adopts the same perspective.

## :Ng Access To Sensitive Intelligence Information 22 Rules And Strengthening Penalties For

disclosure.

A persistent problem in the House has use Rule XI
(2)(e)(a)bthat grants access of z1ll Congressmen to all committee materials.

(There is no c:fl"n"able rule in the Senate.)
If the need final report, the Bolling Committee concluded that
"if the nighest officials of the executlve branch...belleve that sharlng
[sensitive materiall w1th Congress will lead to its public disclosure, they will not make it available, even when committees go into executive session to receive such information
"Leaks"
out of the Select Committees on Intelligence have seri-
.

ously undermined the argument that Congress can handle classified information in a responsible manner.

Under the Speech and Debate clause, as interpreted in the Gravel case, a member may disclosg seeurity information,
-
without fear qf prosecutien, if it is done in any manner oOr forum which can be reasonably construed as part of his legislative duties.

Section
[0]
[}
5
[a 1)
w Q
<
] @
[0]
[h Y
:
etermine the Rules of its Proceedings, punish avior, and, with the Concurrence revised to provide for appropriate disciplinary actiocn
-- including expulsion
~-
for unauthorized ied information.

disclosuxe oI

4,
2Av
that
cvarsl ght committees
be
"fully
and currentl
encourage too much day~to-day interference by Congress and its committee staffs in agency non-statuto understandings.

Statutory Executive-Legislative relations is more tionships.

Congress, too, should benefit from
.

6.
Separating foreign intelligence from law enforcement
oversight.
Intermingling
of these two areas
is often
confusing.
ISSUE:
What should be your substantive position concerning intelligence oversight committees?

from both Houses, membership for limited terms, and jurisdiction telligence Community.

There is conover th giderable disagresement concerning the scope of its authority.

d
>4
The alterna
(1)
oversight only;
(2)
. legislative and
-oversight:
and,
(3)
oversight with legislative jurisdiction shared with pressant Cormittees.

The main arcument in favor of a JointVCOmmittee is that ation of ClaSSlfled information, thereby
. The key arguments against are:
(a)
it
.

.

violates normal procedures 'and, by eliminating independent
.

.

.

House-Senats action, may lead to errors and abuses, and,
(b)
_
-
in the case of foreign affairs and
-- arguably in foreign intelligence
--
the Senate has a preeminent Constitutional role.E;g
2.

Support efforts for new, but segarate, intelligence
:
.

committees in each House.

|
This will help control dissemination of classified
+
information without the problems of trying to create a Joim Committee.

## Issue: In What Manner Should The Intelligence Budget O Be Displayed To Congress?

There have been many demands for wider distribution within Congress of Intelligence Community budget information.

In the past, intelligence budget details were'presented.only to

he
small number
of Co:~:es= men
on PDproorlatlons and Armed
Services Subcommittess
inveolvad
in oversight and budget review.
) This year dztzils were more widely released
to
all members of
5
those committses.
A propesal
this year
by Representative Glamo
to reveal
the totzl
amount of the CIA budget was soundly defeated.
The
sizs
of the
intelligence budget remains. undisclosed
Thers
is
no guestion that intelligence oversight
wngrs
committees
nue
as
they did
in the past year
to re-~
guire detailsd
s
of
the intelligence budget.
The major
issue is what
 information should be presented to ali
535 members of Cone:ess.

The NSC/CM2 study dlscussed the 90551b111ty of 1nclu51on of
.a classifi=d annax in the President's Budget, which would be availablis ts
=21l Congressmen, but which would inciude only general, big dollar infcrmation.

This clessified ennex would encompass the overaTI intelligence program.

Provision of this amount of budgst informafiion attempts to comply with Congression needs without unduly rlsklng leaks of sensitive information.

_
on the other hand,
once
such information
is provided,
it may
simply
lead
to demands
for more
and more details.
ISSUE:
What substantive intelligence should be sent to Congress, and what official should be.resgonsible for making such determinations?

quite interested in receiwving more telligence Community.

In icence producers have briefed Estimates ane many other Community publications have not as
..

For the national intelligence structure, of infielligence is complicated by four considerations:

1.
Sansitive information
is unlikely
to
be protected or
kept out
of the public domain
if
it
is widely disseminated on
Capitol #ill.
Sources
and methods
can
be difficult
to separate
from substantive intelligence.
2.
In many situations,
there are likely
to
be
sharp,
profound differences of opinion between a President and his senior subordinates and Cbngress over what members of Congress ara proper consumers of what intelligence products.

3.

No President will be happy about ehy component of the Intelligence Community that furnishes information which is used to oppose his policies.

4.
The
Intelligence Community's
ability
to
be objective
and candid
can be threatened
if
its products
are widely used
.
It
is desirable
for diver-
Intelligence Communifiy;
if,
zicularly deserving of Congressional distribution. -
Although some NIZT's represent general background information that would be zporopriate for distribution, others, because they deal w guastions such as
"what if a certain action were taken,"
involve wolicy considerations that would make distribut%gn unwise.

te write into law a requirement that intellige particularly those in INR, DIA, and CIA, give systematic, forma attention fio Congrassional information needs.

The increasing chorus of iem;nds for sucH informatipn seems to require a centralized office for its dissemination.

Only with such an office can Administration positions be coordinated and some of the dangers pointed out abcve avoided.

The DCI, as leader of the Community, must be the focus of any such centralization.

f how Congress or its
-
o
=]
o o

ot T
53

g i o g formally decide to publish classified
3
rion provided by the Executive
(this issue shed from the problem of
"leaks"), i
to consider the possibility of a

" . For example,
a joint Executivengrass board could assign security classifications
intelligence information and then both
2.
A more promising alternative
may be
to expand on
Act" approach.
This statute requires
the
'Branch
to submit certain international
agresments
to Congress,
but classified agreements
are given only
to the House International Relatiohs'-
and Senate Fereign Affairs Committees under
an
injuaction
of secrecy.
The secrecy injunctien can
only be removed
by
the President.
This procedure is almost identical to the ?ublication agfeemenfi worked out between yofi and the Pike Committee.

While this approach has promise, its weakness was demonstrated last two cover:t action reports
- Italian elections and Angola
~--
but on ths varv same day, thalr contents were leaked to the Press.

## F. Public

Tha sxtent to which the public and the Press can play a xole in tae oversight of the Intelligence Community, or even to be awzre of and appreciate its value is, of course,
{n neral need for secrecy in intelligence activilimited by the Z
ties.

To a gieaz extent, however, public confidence in the Intelligence Community can be rebuilt through greater public understanding of ths responsibilities and activities of the Community.

## Options:

Thers may be some actions you could take to improve public understanding of the community.

7Possible examples are:

1.
Recuire
the reorganized PFIAB
to
issue
an unclassified~
annual repcrt
on the activities
and effectiveness
of
)
S
the Intelligenee Community.

This would require careful judgments on difficult classification questions but, on balance, would>probably be valuable in educatingthe public about ifitelligence activities and their importance.

It would alsc tend fo reassure the public that the PFIAB was keeping an eye on the Community.

%)
ing from its expendian unclassified report would probably have to read much like a newspaper
(or be sven less informative)
;
on balance this might dama_ge perception of the Community{s effectivensss.

| crasents     | the        | issue    | of     | how    |
|--------------|------------|----------|--------|--------|
| 2            |            |          |        |        |
| Community    |            |          |        |        |
| should       |            |          |        |        |
| be           |            |          |        |        |
| The          |            |          |        |        |
| following    |            |          |        |        |
| subjects     |            |          |        |        |
| =            |            |          |        |        |
| ich          |            |          |        |        |
| were         |            |          |        |        |
| analyzed     |            |          |        |        |
| in           |            |          |        |        |
| the          |            |          |        |        |
| NSC/         |            |          |        |        |
| --           | are        | covered: |        |        |
| prcblem      |            |          |        |        |
| of           |            |          |        |        |
| leadership   |            |          |        |        |
| in           |            |          |        |        |
| the          |            |          |        |        |
| elligence    |            |          |        |        |
| Community.   |            |          |        |        |
| ragement     | of         | the      | budget | of     |
| 2lligence    | Community. |          |        |        |
| nagement     |            |          |        |        |
| of           |            |          |        |        |
| resources    |            |          |        |        |
| for          |            |          |        |        |
| igence       |            |          |        |        |
| collection.  |            |          |        |        |
| s            |            |          |        |        |
| of           |            |          |        |        |
| improving    |            |          |        |        |
| the          |            |          |        |        |
| timeliness   |            |          |        |        |
| ity          |            |          |        |        |
| of           |            |          |        |        |
| intelligence |            |          |        |        |
| rcblem       |            |          |        |        |
| of           |            |          |        |        |
| covert       |            |          |        |        |
| activities.  |            |          |        |        |

## A. Overall Dipection

ISSUE:
leadexrshi does the Intelligence
=]
I
H
o o8
o] o
=2
=
=]
14
(]
H
3
] =
=
o7}
0
%
ot D
]
=]
[V =
=
to efficiently provide quality intelligence on_a timely basis?

Which person, or persons, shall be held accountable for leadership of the Intelligence Community?

The CIA was established by statute to cperafe upder'
direction of the NSC, and questions are now being raised about the adegquacy of mechanisms to guide the Agency)
Qor more generally, the Intelligence Community.

Leadership of the Community was assigned to the DCI
by President Nixon's memorandum of November
5,
1971.

It charged the DCI with
(1) planning and rsviewing all intelli-
.

<
ence activities;
2}
rplanning and reviewing allocation of all intelligence resources;
and,
(3)
pfcducing national intelligencs.

=z exsrcises, however, line and resource control cnly over the CIA Program *******'
Resource and line contrel over more than **percent of intelligence assets is in the Defense Department and includes the Consolidated Crvoptelogic Program
(CCP, which includes NSA
.

fula N
and the Service Cryptologic Agencies), National Reconnaissance Program
(NR2}
ane Genaral Defense Intelligence Program
(GDIP).

Within Defense, intslligence expenditures are a small part of a
$100 billion plus budget, but this is.la:.'ge relative components.

'to other
-
The DCI's isadership over the NRP
is exercised through chairmanshis of the NR Executive Committee
(ExCom), a twoman committee made up cf the Assistant Secrefiary of Defense for Intelligence and the DCI, although final resource decisions reached by the ExCom are subject to review and approval by
+
the Secretary of Defense.

The DCI's influence over the'
CCP
and GDIP
is solely advisory and is exercised through chairmanship of the Intelligence Resources Advisory Council
(IPAC)
and the U.S.

Intelligence Board
(USIB), which sets_'
collecticon requirements and priorities.

1
show
(1)
The Percentage cvernment Agenc ies, G
J
1O
H
[
14
by
TM
1
(=]
H P
nning, provision of intelligence izn systems
(primarily satellites)
to
>xs, and integration of information azch of these areadas, the DCI must rely on cocoeration.

Because of the divided line and resource problems as they arise.

rsaip of the Intelligence Community must start with the pclicy-makers outside the Community.

Although committees could perform this function, the NSC already has ponsibility for integrating domestic, foreign
2s.

The NSC represents the primary con-
, Vice President and Secretaxies of Secretary of Treasury and other top represented in NSC committees, including officials the NSC Intelligence Committee, when their interests were s relevant.

1.
Make
the NSC more effective through assignment of
ou
=
responsibility for guidance
to the Community
to a
DCI more effective.

Within the Intelligence v, leadership is currently assigned to the DCI
but, in fact, is shared with other officials, the Secretary of Defense.

The DCI's role has been hampered by his dual role as Community lsader and head of one part of the Cormmunity, the CIA.

The Defense Department has long felt that the DCI
cannot =2
an independent leader as long as he is so
9]
ot cf tied with one part of the Community.

[o]
w
[0 h v Suggesticns have thus been made that the DCI
should be separated from the CIA and moved into
"lte:fiatively, the DCI could be given direct line and resources control over all national intelligence progfams, aniuding the CIAP, CCP and NRP.

The latter alternative, however, separates Defense ntrol of assets on which it must depend from

Q
directly for tactical suppeort to wartime forces.

Designate a member of the White House staff as
"Special Assistant for Foreign Intelligence".

wing among the e proposad creating and giving it Cabinet rank.

nade is that foreign intelligence slved in a broad spectrum of issues with emphasis on matters other than foreign affairs, such as economic and resource Thus intelligence leadership in 'the should not be controlled by the.

Orn the cther hand, it would appear that this apcreach could be perceived as leading to greater abuses by
"politicizing" intelligence and, in any czss, it is difficult to see how such an individual ective without any institutional base Under anv of the options, significant leadership responsibilities will continug to lie with the Secretary of Defense.

He should be egpected to examine the organization and management of intelligence assets within his Department.

He will need to focus on NSA
and DIA because both the select and standing committees have raised gquestions concerfiing the authority, efficiency and funding of these agencies.

## 3. Budget And Resqurces Contrcl

wn
in
UZ:
#What mechanism would best provide
for control
pidy
mEeian oSl
woUoY ASST
brovide
Ior control
)
XA
C
v
K
intszllicence resources?
The Intelligence Community has approximately a budget that must be eificiently controlled if it is to make maximum use
f scarce resources.

There is no single central e e reee controller now of intelligence resources, not even OMB.

;..lIl-'.lQ........'l'..I......'.l-'l..-.'..l...llflll R
T
N
N
A
R R
R
R
R
R
R
I
TeetTttReeesreetttt A number of advisory committees, includifig IRAC.

and USiB, attempt to coo;dinate resource allocatibn, but are limited bf their advisory nature..

OMB reviews the intelligence Budget in getail but has had difficulty in making tradeoffs among collection, processing and pfoduction functions.

-
Resources tend to be allocated because collection is -
technologica possible, rather than because certain information is needed for intelligence reasons.

The charge to the DCI
to review all resource allocation in the Community has proven unworkable, and fragmented budget allocation still remains a proElem five years after the Schlesinger OMB study.

## Options:

Three options have been advanced to cure this problem:

1.
Charge
OMB with
a more active role
in intelligence
_
e
s
s
-
resource allocation.
OMB,
as. the President's adviser
on
the budget,
isbin the right position-to deal with
croblems-of intelligence o N
It could ssrve as the bridge between
(a5
rapraesented cn the NSC)
and producers With reprogramming, transfer and av controls imposed
(by the House Appropriation for the first time, OMB should be better atls to integrate the budget.

Support the DCI
in a more active exercise of the the November
1971
letter.

solidate all national programs
---
the CCP, NRP
~-
under a single manager so that he has diract rasource control over the bulk of intelligenc rasources.

Such centralization would make the manage mest likelvy the DCI, accountable for resource trade-o The zllocation of resources among targets within the
-National Foreign Intelligence Program is shown in the following chart.


o]
rganizations be consolisimplify management vo greater cost effectiveness?

Coll sf intalligence requires significant given limited appropriations, must be o resources, efficightly s
.

Consolidation of intelligence collection organizaticns has been a perennial topic for siudy.

The possibility of resource savings from consolidations was a major thame of the
1971 Schlesinger Reporf.

To some extent, such consolidation is no longer the central focus of attenticn because of tight Community budgets in In the cas=
of collection
--
as opposed to the
-~
there is
"general"
agreement thati 5c:petition is not a necessary objective. -
The centrzl challeange in collection management 1s efficient use of rasources:
dupllcation of facilities is
 little valus.

At present, signal intelligence collection is conducted by NS3i, the Service Cryptological Agencies and CIA;
photc intelligefice by the NRO, which is in both CIA
and the Air Force;
and human intelligence by the CIa, armed ser&ices, State Department, and various other cabinet agencies.

e et gence activities out of transfer cf a small amount of collection activities out of Defense.

total consolidation of NSA and tha Service Cryptologic Agencies;
and consolidapRes NRO activities in Defense.

M2jor Consolidation
-- consolidation into one agency of all the national collection programs --
.

the CIAP, CCP:and;NRP.

dation
--
The current division of both NT
znd NRO activities between CIA and Defense articular expertise in each agency
3
be -lost in any.consolidations.

In any tion, bureaucratic infighting might lead
)
0
i3
w
0
b
o7t il of

a loss of quaiifiee personnel afid short-term ineZficiencv due to turmoil.

Consoii&ation might also separate. certain colleetion'systgms from consumers, especially military cpmfianders, and Y
thus reduce responsiveness.

FY 1875 FundsrRequested for Intelligence Collection ars shown in the following chart.

Lligence must be timely,
.of high ive to consumer needs.

The basic h uction responsibilities at present is O
"
s}
"
Q)
ol
9
o s K
W
=
g
0]
3

o1
b that CIA, Defansse afid, to some degree, State produce defense-relatad intelligence;
and CIA, State's Burean of Intelligence ane Research
(INR)
and, to some degree, Defense produce political intelligence;
and CIA, State and Treasury produce economic intelligehce analysis.

Each of 'these agencies serves both departmenfal'and national consumers.

The Intellicence Community has been publicly criticized for failing to prsdict a number of recent international crises;
the NSC/OMB
st raported State and Treasury disappointment with the Commusity''s longer-term estimative capabilities in interpretation of collected information can provide valuable insight to policy-makers.,

## Options:

nments of existing production
;
%, o}
major reali
[{e]
respensipilities have been suggested:

1.
Spin off
the production components
of the CIA
into
a new national analytic capability entirely
independent
from any operational
or collection
of a naticnal production

upgrade departmental intelligence
Certain key intelligence products coule still be coordinated by the DCI
or NSC
in National Intelligende Estimates are new pr epared
(NSC/OMB Study Option
#33).

The firs:t alternative would free the national production -
ny taint it now has from being assoc1atea ctivities.

It would create an intelligence divorced from policy, thus providing also aerhaps lead to less responsiveness The second alternative could improve to policy-makers, but would eliminate indenendence asserted to exist in the CIA.

major alternative is desireble, departmental
;ntelligence producticn assets could be built up;
production constitutes only
10
per cent of the intelligence budget, a reflection offthe absence of the expensive hardware which makes collection so costly.

As an example to bring the production process into focus, the proceess for producing the key National Estimate on Soviet Strategic Capabilities and for producing economic intelligence is shown in the following charts.,
(Note:
the Soviet Estimate was unusually extensive.)

## Cation Of Key Issues Z Substantive Resolution Of Key Issues Partigipating Offices And Agencies

ERDA
USIB Committees
Gaided Missile and Astronautics Intelligence Committee
Scientific and Technical inteiligence Committee
Joint Atomic Energy Intelligence Committes

## T Key Issues-Soviet Capabilities Tellibence P Ke Supporting Agengies And Contragtors

Lockheed Alrcraft Carp.

Hughes Aircraft Co.

Lawrence-Livermore Laboratary Stanford Research Iustitute Rand Corp.

Etactro- Magnetic Systems Laboratory APR-IUNE

## 2Es For Intercontinental Conflict Through The Mid-1980'S

DECLASSIFIE
E.O. 12555 Sec. 5.6
MR V-3
ein (oin ife/qq
& (F
mama, patw_pjzemo

## National Intelligence Officer For Economics And Energy

CIA
State
DoD
Treasury
ERDA

## Key Intelligence Questions Identification Of Key Issues

Future demand for OPEC oil
Stability of the cartel
OPEC revenues
Development of aflernafives
energy sources
New non-0PEC oil seurces

## Feedback From Consumers On

Petrodellars

## Previous Publications

NSC
CEA
CIEP
Treasury
FEA
State
Dop
ERDA
STRTM
"Coancii of Econsmis Advisers
"*Presidont's Spacial Trade Rupresentaiive

## Intelligence Sources .

Open sources {press, trade
10D Preparation
i
ublications, etc.)
Analysis
Collection
'
X
i
.'
.
Dissemination
>
)
Clandestine reporting
Dratting of articles
& Requirements
Review
to Consumers
f
i
Other government agencies
.
NSC
9
(State, DOD, ete)
CGoordination
eEr
&
Communications intelligence
T
CIEP
5% 35
Contacts with US firms
Treasury

=3
FEA
S
g
]
State

ES
pop
|

(8;
ERDA
]
]
STRTM
andestine activity be separated pability has been included in the since its inception, but its action Intelligence Cormunity orientation has I
e s e 88800 ENSsEssseesses0teeesNs0eTsLseRRSCESISIROORERIRALIOCEISIIOITRIOOL
aasesesesssscresscssssnsen es s s s sscesnssenessseccas s esssue R
R
R
PR
PR R
PR EE R
RS
AR
AR AL
A
LA
A LA
AL EES AN
-------o....o--..-.-..---.--..--o-..ooo.----o.-o----..---....

eecsescsscscssecacscscscsaacsssnssassee s eesesseesscasssossnasree e
8 8800608000400 06000sEEsseEsE0eEERllPNSSNOSOOICIEIEIPINRIOIRTRIISEOTTSITEY
IR
WA WY
The covert action capability in CIA has been strongly criticized in tie Press and Congress for inadequate control,
'biasing of the independence of CIA analyticel judgmefits, and detrimentel effects on CIA recruitment of analysts.

Although the arguments for separating covert action from the CIA have some merit, sarious practical problems arise.

OPTICNS:
its primarily overt status and be contrary to
'international diplomatic practlce.

m"ansfe:
to the Defense Degartment would raise
1
pr-lc app*ehensxon over accountablllty given the size and scope of Defense's activities.

 (However, any resort to large scale covert paramilitary activities in the future could appropriately be.

conducted through Defense.)
moving covert actlon and
10T
LDTO
'would own_agenc ssparate covert overatives Ifrxom the supervision of offizials and encourage them to
ill slack Zor new covert actions, the only for their continued employment.

This crtion has support among the liberal wing of the foreign affailrs
"community".

## D. Organiz ] Options Analyzed In Nsc/Omb Study


In light of th five issues discussed above, the NSC/OMB
study set forth fovr major options for reorganization of the Intelligence Community, the first three of which would require legislative action:

1
i
[
m
T
tion
of
a
new expanded intelligence agency,
@]
hazded
by
a Director
of Ihtelligence,
with resource
and line control over the national programs
-- the
CIA Program
(CIAP),
Consolidated Cryptologic Program
(CC?),
and the National Reconnaissance Program
(NRP).
This option is based on the Premise that netional programs are best managed
1f centrally funded and controlled, and that gains ffom centralization outweigh disadvantages resulting from separation of collectors from their primary consumers.

and NRP, immediate staff.

is pased on the premise that a central a> with regource control and without a vested srast in any one element of the Community'is nesezd, - Option
22 would leave. line and resource con:rcl over CIA analysts with the DGI.

Creztion of a Director of Foreign Intelligence
(DFT)
with bread coordination powers but neither resource O
SISO
nor lina control over any part of the Intelligence Community.

Tfiis option is based on the premise that an intelligence leader, independent of any organization within the Community, would be best able to ccc:di:ete its activities, and that the Defense requires a major voice in resource and ccntrcl_of intelligence assets.

Option
3A would
~brszk up CIA production elements and transfer them to other departments.

on of current Community relationships with the addition of a second full Deputy to the DCI with managemsnt rasponsibility for the CIA and perhaps with expanded or restructured Executive Committees and production responsibilities.

This option is based on the premise that major organizational changes
=3
their effects on leadership, on', and the budget are detailed in the S
ummary charts are diagrams of the four s.

And finally, thexe is a chart H
eactions to the four options.

## Option | From The Report To The President On The Foreign Intelligence Community

DECLASSIFIED
E.O. 12958
25c. 3.6
R a4-3 #|
:
18 bl tfof19
By_Lsk  MARA, Daw_2jasn

## Option Ni - From The Report To The President On The Foreign Intelligence Community

596195
DECLASSIFIEL
E.O. 12368 Bor. 3.3
MR G4-3. %) ok bl ifuaf

# Option Iil , From The Report To The President Cn The Foreign Intelligence Community

## Option Ina

DECLASSIFIED
E.O. 12568 fuc. 3.6

## Option Iv From The Report To The President On The Foreign Intelligence Community

.

OF DEFENSE
OF. STATE
OPERATIONAL CONTROL
===
DCI INFLUENCES RESOURCE
DECISIONS
MANAGEMENT RESPONSIBILITIES COORDINATION OF NIEs DE1 REFORTS TO PRESIDENT
THRAOUSH NSC
.

!

DECLASSIFIED
E.O. 12958 Sac. 3.6
M gfz_'#l s Bl
1) [2m0
By (o Naa, Dave_3/220

Additional Staff
Government-wide
Establish New Group
Strengthen Agency IG
Expand PFIAB
Attorney General Staff
Within the Irntel Community
Outside the Intel. Community
Special Counsel to President

chapter is to present naintaining control over ed foreign intelligence activities tion.

The following issues are

to protect cla551f1ed informaion more
effectively.

'f orm of statutory protection for ssified information.

## A. Classification System

ISSUE:
Tg what ex tent should the existing classification

## System Be Revised?

The current classification system
(establlshed by Executive Ordsr XNo.

11552
issued by President Nixon on March
10,
1972}
has been the subject of much criticism, notwithstanding that it represented a comprehensive reform of the priocr system.

The criteria established for the various categories of information
(e.g., TOP SECRET, SECRET)
'are vague, leading to much over-classification.

There are provieions for automatic downgrading and eventual de-
clessification, but the exceptions to them are frequently invoked, particularly in the Intelligence Community.

V
The system of
"compartmentation;
(special clearances giving access to information only on a need-to-know basis)
has kept valuahlz intelligence from policy-makers and analysts whe would have warned against improvident policies.

235
clsarly contemplate the existence of The currant Ror-Rokd icas a'classif Many cri that protection of classified information by statutes is unwise because the current classificztion system has resulted in great cverclassiz rassage of such legislation will be mich more
&i if the classification system is not overhauled.

Indsed,
& revision of the classification:
system could be viewsd as a necessary price to be paid fu for passage of legislation to protect classified information.

ISSUE:
If th rrent classification system is to e revised, should its revision be accom-

## Plishad By Executive Order Or Statute? Classification System Design Has Historicallyibeen

a function of the Executive.

The President is in a better position than eongress to know what categories of information need protection, and to what extent.

The Administration's proposal.can be adoptee with precision in'
an Executive Order while, of course, legislative proposals may be subject to significant amendment.

However, Congress would probably

## B, Protecticmn Cf Classified Information

ISSUE:
_administration propose revised

## Isgislztion To Protect Classified Information?

Present
_utory.protection is inadequate.

Current statutes prohizit the transm1531on of classified 1nformgtlon by e government swployee only if made to an agent of a foreign power law prohibits such transmission by a non-employee only if done w1th intent to injure the
.United States cxr aid a foreign government.

There are only two types of classified information which receive special protection frcm madia publication.

It is a crime for any person to deliver
(individually or by publication)
to any unauthorized person any classified information relating to cryptolcgv or cgmmunications intelligence.

(The comprehensive statute dealing with-fihese limited typee of information grew out of the publication by the Chicago Tribune of the fact that the U.S.

could read Japanesg codes.

Even the information the defendant divulged to an unautherized person has not become public knowledge, a successful prosecution requires that it be made public at the trial.

Under present law, the govermment may obtain a remedy.

This, however, is not protection, Tutory protection of classified sourse, a politically controversial one.

extremely critical of the provisions of the current cposad revision of the Federal criminal code s criminal sanctions on the unauthorized sified information.

rotection should be accorded ISsUz:

onl#
zo _intelligence sources
and methods
or
to
types
of classified information.
By the DCI
is required fo protect
"intelligence ds"
which constitute one type of classified information.

BRBasically, this term refers to sensitive information apout methods of collecting and analyzing foreign intelligence and sources of foreign intelligence, whether human or technical.

The disclosure of information of this type can, of course, be more or less damaging than that of other types of classified information, depending on many
-factors.

 However, there is an exception to the autometic declassification requirement in the current Executive Order for information relating to intelligence sources. and methods.

ly exist within the Adminis-
Two draft statutes curr tration for the protection of classified information.

A
CIh-sponsorsed bill would only cover information related to intelligence sources and methods.

There is disagreement between CIA and Justice over certain of its provisions.

s.

1, a proposed revision of the Federal criminal code contains certain provisions which would protect classified information of all tybes.

The Administration has urged prompt action on S.

1, although.it has not endorsed its particular provisions;
S.

1 has been referred to the Criminal Law Subcommittee of the Senate Judiciary Committee;
as yet, no formal action has been taken by the Subcommittee.

The current proposed revision to the Federal criminal code
(S.

1)
provides protection for all types of classified information.

It may be that legislation which covers only sources and methods would stand a better chance of passage than a broader bill, since information related to sources and methods may be perceived by the Congress and the public as more worthy of protection;
such information does not relate to polfcy formulation and is less likely to be classified for purely bureaucratic reasons.

However, if the classification system is rationally designed, there seems telligence no legitimate reason to provide protection only for in sources and methods.

ISSUE:
Whethex statutory protection for classified
*'-_'__':_'.-*_---
ticn shenld cover only government.

emrelated to classz:led information impose nc dire:
Q
rh icns on the recipients of leaks of such information However, if to harm the United States, the recipient may be criminally liable under statutes on conspiracy and alding and abetting.

As a practical matter, very few leak recipients could be successfully prosecuted undexr current law.

Both the CIA bill
'U
and S.

1
impcsa sanctions only on government employees.

If they were extsndad to cover leak recipients, opposition would be even greatsr than it is now and First Amendment problems might be raised,

## Agrainst Security Violations

ISSUZ:
what form of statutory protection should be given to classified information
(i.e., criminal S2lT
s Togesller Jhiormation {i.e., criminal or civil, or both)?

The Il
[]
ars two basic methods for discouraging disc;osureof classified information:
criminal sanctions to be imposed after an unauthorized diselosure, and a civil injunction ta be issued before a threatenedvaisclosure The CIA bill
(but not
.

1.)
provi desf r both tynes of 'actions.

It would seem unwise te rely on the civil 1njuncL1ve remedy alone.

Although in on2
respect it can be a more severe sanction
(in that if one violates an injunction he may be punished for criminal contemdpt without a jury trial), it is generally
-
oS
(0]
e i+
[
[]
[]
f J
<
1]
n
1+
]
(1]
t Y
(]
(o]
<t
[0]
B
o1
5
(D
nt is usually unaware that W
disclosures are about to take place.

Indeed, even in the the civil injunctive remedy is extent in the cases of employees who have signed sscracy oaths;
it has not proved particularly effective, st ng alone.

One might argue that prqpoSed legislation sheounld not include the civil injunctive remedy ts lack of effectiveness and controversial
"orior restraint", especially since the to some extent anyway if the employee It shoulZ
ke noted that neither type of remedy is likely the case of disclosures by members of Congress and their psrsonal and committee staffs either on ittee hearings, or in committee reports.

Statements in such contexts are generally protected by the Speech and Debate clause of the Constitution.

Y

## Appendix I - Index

.
NSC/OMB Study
-
Agency Comments (President's Copy Only)
# Draft Report To The President On Organization And Management Of The Foreign Intelligence Community

R
December
16,
1975
-
~
 1/R-75/S-665
~MEMORANDUM FOR:
Secretary of State
)
Secretary of Treasury Secretary of Defense Attorney General Director, Central Intelligence Chairman, Joint Chiefs of Staff FROM:
James T, Lynn
66
> %'"
SUBJECT:
Options Paper. for the President on Organization and Management of the Foreign Intelligence Community Transmitted herewith is the latest draft of the options and recommendations paper for the President concerning the organization and management of the foreign intelligence community.

I understand that the text of the options paper has been reviewed by your working group representative.

The deadline for your comments and recommendations to the President with respect to the various policy options is Noon, Thursday, December 18, I appreciate the shortness of this deadline, but it is necessary in order to ensure that the President has the benefit of your views, Thanks, Attachment

## Table Of Contents Executive Summary Introduction

II.
Current and Future Trends
F
Future Trends
10
Problems
in Intelligence
III.
A.
Proper Safeguards Against Future Abuses
B.
Quality Intelligence
on
a Timely Basis
C.
Well-directed Intelligence Activities
10
12
17
22
D.
A Need
for Change?
24
Iv.
Actions
to Prevent Abuses
24
A,
Guidelines
for Propriety
and
Restrictions
B.
Oversight
C.
Intelligence Policy Coordination
24 27
29
D.
The
40 Committee
30
Intelligence Community Organization Opfions
32
36
40
41
45 46 50
Option
#1 Centralized National Intelligence
Program
Option
#2 Centralized Resource Control
Option
#2A
Option
#3 Departmental Emphasis
Option
#3A
Option
#4 Modified Current Arrangements
Covert Action Location
53
Management Improvements
53
55 55
56
56
A,
Budgetary
and Financial Controls
B.
Compartmentation
C.
Consumer Interaction with the
Intelligence Community
D.
Performance Evaluation System
.
E.
Cover
and Clandestine Collection

## Organization And Management Of The Foreign Intelligence Community Executive Summary

The prinmfy objective of the foreign intelligence community is to provide quality intelligence on a timely basis to both policy-makers and operational officials.

Any organization and management of the Commun-
"
ity -- its collectors, processors, and producers -~ must be shaped to accomplish this objective.

To assure public confidence and support, organization and management must be structured to prevent potential abuses and to make maximum use of limited resources.

Demands from Congress for information on intelligence operations and substantive intelligence will force the Intelligence Community to operate in a more public arena.

Diffusion of political and economic power, proliferation of nuclear and sophisticated conventional weapons, and growth in terrorism are creating broader demands for timely integrated analysis.

Ever-increasing demands for high quality intelligence assessments, especially in crisis situations, will require increased use of advanced technological systems as well as the more traditional human intelligence sources.

Any restructuring of the organization and management of the Community must i respond to these challenges.

Executive Branch safeguards are necessary to prevent potential abuses.

Options include:
(1) guidelines defining the scope of permissible intelligence activity and (2) mechanisms to improve Executive Branch v over sight.'
To improve quelity and direction in the Intelligence Community, four major structural options -- three requiring legislative action -- are examined:

Creation of a new expanded intelligence agency, headed by:
#1:
a Director of Intelligence, with resource and line control over
the national programs
-- the CIA Program' (CIAP), Consolidated
Cryptologic Program (CCP), and the National Reconnais sance
Program (NRP).
This option is based ;m the premise fhat
national programs are best managed if centrally fu.ndgd and
controlled,
and that gains from centralization outweigh disadvantages resulting from separation of collectors from their
prima Ty consumers.
Creation of a Director-General for Intelligence (DGI) with
#2:
resource control over the CIAP, CCP and NRP, but line control only
over his immediate staff.
This option is based on the premise
that # central leader with resource control and without a vested
interest in any one element of the Community is needed.
Option #2A
differs frbm Option #2 by giving the DCI line coatrol over
pfesent CIA production elements,
Creation of a Direetor of Foreign Intelligence (DFI) with
#3:
broad coordination powers but neither resource nor line
control over any part of the Intelligence Community.
This
option is based
on the premise that an intelligence leader,
independent of any organization within the Community, would
be best able.to coordinate its activities,
and that the Defense
Department requires 2 major voice in resource and line
.
control' of intelligence assets.
Option #3A differs from Option #3
by decentralizing intelligence production responsibilities through
transfer of present CIA production elements to the relevant
departments.
Retention of current Community rela'tionships with the addition
#4:
of a second full Depl;lty to the DCI with management responsibility
for the CIA and perhaps with expanded or restructured Executive
Committees and production responsibilities.
This option is based
on the premise that major organizational changes may be
undesirable, and that improved Community leadership structures
are possible through administrative action.
The study also discusses moving the covert action capability out of CIA and placing it in a new, separate agency.

Finally the study also discusses certain possible management improvements.

## Organization And Management Of The Foreign Intelligence Community I, Introduction

On November 14,
1975, the President initiated a study of the organization and management of the foreign intelligence community, including an examination of:

-~
the basic structure of the Community,
--
key problems of organization and management,
--
definition of requirements,
--
.systems design and selection,
~-
resource allocation,
--
guidance mechanisms,
-~
consumer-producer relationships, and
--
relevant recommendations of the Rockefeller and
Murphy Commissions.
Based upon the results of these reviews, the study was directed to:

--
evaluate the need for changes in the current orga.mzatmn
of the foreign intelligence cormmunity,
--
present options for a possible reorganization of the foreign
intelligence community,
and
-~
submit the recommendations of each addressee [the Secretaries
of State, Treasury, and Defense, Attorney General, Directors
of OMB and CIA, and Chairman of the Joint Chiefs of Staff] on
the options presented.
The study group determined that its charge did not include counterintelligence or assistance to law enforcement agencies, because these areas include components outside the foreign intelligence community, primarily the FBI.

declassification exemption ached
{1},
(2},
(3
Automaticgafy declassified on Date_Japossible 1o Doterm)

## Saty I, Current And Future Trends

The foreign intelligence community serves a wide variety of consumers, not oniy at the national level but also in the field.

These include the members of the NSC
-- the President, Vice President, and Secx:etaries of State and Defense -- the Secretary of Treasury, and, to a lesser extent, the Secretaries of Commerce and Agriculture and the other members of the economic policy community.

Also included are Ambassadors, trade negoti.ators, and military command authorities -- all stationed outside.of Washington.

These consumers use intelligence to guide policy decisions in the military, diplomatic, politic'al, and economic areas.

Analysts and producers of intelligence include parts of the CIA, the Defense Intelligence Agency (bIA), the State Department's Bureau of intelli
gence and Research (INR), Treasury and elements in the armed services.

Collectors of intelligence include the CIA, the National Security Ageficy (NSA)
and military Service Cryptologic Agencies, the National Reconnaissance Office (NRO), members of the Foreign Service Officer corps, Treasury, Agriculture, Commerce and Defense attaches, and elements of the armed services intelligence staffs, The chart on the facing page displays relationships in the foreign intelligence community.

The Director of Central Intelligence (DCI) is currently charged by the President with leadership of the Intelligence Community.

His four major responsibilities are:

--
Plenning and reviewing all intelligence activities
and the allocation of all intelligence resources, .
.
-~
Producing national intelligence required by the President
and other national consumers.,
--
Chairing and staffing all Intelligence Community advisory
)
boards or committees..
- Reconciling intel]igence requirements and priorities
within budgetary constraints,
'
. The DCI exerceises both resource and line control ove;r the CIA, The Defense Department exercises resource and line contr61 over the Consolidated Ciypto].ogic Program (CCP), the National Reconnaissance Program (NRP), and the General Defense Inte]li"g.ence Progra.zfi'(GDIP).

The DCI exercises the l;esponsibilifies outlined a}_::ove through his line con'cr_oi over CIA production and collection compo;ents, through chairmanship of Comfi:mity advisory committees on requirements, resources, and production, and through h:is authority to establish collec;._tion requirements and priorities.

He is also chairman of an Executi.ve. Committee (Equm)
which sets budeefiry and operating policy for the NRP.

Finally, the DCI
a.xlnually presents his recommendations on the to';al Intelligence Community
)
proeram to the President, Resources and personnel available to the Intelligence Community
_reached a peak during the Vietnam War and have declined in rea'1 terms since.

An agency and functional picture -of the 1976 intelligence budget request is shown on the facing page.

CIA has about :: percent of the total national intelligence resources with the bulk of its efforts concentrated in human intelligence collection, product-ion, and various support functions.

Almost all other intelligence resources are carried in the Defense budget,
'with signals intelligence, photo intelligence, and intelligence-related resources dominating the picture, National intelligence resources can be described in three different ways:

e
By function, about 85 pef cent are dedicated to collection
and processing, about 10 per
cent to analysis and production
of intelligence and the balance to support,

By target area,
over 75 per cent of foreign intelligence assets
are directed at the communist world, primarily the USSR;
e
By output c.ategory, about 85 per -cent relate to the size
and statgs of foreign military forces (includine scientific and
technical information),
and the remaining
15 per cent cover
political and economic subjects.

## Future Trends

The USSR and Communist China will remain our major intelligence targets.

There are, however, developing international trends and issues which will pose new challenges to the Intelligence Community over the coming years:

e
Largely bec;t;se of the spread of new t'echnolog}} and the
:
growth.of global interdependence, more nai;iens will acquire
some measure of leverage in world affairs,

The proliferation of nuclear and sophisticated conventional
. weapons,
the. organization of cartels _such as OPEC, and the
growing den;_a.hd for raw materials will make coercive poweiincreasingly available to- foreign governments and' non-governmental groups, including terrorist organizations.

The gap between the have and h;ve not nations wfil continue
to widen,
Issues such as mass starvation and overpopulation
will grow in importance.
The conflict between economic
realities ax;ld social welfare .a:sp'ira'tions will continue to create
ferfiile fields for communist subversign, 'political tizrbulence,
and growth of terrorist threats (perhaps involving nficleafl;r weapons),
I
I
I
R
R
I
N
T
I
sescevae

ceccsesscccssccsassesesversssasesensusacane
.
csseasae
D
I
I
A
R A
R
A
R
R
I
R
R
e
EEEX
L
I
I R
A
N
A
N
R
R
A
I
A
A
S
R
N
Y
In the coming years, additional challenges to the Intel.figence Community will be posed by the acceleration of international events requiring the cai:ability to assess and respond on a near real-time basis., New collection and da.ta systems will produce large amounts of information Tequiring a need for
.

improved communications between agencies, better management and information handling capabilities, more advanced analytical methodoligies, and new types of product presentation, A great variety of demands, issues and opportunities face the Community's leadership:

e
Notwithstanding the increased sophistication of collection
systems, thereis a rising demand, pafticularly in crisis
situations, not only for the kind of intelligence available
from technical sensors, but also for intelligence which can
normally be acquired only from human sources.
.
'
The need fer confidentlmonitoringv of Soviet compliance with
SALT and other agreements and support of MBFR negotiations will require more detailed intelligence on Soviet and
Eastern European military targets.
.
Collection systems must be able.to survive and be useable
in wartime to satisfy combat needs.

Congress will demand more substantive intelligence.,
Policies
will have to be developed to determine what intelfigence should
be provided, how sensitive information is to be protected from
publ?ic disclosure, and how to avoid inhibitions on the analytic independence of the Community.

| Changes in the world at large, and in the means of perceiving and assessing their significance, have complicated the tasks and challenged the resourcefulness of the Community.

These challenges do not argue for any particular organization of the Community; they illustrate the diversity and scope of the demands upon the Community and euggest the Potentia.l significance of the way in which the Community is structured.

## Ii. Problems In Intelligence

The Intelligence Community has made many vital contributions to the national security of the United States.

Throughout its history efforts
.ha.v;e been made to improve Community performance.

Igevitably, in any
.study of this typ'e, the_foc;ls must be oxr problems, rather than a_chievements, in intelligence.

Problems in intelligence can be viewed in the context of three major objectives for management and org@zation of the Intelligence Community:

e
Create proper safeguards against future abuses;
e
Provide customers with quality intelligence on a timely basis; and
e
Ensure that intelligence activities are well-directed.

## A, Proper Safeguards Against Future Abuses

The current public focus on the Intelligence Community evolved from a concern over alleged abuses:
surveillanc.e of Americans, domestic electronic intercepts, mail openings, and assassination plots.

The Co'm.-
mission on CIA Activities within the United States (the Rockefeller dom
" mission), the Murphy Commission and recent Congressional investigations
'all concluded that existing safeguards against abuses, including gfiidelines, have been inadequate.

The Commissions made a number of recommendations aimed at (1) eensuring that top policy-makers were aware of possibly questionable activities, and (2) promoting deliberative cor{shidevrve.fic;n of)
such activities, Inadequate safeguards were found within the Intelligence Community, the Executive Office of the President, and Congress.

Although many Community-wide directives have existed for assignment of responsibilities
' and other management purposes, directives on proper conduct have been
. rare.

The DCI, the leader of the Community, has no clear authority to inspect activities except within the CIA.

Particular problems within the CIA identified by the Rockefeller Commission include the limited role of the Inspector General and General Counsel, absence of written regulations on this subject, and over-compartmentation of some activities, Within the Executive Office, inadequate mechanisms exist to review the legality and propriety of ileltelligence activities, Responsibilities for propriety rest primarily with the head of _eaeh operating component.

Within the Cengress, oversight of the CIA and other com;ponents of the Intelligence Community was conducted until quite recently by a senior group of Senators and Congressmen, This small group of Congressmen reviewed Community activities and approved intelligence budgets.

The recurring the'rfie in oversight and safeguards against potential abuse at all three levels is the inadequacy of review mechanisms and insufficiency of attention to propriety.

Because attention was not focused
'on this responsibility, certain activities were conducted without the top level attention they merited,

## B. Quality Intelligence On A Timely Basis

Production of qualit',; intelligence on a ti;nely basis extends deeply into the management of the whole intelligence effort.

Ii.: includes the 'p;'ocess by which resources are allocated to collectors, processors and producers; the quality and organizational placement of collection and production functions; the nature of the research and development efforts;
.

and even the development of programs which provide necessary support
)
for intelligence a&;tivities.

While the leadership will continue tolbe challenged by the need to provide efficient management of Community resources, major attention must be devoted to iptelligence production.

The Intelligence Cbom.munity has been criticized for failing to predict major events and crisis situations such as the 1973 Middle East War.. .

Over the years, however, the Com.mu.nitir has dealt successfully with many different crises such as the 1967 Middle Ee.st War, Success or failure jn forecasting events rests on the perceptiveness of the estimative judg-
.

men'ts of the Commmunity as well as the sufficiency of timely, relevant and accurate intelligence from which judgments of intent could be derived, The Community's performance with respect to longer term estimates has also been mixed.

The production of such estimates is complicated by
(a) the paucity of hard evidence and (b) the fact that judgmental accuracy hinges on .futu're decisions or actions of foreign governments, or on U.S, decisions or actions to which the estimators are not privy.

Accuracy apart, the utility of estimates is also complicated by problems of dialogue and feedback between intelligence consumers and intelligence producers, While senior policy officers have often felt that intelligence asseesments ere not sharply ;ocused on-their real needs and concerns, these policy officials often do not clearly articulate their needs.

The estimates production process, however, does compel an orderly review of all new intelligence and analysis and forces old assumptions to he retested and discarded

or revalidated.

Estimates of concrete, factual subjects
-- e.g., military capabilities
--
are generally well regarded and thought to be useful, In those addressing political and economic subjects, the judgment quotient is much higher, They elicit a more mixed receptien'and represent areas in whjch State and Treasury rely heavily on their own ana.lytieal resources., A number of problem areas in provision of quality intelligence have been identified:
Consumer relations with the Intelligence Community.

While intelligence produced for policy-makers in recent years has improved in quality and timeliness, certain problem areas remain that impact adversely on the intelligence product and on the efficiency of the intelligence proc'ess.

There is inadequate guidance and feedback fro'n senior policy officials, compounded by a traditional relectance to make certain sensitive policy_oi'
operational information available to intelligence officials, When intelligence personnel are in close contact with policy and operational activities, their appreciation of the priority issues is vastly improved.

The present active participation of CIA, DIA, and INR in the SALT and MBFR delegations, for example, is. considered a useful model for intelligence working relations with policy elements.

The NSC Intelligence Co@ifiee (NSCIC) has been criticized for not performing the product review and consumer guidance fu.nctl:ions for which it was organized.

However, the NSCIC working group now fneets regul;zu:ly, has provided some guidance on requirements, and has initiated a consumer survey.

Consumers are often inadequately informed as to the resofirce'i.mplications o}:' their requirements.

Although they need not be intimately involved or knowledgeable concerning the details of the intelligence resource alloca~-
tion process, they should be informed when the cost of their intelligence requirements has significant cost or tradeoff implications.

Crislis management, The consumer relationship becomes especially crucial dufing crises, It is ee;gential that intelligence analysis in critical circumstances proceed from an understanding of operational policy decisions so that the likely reactions of the other side can be assessed. The White fiouse, State, Defense and the DCI all have major roles to play in improving procedures to develop better intraagency, interagency and White House ties, In times of crisis, each Agency organizes itself to maximize support for its chief who participates in crisis management decision-neakine through the NSC's Washington Special Action Group or less formal arrangements, These generally work well; but, there is little overall coordination of agency activities, They often result in a large volume of unevaluated infor -
mation at the top.

Timeliness of intelligence reporting has taken precedence over careful analysis and interagency coordination.

The future challenge is to ensure adequate analysis and timely reporting and to provide for more interagency dialogue.

National collection National intelligence support to field commanders.

can provide information to military commanders at the level of systems detail needed for planning and conducting military operations, but their:
'utility as wartime assets remains to be tested.

Military. intelligence is an essential element of the combat commander's force.

National collection assets offer promise of contributing significantly to the commander's: intelli~
..gence needs.

If the national assets cannot meet requirements for timeliness, accuracy, availability, dependability and survivability in a combat environment; however, combat commanders will remain under standably reluctant to become overly dependent on national collection systems.- An effort is.

currently under way to provide processed information directly to -military commanders .at the theater level and below.

Access to some intelligence informa-
Secrecy and compartmentation.

tion at both the policy and operational levels requires: special clearances, which are. considered necessary to protect sources and methods of intelligence and other sensitive information from unauthorized disclosure.

A classification system established by an Executive Order, reinforced by unusual employment termination authorities over employees of CIA and
. NSA, and a series of less than airtight criminal statutes are used with
. varying degrees of effectiveness to protect intelligence.

For many years, it has been recognized that these procedures and sanctions are. inadequate to accomplish their task and to allow the DCI to fulfill his .statutory respon'-
sibility to protect sources and methods.

In part because of the inadequacy of classification and statutory sanctions, a number of special control systems for particular types of intelligence information have been developed.

Compartmentation, properly applied, permits a broader dissemination of less sensitive material while protecting the most sensitive, However, procedures to remove classified information from control systems are usually elaborate and time consuming, A bontinuing problem is the difficulty of ensuring that consumers have access to the kinds of intelligence products they require.

Separate control systems also inhibit useful intelligence analysis and production.

Compartmentation proceciures in 'some organizations artificially divide the intelligence data base and make it difficult -- in some cases impossible --
to store and integrate informafim collected at great costs.

Much has been done to sanitize and decontrol intelligence to make it more widely available, More remains to be done.

In undertaking such changes, sensitive material must be protected.

## C. Well-Directed Intelligence Activities

Consideration of the third .objective -- ensuring well-directed mtelhgence activities -- starts with the National Security Act of 1947 which
. gave CIA the responsibility to advise and make recommendat:ons to the NSC
and to correlate and evaluate intelligence relating to the national secux:ity.

Existing Presidential directives state that the DCI "shall assume leadership of the Community in planning, reviewing, coordinating, ax;d'evaluating all intelligence programs and activities,' and in the production of national intelligence.''
Today, the DCI has resource and li;le eontrol authority over only one part of the Intelligence Community -~ the CIA., His Community responsibility to set requirements and priorities for collection is established in NSC directives and is exercised through a variety of committees and ad hoc arrangements, The DCI must coordinate all national intelligence resources to assure f.fiat military, economic and political concerns receive appropriate emphasis.

The Secretary of Defense must ensure that his military intelligen_ce organization, as an integral.part .of the national intelligence community, provides informat;i.on to all echelons of command.

The increasing capability of national collection assets to provide inteliigence to field activities calls for closer interagency cooperation in a number of areas;
Peacetime /wartime transition, In peacetime, centrally-managed technical collection systems such as the National Reconnaissance Program
_
and the Consolidated Cryptologic Program are controlled by a variety
'
of mechanisms in which the DCI's influence varies, In wartime, Defense intelligence requirements are paramount,
. For transition to wartime, the Joint Chiefs of Staff and the DCI ilave concluded formal understandings governing military7 CIA command relationships at the theater level in war and contingency situations, There is, however, no peace/war transition agreement at the national level. Closely related is the q;lestion of whgther existing arrangements provide for an effective transition to crisis and hot war conditions, Formal agreements cc;ncg;-ning DCI and CIA support to Defense in time of war could enhance
.

collaboration between the two organizations in time of peace.

Control over Community resources.

The DCI has direct resource:
control over the CIA, less direct control but substantial influence over the National Reconnaissance Program, and influence through the requirements
.

process and the recommended program budget over the General Defense Intelligence Program and Consolidated Cryptologic Program.

Budget development and execution occurs primarily within the departments.

However, the National Reconnaissance Program budget developed by an Executive Committee (ExCom) made up of the DCI and the Assistant
'Secretary of Defense for Intelligence.

Although the budget is handled primarily within the departments, the DCI submits each yeaz; a set of program recommendations to the President for his consideration in preparing next year's budget., In this document the DCI discusses important aspects of the U. 5. Foreign Intelligence Program, presents his position on budget issues, and displays.a reeommended level of Community resources for the coming year.

Because it is superimposed
.on the normal budgetary process, there have been problems of timing associated with this submission.

It must be formulated after the preliminary budgets are formed and the issues defined and debate&, buf before the President's budget is assembled.

The DCI also uses two interagency advisory review mechanisms:

e
The United States Intelligence Board (USIB).
The USIB was
established to advise the DCI and identify information needs
'and requirements.
When the information requirements can
be readily transla.'te& into resource requirements, they influence resource levels,
e
Intelligence Resources Advisory Committee (IRAC).
The IRAC
was established to advise the DCI on the preparation of the
intelligence budget and the allocation of reeouces among programs,
It has as members the DCI and senior representatives from State,
Defense,
the CIA and OMB,
There is no single central controller of intelligence resources.

Trade-offs among collection, processing and production functions seldom are made, in part because of the diverse budget review process.

It is difficult to relate resource inputs to product outputs.

While there is a tie between processe& intelligence input and finished analytical output, the relationship of product to processing and collection activities except in isolated circumstances is difficult to quantify, Further, decisions tend to be made in terms of particular sensor collection capabilities to the exclusion of consideration on an across-the-board basis among available resource options.

Clandestine collection and covert actions.

CIA, and to a limited extent the military services, conduct clandestine collection abroad.

The importance of such collection remains high in learning about the secret activities, plans and intentions of foreign states.

Cover is essential to CIA's clandestine collection.

Few foreign governments could tolerate an openly identified CIA contingent, As the size of the Arnerican official presence abroad has decreased in recent years, so has the opportunity for official cover for CIA ope;atives.

CIA has made increasing use of non-official cover; but these arrangements are generally costly and inefficient and sometimes dangerous to the operative.

The CIA
and State have been unable to resolve to their mutual satisfaction how much and what kind of State Department cover can be provided.

Clandestine collection by its nature is often extremely sensitive politically.

Because of the importance of secrecy in these matters, coordination of sensitive clandestine collection has tended to be worked out at the local level, between the Ambassador and the CIA Station Chief.

Public Law 93-495 expresses Congress' view that coordination is essential.

While a limited amount of Washington-level coordination takes place at working levels between State and CIA, mutually acceptable procedures have not been achieved.

Covert actions, including political 'and psychological projects and paramilitary warfare, have been carried out by the CIA a.Lmoet since its inception, Proposals. for moving covert action out of the CIA have been made many times but have always been rejected.

Review, coordination, and approval of covert operations is the responsibility of an NSC subgroup, the 40 Committee, The Murphy Commission and congressional observers have criticized this committee for inadequate deliberation and staff support and for failure to represent a broad enough diversity of policymakers.'
At times in the pas'c, 40 Committee meetings have not been held; decisions were made by telephone or written correspondence.

Inadequate time for staff corsideration has been a criticism both within the government and outside.

Although the 40 Committee charter calls for annual reviews of ongoing programs, this direction has not always been followed.

The Attorney General has served on the 40 Committee in the past, but served more as a trusted Presidential aide than as the government's chief legal adviser.

## D. A Need For Change?

Since 1947, major changes have occurred in the size and scope of the responsibilities and activities of the Intelligence Community.

Over tfia period the DCI's Co;:mnunity leadership has remained basically constant;
however, the intelligence leadership struch.ue with;in Defense has become increasingly centralized, A wide assortment of committee arrangements has been developed to advise the DCI, who has coordin_ating authority, and managers within the Community, who have resource and line authority.

-
In the oversight area, new arrangements seem required.

- Although the publicity of the last year was probably the most effective safeguard possible against potential impropriety, the preferred prescription for the future is not continued exposure, but rather sound oversight within the Community, at the Executive Office level and in Congress.

With respect to the management and control of Int_elligence Community resources, the 1971 Presidential Directive gave the DCI a resource review responsibility for the entire Intelligence Community but no statutory or fiscal authority to e.nfor'ce such a responsibility.

Arguments for centralization based upon the growing resource management task stress the DCI's lack of real authority and the Intelligence Community's increasing reliance on expensive collection systems which require central management to serve the full range of potential consumers., Counfer-arguments stressing the need for greater, or at least unimpaired, departmental authority point to the substantial influence that the DCI has exercised under present directives and arrangements, They also con.tend that major technological collection programs, such as the National Reconnaissance Program and vCon.s olidated Cryptologic Pr'ogfam have worke& well, are responsive to
.na.tional requirements, and fepresent a form of Community management that while decentralized makes-effective use of scarce resources and expertise,
. Proponents of major organizational change believe th.a.t new institutional arrangements at the top of the Community are necessary for effective consideration and solution of many complex problems.

Opponents,on the other hand, believe major organizational change is not required and would be disruptive, reduce morale an& actually decrease efficiency, at least in the short run, As a final'point, it is generally agreed that the House and Senate Select Committees will make proposals for reorganization and that the President would be well _advised to set forth his own proposals which ceuld"be useful as guides for Congress in its deliberations., On the other hand, while such proposals will be advanced, there is no certainty that Congress will act.

## Iv. Actions To Prevent Abuses

Recent events have demonstrated the need for improvement in existing control procedures over the Intelligence Community within the Executive
'Branch and in Congress., Changes in both organization and procedures to provide additional control are examined below.

## A, Guidelines For Propriety And Restrictions

A code of standards for the conduct of i.ntelligent.:e activities is needed, A draft Executive Order has been prepe.red for intelligence agencies (excluding the F'BI) which sets restrictive guidelines for domestic activities (e.g., mail open'ing, infiltration of dissident groups, illegal electronic surveillance, inspection of tax returns;
collection of information on U.S. citizens and drug testing) and which limits activities which can be taken to protect intelligence sources and methods, Approval and dissemination of an Executive Order is a necessary first step toward providing the guidelines within which the Intelligence Community must operate.

## B. Oversight

' A'n.v.xnber of legislative proposals have alteady been introduced to enhance the congressional oversight role.

Two distinct possibilities are emerging:

]
Es#ablishxnent of a joint oversight committee with responsibility
to review all intelligence activities; and
e
- Establishment of a wider General Accounting Office role in
review of intelligence.
Against this backdrop, three tiers of potential options exist within the Executive Bl;anch:

1.
Executive Branch oversight -- w1th1n the Intelligence Commufiii:x.
The DCI currently utilizes an Inspector General (IG) to review only CIA
' ecfivities.

Each agency is responsible for carrying out an inspection function of its own activities.

Special clearances and sensitive aspects of inteiligence functions have inhibited deep scrutiny in the pa.st.

Two options can be considered:
.

e
 Strengthen the inspection function in each agency;
e
Establish a Community IG under the DCI.
Establishment of a Community IG should reflect the planned future role of ';he DCI.

Conflicts may arise between a Commfin;tty IG and the intelligence aggficies regarding access and degree of authority.

Also relevant is the decisibn on the need for a Cquneel to the President, as addressed in the following section.

The arguments for either a Community IG or oversight at the Presidential level are fairly lear, but the functions of the two would
_overlap.

Some would question the need for both,

2.
Executive vBra,nch oversight -- outside the Intelligence Community.
A. decision in this area .shou.ld address the following:

o
Usefulness to the President of an independent oversight officiai;
o
 Ability of this offic.ial to gather useful information; and
e
Public perception of the change -- substantive or cosmetic.
Three options have been identifieds

The Attorney General, who would advise the President through
.
use of a staff established within Justice to monitor intelligence
.
activities; or
e
A Special Counsel to the President, together with an appropriate
staff, who would be responsible for advising the President on the
legality and propnety of intelligence activities; .or
e
A government-wide Inspector General, who would also respond
for the President to improprieties in Federal activities beyond
the Intelligence Community.
His appointment would demonstrate
a willingness to address other Executive Branch improprieties.
3,
Executive Branch oversight -- by outside Government ger'soimel.
-goirernment group
Anocther approach to oversight involves the use of a2 non
to advise the President.
Two options are identified:
e
Adding an oversight responsibility to the President's Foreign
Intelligence Advisory Board (PFIAB); or
e
Establishing a new oversight group.
The Rockefeller and Murphy Commissions both strongly endorsed the concept of expa.ndmg the PFIAB charter, The key question to be resolved here is the extent to which an advisery group (even with a permanent and expanded staff), meeting on an occasional basis, could effectively oversee ongoing intelligence operations.

Expansion of the PFIAB charter should probably be coupled with appointment of a more diversified membership.

Determination of whether to use the PFIAB or to establish a new group depends Eeavfly on consideration of the extent to which the PFIAB's 'prixnary role in the past --
encouragement of the Intelligence Community to do the best job possible --
would be diluted By, and perhaps even conflict with, this new responsibility.

## . C. Intelligence Policy Coordination

A number of intelligence activities impact on policies
-- domestic, diplomatic.

and military -- outside the Community.

The NSC has the statutory duty of integrating domestic, foreign and military policies.

This duty is currently carried out through NSC directives and NSC committees, Coor-
.

)
. dination o:". ifitelligence activities, in large part due to their higlfly sensitive nature, remains a difficult problei'n.

Ad hoc arrangements have, with vary'inge'
effectiveness, been used to integrate policy in intelligence-related areas such as surveillan;:e of Americans, official cover for clandestine operations'
and communication intercepts.

The orga.nizationai focus within the Executive Office should address:

The ability to coordinate the efforts of foreign intelligence,
L
. counterintelligence,
and dc;mestic intelligence on specific
projects; and
e
The public and Congregsional perception of Executive Office
control over intelligence activities.
Three options have been identified:
Expanded Use of the NSC Structure.

The NSC structure could be better used to integrate policies involving domestic and foreign
.

intelligence.

NSC Committees could be augmented to include Justice and Treasury, Other departments could be brought in as the subject demands.

Either a new committee could be established, or the functions assigned to the NSC Intelligence Committee could be expanded.

Intelligence Adviser to the President.

One person located in the

Executive Office could be assigned responsibility for integrating
those interagency policies affecting foreign and domestic intelli-
.
gence activities.
A special adviser would have some authority
-
and high public visibility.
Ad hoc committees could work with the
intelligence adviser and his staff on designated problems; over-
-
sight responsibility could also be assumed.
Conflicts with the
NSC could occur, however, because the special adviser's
responsibilities would overlap those of the NSC.
Improved DCI/Agency Coordination.

Foreign and domestic poiicy considerations involving foreign intelligence efforts could be handled through existing informal mechanisms directly between the DCI and involved agency heads without White House participation.

This would require re-examination of the current role of the DCI.

## D. The 40 Committee

The NSC's 40 Committee provides policy approval for covert actions. The group is chaired by the Assistant to the President for National Se.curity Affairs and includes the DCI, State, Defense and the Joint Chiefs of Staff.

The Attorney General is formally a member but has not been an active participant in recent years.

While formal review procedures have been established, there is a
.

generai perception by Congress and independent commissions that there has been an inadequai;e substantive review of proposed actions.

Iz'np_rovedb review might be a.ch.ieved by:

e
Reinstituting formal committee meetings on all significant
covert and sensitive requests{
e
Redesignating the Attorney General as a committee member
with additional representation from other departments as the
subjeect demands (with attention paid to eos sibie conflict of
roles for the Attorney General if he is designated as the
President's intelligence inspector); and
[
v Adding staff to provide non-departmental substantive analytic
input on the need,
risk and potential benefits of each operation.

## V. Intelligence Community Organization Options

In the context of addressing the probiems discussed in Section III, the study group examined a wide va.riet.;y of Community leadership alterna-
:
"tives, ranging from total centralization of all intelligence resources and
.programs to eliminafion qf any central intelligence coordinator.
Four organizational options were analyzed in depth.

These options are intended to present a range of choices and need not be adopted in their entirety.

Key e_lex;nen{;s of these options are:

.
 Identification of the overall leader of the Intelligence Community and definition of his place within the hierarchy of the
Executive Branch and the Intelligence Community;
e
Specification of operational responsibilities;
e
Specification of analytic and production responsibilities;
.
Specification of resource responsibilities; and
e
 Definition of the jurisdictions and organizational inter-relationships
of the major components of the Intelligence Community,
-
All options would accommodate 'an intelligence leader who could either continue in his traditional role as afiviser to the NSC or himself become a
.member of the NSC.

Full NSC membership, by incr'easing the intelligence leader's stature, would strengthen his rolg within the Community, Conferral of Cabinet rank or statutory direct access to the President could serve the same purpose.

Retention of the adviser role has the advantage of keeping intelligence separated from policy and precludes over-identification of the Government's chief intelligence officer with specific policy choices.

Of the four options considered, legislation would be required to implefinent the first three.

The fourth could be accomplished through administrative action, Certain elements are common to all options, f'irst, all options would accommodate an Inspector General under the direction of t'he Communi.ty leader to ensure legality and propriety in the conduct of intelligence activities.

-
The more control the leader of the Cor_r_)munity had, the more authority and access his Inspector General would have.

.

Second,
all options envisage the head of the Intelligence Community
as Community spokesman in relations with Congress including the presenta-
"
tion of an overall intelligence budget and provision of substantive intelligence.
The extent to which the DCI would speak for the Community is greater under
options envisaging incre#s_ed centralization than in those stressing departmental roles.
Third, all options envisage continuance of departmental intelligence production to support departmental missions and to contribute to national
'intelligence production.

Finally, all options would relieve the DCI of responsibility for day-today management of CIA and for reviewing tactical intelligence resources.

- Required
Committee
8tructure
Legislation
Collection
Regponsibilities
Production
Respongibilities
DI controls sll CIAP,
CCP, NRP elements
DI produces all
national intelligence
present CIA
requirements
&
priorities
Retain existing or
similar committees;
OPTION #2A: Provides
DGI line control over
DGI produces national
estimates; tasks other
production elements
DFI esteblishes
requirements
&
priorities
Retain existing or
similar committees
OPTIOR #3A:
Trensfers CIA
production components
to departments
DF1 produces national
estimates; tasks other
production elements
DCI esteblishes
requirements
&
DCI wu.onuoom national
estimates; controls
CIA production
Leadership of
Communi
Operational
Responsibilities
Resource
Responsibilities
" DGI establishes
DGI controls CCP,
NRP, CIAP resources
Intelligence {DGI)
Intelligence (DFI)
DFI review only;
Chairman, NRP ExCcm
DFI no line authority
DCI delegates CIA line
DCI controls CIAP;
Chairman RRP
& SIGINT
ExComs
Reviews other resources
anthority to
a 2nd Deputy

## ' Centralized National Intelligence Program Rationale

This .option is based on the premise that the present intelligence system suffers from a division of responsibility and co.ntrol of resources and operations,. and that the best. approach to the problem is to centralize every element that reasonably can be centralized -- the CIA Program (CIAP), the Consolidated Cryptologic Program (CCP), and the National Reconnaissance Program (NRP), This option assumes that the gains in centralizing intelligence resources outweigh any disadvantages resulting from transferring some collection agencies from their primary customers.

This new agency woul& serve the Government's intelligence nev..eds much as the Justice Department serves its legal needs.

## Summary Description

The major and most costly national intelligence activities, CIAP, NRP and CCP, would be combined into a-single agency, headed by a Director of Intelligence.

Departmental analysis and production centers v;ould be retained, permitting the presentation of contrasting points of view in national intelligence production, While this option creates the maximum centralization of intelligence of all the options presented, it does not encompass all intelligence, Thus, departmental intelligence components would remain basically unchanged.

## Primary Changes And Effects " Leadership Of Community

The Director of Intelligence would have line authority over-national foreign i.ntelligence activities, including the CCP, NRP and CIAP, This provides the maximum leadership authority of all the options.

## Operational Responsibilities

. The Director of Intelligence would be fully responsible for opera.tional and other aspects of national intelligence, including the CIAP, the CCP and the NRP.,

## Resource Responsibilities

The new agency would include the budgets of the CCP, NRP and CIAP, which the Director of Intelligence would review and approve.

The Director
'of Intelligence would develop and submit the overall intelligence budget to the President and Congress.

i

## Collection Responsibilities

All collection elements included within the CIAP, the CCP and the NRP would be contained in the new agency.

Their organization would be
"
left to the Director of Intelligence.

## Production Responsibilities

Producfion of national intelligence (national current intelligence production, national estimates, maintenance of national intelligence data, and specialized intelligence research) would be centralized in the new agency, but other depa'rtmenfs would continue to produce departmental intelligence.

The nucleuevfor the production component would be centralized in the new agency but other departments would continue to produce departmental int elligence.

The nucleus for the production component would be the production elements of what is now the CIA, possibly Qith. augmentation from analytical elements of other departments,

## Committee Structure

The D_irectox; of Intelligence would have authority to settle disputes without recourse to the present committee structure; howe'ver, some form of committee structure would be required for interaction with other departments.

## Effect On Intelligence Product

Centralization of control over naticnal programs under the authority of one individual could result in improvements in overall product quality as collection, processing, and production resources are focused on highest priority problems, However, diversity and competition of views will be submerged to the extent that production is centralized at the expense of the depa rtments.

## Effect On Intelligence Management

Combining resource and management control in one agency could result in the most effective and efficient intelligence management system of all options by eliminating conflicts between responsibility and control.

A short-coming is the possibility of _decreased responsiveness to the
" requirements of Defense which currently generates the preponderance of intelligence requi.remen'ts.

At the outsej:, realignment and reorgani-
. zat;ion would be unsettling and would adversely affec'(_:_"v_efficiency.

The proposal to establish a new intelligence agency would encounter congressional and departmental opposition.

Finally, establishment of such an agency would focus attention on the intelligence budget and might increase demands for more open consideration of it.

## Option #2 Centralized Resource Control Rationale

'
)
'i'his option is based .on the premise that there is a need for a stronger
.Community leader, but that Defense, with its military requirements, must retain a strong voice in the management of certain intelligence assets now under its direct control.

This option strengthens the'.leade.r by giving him resource control over the national intelligence programs
-- the CIAP, NRP
and CCP -- while leaving Defense's operational control over the NRP and CCP
intact.

The leader is separated by statute from the CIA, reducing the conflict between his present roles as head of the Intelligence Community and head N
of the CIA,
. These changes are intended to strengthen the leader of the
-
Community and relieve him of vested interest in any one segment of the
:
Community.

.

SUMMARY DESCRIPTION
The DCI would be separated from CIA and renamed the Director Generalg for Intelligence (DGI).

He would have.no. operational responsibilifies but
"
would continue to be the President's chief intelligence adviser.

He would have

control over the national intelligence budget which inclfides the CIAP, CCP
and NRP, Defense would continue to manage the NRP and CCP; and a newly created Director of CIA would manage the CIAP.

The Director of CIA would report to the NSC through the DGI.

The Director of CIA would be responsible for day-to-day management of CIA and for management of national intelligence production, drawing on other agencies, as now.

A variant of this option discussed as Option #2A below would give
'the DGI direct management responsibility for infelligence analysis and production,
-

## Primary Changes And Effects Leadership Of Community

The DGI would be charged with overall policy direction for the Intelligence Community, without direct line ma.nagerfient over any.of its operational elements, His leadership authority would rely on resource control and independence from agency ties,

## Operational Responsibilities

The DGI would have a staff similar to the present DCI Staff, i.e., the N:;Ltional Intelligence Officers (fiIO's) and the Intelligence Community Staff (IC Staff), but no operational responsibilities, Operational control of the NRP, CCP and GDIP would 'be retained in Defense.

Operational control of the CIAP would be 'vested in a Director of CIA,

## Resource Responsibilities

The DGI would control budgets for the three major national intellig.ence vprograms.

Funds for these programs. would be appropriated to the DGI for reallocation to program managers.

The DGI would develop and submit the overall intelligence budget to the President and Congress.

## 'Collection Responsibilities -

The DGI would provide guidance concerning information requirements, review the adequacy of collection requirements developed by the Community,
'and make recommendations for necessary improvemente.

He would use his control over the bu_dgetary process to insure adherence to his policy guidance."

## Production Responsibilities

. The DGI would be directly responsible through his NiO Staff for the production of national ini:elligence estimates.

He v'vould be responsible forproviding guidance to the Intelligence Community on peeds and priorities and for arranging for the provision of intelligence support to the Presgident, the NSC and Congress.

## Committee Structure

The DGI would require USIB, IRAC, ExComs or similar bodies to insure effective coordination and integration of resource and operational matters.

This option presents an opportunity to streamline the committee structure,

## Effect On Intelligence Product

By giving the DGI basic authority over the resource allocation process,
~he' should be able to focus collection systems on high priority production requirements and to evaluate the performance of both 'collectors and producers in meeting consumer needs.

DGI control over resource decisions concerning the CCP and NRP might provide insufficient assurance of adequate resources to meet the needs of military customers.

Defense operational control over the CCP and NRP would be an offsetting factor.

'
|
Over the longer term, development of a resource review process in which fundamental trade-offs can be considered, and cos}tsv a.nd benefitscan be evaluated, could have a positive effect upon overall product quality.

## Effect On Intelligence Management

 The changes proposed would give one individual, the IDGI, effective authority to establish a comprehensive and integrated resource review process for the three major national intelligence programs, This arrangement allows the DGI to establish priorities and effect trade-offs in developing an optimal infelligence program.

va leaving operational control over the CCP in fiefense, and by.maintaining existing NRP arrangements, Defense would continue to exercise significant control over these programs in order to satisfy essential military requirements.,
-
A potential problem with such an arrangement, most particularly in the case of the CCP, is whether a program manager could efficiently carry out his responsibilities while reporting to Defense on operational matters and to the DGI on resource matters, This could also create problems in ensuring that Defense planning was adequately related to resource decisions made by an independent DGI, However, analogous procedures, including the NRP ExCom, exist elsewhere in government,

## Option #2A.

.Tl'n's option is identical in all respects vto Option #2 except that, under this variant, in order to concentrate his efforts on improving the vna.tional intelligence product, the DGI would retain fullvresponsibility
'for line management bf present C1A production components,
" The principal advantage of this variant is that it would give the DGI
line ccmtrd over produetion resources to carry out the substantive responsibilities given to him under the option.

Alse, it would disassociate present CiA production elements from operational ;:or::;ponents of CIA,
'i'he principal disadvantage of this variant is that it gives the DGI line management resfonsibility for a sizeable
: : :: : : production program, thereby reducing his ability to carry out an i:m?artial resource management role as established under the basic option.

## Option #3 -Departmental Emph.Asis Rationale

This option ie based on the concept that the necessary independence
'of the DCI within the Intelligence Community is co:hpromised by .his ties to the CIA, and that the responsibilities of the Deparfinent' of Defense require a major voice. for the Secretary of Defense in the developn;enf and management of intelligence assets.

This option attempts to increese the DCI's stature as an independent leader of the Community by divesting him .of his management responsibilities over the CIA, while retaining his role in major resource decisions.

Resource control would reside in the departments and agencies.

## Summary Description

'Under this option, the present DCI would be renamed the Director, Foreign Intelligence (DFI); and the DFI would be organizationally separated from the CIA.

The DFI would take the NIO structure and IC Staff from the DCI organization.

The CIA would be rechartered under a Director of CIA
'reporting to the NSC through the DFI.

Most present CIA SIGINT functions would be consolidated in the CCP in Defense.

The DFI would have the primary responsibility of providing substantive intelligence support to the President and the NSC.

The DFI would have a role in Communifi resource decisions concerning major national intelligence systems through his authority to establish requirements and priorities and through his chairmanship of the IRAC and the NRP, The DFI would provide independent assessments regarding national intelligence on both substantive a.nd' resource matters, and he would task elements. of the Community
;o aid him.

'
Under a vfiria.nt, Option #3A discussed below, CIlA prod\iction elemt.ants would.,lbe- transferred to other departments; and tl;e DF1 would'
be cast in the role of "coordinator'' of departmental'intelligence.

## Primary Changes Afid Effects  Leadership Of Community

The DFI would be charged with overall p?)licy direction for the
.

Int'elligence Community, without direct line management or resource control over any of its operational elements.

' His authority would be vested in him through appointment by the President as an independent leader.

## Operational Respon Sibilities

The DFI would have a staff similar to the present DCI Staff, i.e., NIO's and the IC Staff, but no operational responsibilities, Control of the NRP, CCP and eeneral Defense Intelligence Programs would be continued
@der the Secretary of Defense.

ExCom arrangements for the NRP would remain es.sentially uncha.nge_d;
NSA would remain un&er Defense (the Secretary of Defense is the Government's executive agent for SIGINT) with SIGINT activities now conducted by CIA, except those in direct support of agent operations, included in the CCP.

Operational control of the CIAP
would be vested in a Di;:ecter of CIA.

## Reeource Resgonsibilifigs :

A
Deveiopment of program budgets woul;i. remain asa departmental or agency responsibility, The DFI, in an advisory role, would provide the President with an independent review of the entire i.nt'ellige-nce budget as at present, Funds for the CIAP, CCP and NRP would be'apprbpriated to operating departznet'lts and agencies for reallocation to program managers.

## C;:Llection Responsibilities

The DFI would establish requirements and priorities and provide i'econimgndations regarding the national intelligence program, but would lack resource control, The Director of CIA would supervise all clandestine HUMINT collection activities, except those organic to combat units or in direct support of military activities.

Defense would control all SIGINT
collection activities except those in close support of CIA agent of;eration's.

## Production Responsibilities |

The DFI would have no production organization, but would be responsible for providine guidance to the Intelligence Commty on intelligence needs emd priorities, arranging for intelligence support to the President, the NSC
" and Congress, and for reviewing and evaluating the resulting national intelligence products.

The DFI, tfiro_ugh his NIO's, would coordinate and arrange with departmental elements for the production of National Intelligence Estimates.

The DFI would coordinate the integration of the intelligence production activities.

## Comimittee Structure

The present .committee structure, or some similar structure, with the, DFI chairing appropriate committees, would be ngeded.

## Effects On Intelligence Product .

Emphasizing departmental responsibility for production could lead to improved responsiveness to departmental heads.

An inherent danger could be the dimunition of an independent capability to produce and critique intelligence asses_gments.

## Effect On Intelligence Management

This approach effectively rem.oves the pr'eeent conflicts between the DCI's roles as. Com:pu.nity leader and as head of CIA, but. it lea;res h:u:n with neither budget nor operational a;xthority to shape the programs of the Intelligence Qom_muhity.

However, tin' ough presentation of Aannual budget recommendations to the President and his chairmanship of USIB, the IRAC.

and ExCom or similar committees, the DF'I would still have a role in Community resource decisions concerning major national intelligence systems.

## . Option #3A

This option is identical in all respects to Option #3 except that, under this variant, present CIA production responsibilities and resources for
'
intelligence analysis would be transferred to the relevant departments.

The underlying assumption is that policy-makers would be better served by -departmental producers than by a central agency.

The principal advantage of this option is that it would place primary stress on the value of strong participation in the production process by the relevant departments, thereby bgtter linking prodicers and consumers of intelligence, The principal disadvantage is th'at it would eliminate an.independent analytical entity separate' from policy-makers and thus independent of their operational or policy biases.

There is also a question as to whether a DFI with only production coordination responsibilities could usefully serve as the senior intelligence adviser.

This coordinator role was contemplated for the DCI with passage of the 1947 Act, but early Agency experience strongly suggests that the coofdinator can only function effectively if he has direct access to a production capability which givees him an indeplendent basis for judgment.

## Option #4 Modi_Lf'Ied Current Arrangements Rationale

Each of the three prior options .would require basic changes in the National Security Act of_ 1947.

It is uncertain that such ch?.pges can be accomplished without a major controversy within the Executive Branch and wit}mu_t major legislative changes.

A series of proposals which can largely be accomplished within existing legislation, or with only minor changes in existing statutes, ma& have appeal.

The three options discussed above, and the variants to them, all solve certain' perceived problems but may create others.

Fi'nally, it can be argued fhat Congressional legislative proposals are most likely tofocus on the question of control of past abuses and only secondarily on major, largely \inrela.ted, management and organizational changes. ~Much of what may be needed to reduce the potential for future abuses can be accomplished without considering major organizational change.

## Summary Description

Changes addressed in this option invfilve the esta.blish:n.:nent of a second full Deputy for the DCI.

This would allow the use of cne Deputy for line n.la.nagement of the CIA and a second Deputy to carry out the presen.t Intelligence Community resp.onsibilities assigned under the President's November 1971 letter, Changes could also be made to the existing committee structures regarding resources and to delegations of responsibility for production without changing the basic organization of the Community.

## Primary Changes And Effects . : Leadership' Of The Clom.Munity


Present arrangements Ifor policy direction of the NRP, including the Executive eom;mittee (ExCom) chaired by the DCI' with Defense participation, have. helped assure that these programs meet the neede of all major producers.

The CCP and the CIA collection program, however, serve national as well as departmental interests.

With increased dependence on technical collection, a similar ExCom arrangement could be established for the CCP to ensure.

that views of other producers are taken fully into account in tasking and processing.

Conseideration could also be given to an ExCom review of CIA
collection programs, Since principals will remain. essentially the same for consideration of NRP and CCP matters, consideration might also be given to co_ns&ida.ting the two review functions within one ExCom, perhaps with an expanded membership to reflect consumer, as well as pfoducer interests.

## Operational Responsibilities

The DCI would continue to be legally responsible for the operation of CIA.

However, a second Deputy with responsibility for CIA management would absorb substantial responsibilities in this area.

## Resource Responsibilities

No basic change from present practice would occur, except that establishment of an ExCom chaired by the DCI and charged with the respon-
- sibility of fiolicyy overview and resource review of the CCP and CIA SIGINT
activities could enhance the DCI's ability to influence the overall direction of these major programs.

## Collection Responsibilities

No change would occur,

## Production Responsibilities

No change would occur.

## Committee Structure

Adjustments in the responsibilities of committees might be necessary in recognition of an enlarged ExCom.

Effect on Intelligence Product This option would largely continue present arrangements, The DCI woulfs retain unimpaired his Community-wide responsibility for production of nationag estimates, current intelligence, and crisis warning, and for evaluating the Community's performance.

Existing independent and competing production capabilities in Defense, CIA, State and Treasury could be retained or aug-
.mented. "Structural changes at the leadership level in CIA should free the DCI to devote more of his attention to production issues.

## Effect On Intelligence Ma.Nagement -

As discussed under the summary description above, this option would clarify management arrangements within CIA and modefately enhance the

- DCI's abilify to carry out his Community management
and resource review
responsibilities. This option would not, however, give the DCI new basic:
authority to deal with these responsibilities.

## Covert Action Location

One last organiiati6m1 issue cuts across all four options:
the placement of a covert action capability.

Covert action Wag originally pl'ac'ed within the 'CIA to accompany its clandestine collection capabilities.

'i'ranafer to the Sfate Department would endanger the primary activities of this overt service and be contrary to international diplomatic p'ractices.

Transfer to the Defense Ijepartnient would raise public appfehensioz; over accountability given the size and scope of. the Deparfinefit's activities.

A
number of observers have, howevgr, strongly prorImted placing the covert action capability in an entirely sepa;ra.te agency.directly under the control of the NSC, They have a.rgued:.

e
If the covert action capability were isolated in a small agency,
. oversight would be easier; fewer resources and persomnel would
need to be kept under close supervision,
.
'The independent analytic capabilities of the CIA are biased becauee
covert actions make it an operational agency.
Covert actions
create a departmental interest in the CIA which is contrary to its
basic natjonal functions.
e
The CIA might be better able to attract analysts and scientists
if it shed its "dirty-tricks" image which is closely connected to
its covert action capability.
On the other hand, a number of strong arguments exist for retaining the covert action capability i;l the CIA:

e
 Separation, rather than improving possibifities for effective
eversight, would cree.te greater overs_ighteroblems by isolating
this activity from conflicting agency deman.ds and from agency
supervision.
.
@
During the brief period in the early 1950's when 'cla:'l.xdestine
collection and covert actions were in separate offices,
the two
offices were in conflict for rgsources and a&ention, inevitable
redundancy existed, and units worked at cross-purposes.
That
experience demonstrated the close connection in terms of
contacts, methods, goals and suppc;rt that is desirable between
the two activities. For exampie,
the covert action agent is
often also an intelligence source,
and clandestine tradecraft
required to run a covert action agent is essentially the same
-as that for an intelligence agent,
.
The need for cover,
already a difficult problem, would be
further aggravated by the requirement to increase the number
of officials requiring cover status.
e
 Merely shifting around within the Government of the covert
action capability will neither assuage public fears nor reduce
attack's on the CIA.
Outsiders will never believe that ''dirty tricks"
have been taken out,of the CIA, and indeed, their perceptions may be somewhat accurate as the new organization would inevitably have to work closely with CIA clandestine activities.

## V1, Management Improvements

Although'organiza.tional reforms can help solve many of the identified problems of the Intelligence Community, sustained management attention will filso' be reqfiired to resolve these problems.

The study group identified some possibilities for management improvements in areas of particular significance which should contribute both to a prevention of abuses and to a better intelligence product.

## A. Budgetary And Financial Controls

Financial and budgetary procedures provide an effective discipline in government operations for the President, the Congress and the agencies..

The lack.of public perception of the budget a(nd finanecial controls over intelligence activities contributes to pubfic and Congressional opinion that no system of checks and balances exists on the intelligence agencies within the Executive Branch or, for that matter, within the Congress.

In the present situation, while fiscal information on the intelligence agencies is contained in the President's budget, it is not openly identified.

Centralized control over the financial execution of intelligence budgets is not exercised, Two options by which the budget process could be strengthened are:

e
DProvision by.the President to Congress of a separate classified
budget appendix that contained information similar to that provided
for all other government activities; it would be prepared at the
appropriate security level and would require special handling
within the Congress.

This opfion.has the advantage of a formal Ezecutive Branch initiative (within-'acceptable security bounds) to the Congressional re;;uest for .more information.

The primary arguments against this proposal involve the precedent setting nature of a formal budget submission for intelligence and the inevitable congressional demand for more
-detailed information.

e
Implementation of controls by OMB-on the apportionment,
'reprogrmmg, transfer and outlay of intelligence funde, similar
to those for other agencies.
Initiation of these controls would
jincrease OMB's involvement in the execution phase of the
.
intelligence budget which is currently limited to the CIA reserves.
Congreseional reports have already identified the need for imposition of reprogramming controls on intelligence programg.
~
Arguing against this proposal is the appropriateness of relying
on budget control for effect%ive tfirection of an organization
rather than estafilishing objectives and evaluating achievements
against them.
Also, irhposition of reprogramming controls could
"adversely limit the fle:d.bility to respond to crisis situations.
These proposals for providing budgetary information to the Congress and enhancing the visibility of Presidential budgetary control may not be particularly effective in identifsring_ abuses, but they would enhance public end congressional confidence that the fntelligence Community is eubj ect to the same set of checks ahd balances as all other agencies,

## B. Compartmentation

Present arrangements for compartmen';i:.lgv ensifive information ima.ve impeded the flow of information to consumers. The NSC'should assure itself that current Community studies of decompartmentation be _inteneified with an eye to improving consumer access to the intelligence product.

## C. Consumer Interaction With The Intelligence Community

A number of improvements are required in the interactions of policy officials with the Intelligence Community:

e
The NSC should undertake a more activeprogram to improve
consumer in'cera.ctio'ns with the Intelligence Community.
Surveys
should be undertakgn to ide.ntify the strengths and deficiencies that
consumers find in intelligence support (from the NIE's,
for
|
example) and to determine what actions the.poli'.:y consumers
and intelligence producers should take to ensure more useful
intelligenc.e contributions to the decision-makers,
e
The NSC should specifically address problems identified in this
report including the need for:
guidance and feedback fi-om decisionmakers to the Intelligence Community; a better intelligence
appreciation of those policy and negotiating issues which might
benefit from intelligence inputs; and arrangements within
the economic policy-making organizations required to promote a more effective interchange with the Intelligence Community.

The NSC Intelligence Committee should also address the special problem of the need for better dissemination of sensitive memoranda, reports and telegraphic traffic to officials with a need fo know,

## D. Performance Evaluation System

Measures are needed, particularly in certain high cost areas, which will permit a comparison of the value of certain intelligence contributions with their anticipated cost.

The purpose of such measures is to ensure that intelligence collection and production are focused in a way which will achieve more effective expenditures in terms of cbnsm;xer needs, These measures would be an important criterion in evaluating intelligence performan The DCI should intensify efforts, including consultations with consumers, to strengthen arrangements for evaluating Community performance.

## E. Cover And Clandestine Collection

The NSC could be tasked to conduct an interagency study addressing both the effectiveness of present cover arrangements and the adequacy of coordination of clandestine collection.

wexfoxd TUI TBUOTGE
PIZTTBIJUI)
- T# uorid
syseydm
- 4 uoysd
)
T0a3uo) adIN0S3
PIZTTBIJUI)
-
z# uopid
SHOTIIJO JIuSHZIvy
ALINNNNOD HONIDITTALY
)
.. I0Q aspufy -
J93U8) UuoT3onpod
@3esasdag
gqusawafuvaIy JuUaIIMm
- f# uotyd

{A}
Closed by Executive Order 12356'governing access to national security information.

(B}
Closed by statute or by the agency which originated the document.

{C)
Closed in accordance with restrictions contained in the donor's deed of gift.

## Memorandum For The Secretary Of Defense

Subject:
Organization and Management of the Foreign
-
-
Intelligence Community
(U)
:

##

-
1.
(S)
The Joint Chiefs
of -Staff have reviewed
the report on .
"Organization and Management
of
the Foreign Intelligence Community"
and have considered
the options
for reorganization
contained
in
the report.
1In selecting-a preferred optlon,
it
was believed. that
any solution
to
the problems presented
in
the report must consider that:
'
a.
Intelligence support
to
US operating forces
should not
be degraded through organizational
or management changes.
.
b. Whlle
US operating forces may receive 1mportant intel-
.~
7.
-
ligence support from "national systems,"
they require
a
directly responsive,
organic intelligence capability in
_order to meet full intelligence needs.
:
c.'Impfoved oversight, within the executive branch, of certain intelligence activities is needed. -
d.

Multlple,
1ndependent, analytlcal capabllltles should be retained.

e.
Cost effectiveness
in peacetlme must not
be achleved
at the expense
of' responslveness
in wartime.
2.

(U)
The Joint Chiefs of Staff have no fundamental criticism of the collection, analysis, and production performance of the foreign intelligence community.

While improved production and performance must be primary goals in any intelligence restructuring, they are not in themselves sufficient justification for.-
reorganization.

.

Classified by Director, J-5
SUBJECT
TO GENERAL DECLASSIFICATION
SCHEDULE OF .EXECUTIVE
ORDER
11652
T CAUTOMATICALLY
DO']NGPJ\D"'D AT
TWO
.

.

YEAR INTERVALS
.

.

DECLASSIPIED
ON DECEMBER
31,
1983
i A0
aniing pete
\,
)
e e
3.

(U)
Any reorganization will-entail turbulence and uncertainties;
thus, the full implications of change must be clearly understood prior to implementation.

The case for organizational change
.

rests primarily on the need for an improved ability ta prevent
" the improper use of intelligence assets and, -secondarily, on the need for fiscal savings by the elimination of unnecessary duplication.

However, in determining the necessary realignment, it should be emphasized that military reconnaissance and intelligence forces are structured to support combat capability and cannot be judged solely on their contribution to the peacetime national intelligence-effort.

In this regard, it is essential that armed forces possess those intelligence resources which support their operational forces.

4,
(U)
The Joint Chiefs of Staff concur.

in the need for improved management control in the areas identified in Section VI;
however, that section has insufficient data for determining the specific option desired.

:
S5,
(S).In reviewing the proposed alternatives, the Joint Chiefs of Staff are concerned over the emphasis on resource control as the primary means for management control.

While the threat of withholding funds is an effective means of conveying general lirection, it is not a conceptually sound or efficient means of directing an organization on a daily basis.

It creates an adversary relationship between layers of leadership rather than the more desirable, effective attitude of cooperation that stems from a management by cbjective and evaluation process.

6.

(U)
The Joint Chiefs of Staff consider that Options
1
and
2
and variants
2A and
3A could adversely impact on the intelligence support to the Armed Forces.

At the same time, they consider that Option
4
fails to address adequately the problems noted in the report.

Detailed discussion of these options is contained in Appendix B.

7.

(U)
In view of the considerations cited above, the Joint Chiefs of staff have concluded that Option
3, with modifications as
. specified in Appendix A, is the most viable option presented in the study.

It creates proper safeguards to preclude abuses and provides the basis for improving the management of national intelligence assets, while providing for retention within the Department of Defense of those intelligence assets which are essential for military planning and operations.

1
3 (S)
Wlth regard to covert actions, the Joint Chiefs of Staff favor retention of that responsibility in the restructured CIA--based on its close affinity to clandestine collection
. and rcsponqlbilltleq for politicnl intelliqence.

9,
(U)
On
14
December
1975, Mr.

Donald Ogilvie, Associate Director
-of OMB and Chairman of 'the Senior Steering Group directing the study, forwarded a letter requestlng agency positions on an attached matrix.

Appendix C contains responses to the options contained in that matrix.

10.

(U)
In conclusion, given the ramifications on the security
.

of the United States,--the Joint Chiefs of Staff believe the reorganization of the intelligence communlty should be addressed by the National Security Council prior to decision.

1l.

(U)
The Joint Chiefs of Staff request that you take into account, in your response, the views of the Joint Chiefs of Staff and insure that their views are- approprlately forwarded to
:
the President.

'For the Joint Chiefs of Staff:
Joint Chiefs of Staff Attachments

## Option 3 O Study Provisions From Option 3

 Director,
Foreign Intelligence

= Principal intelligence adviser
to President and NSC'
"-
- Oi'ganlzntionany separated
from CIX
~ Relieved
of responsibility
for reviewing tactical
intelligence

- Chairman of USIB, IRAC, and NRP EXCOM
- Provide assessments
on national intelligence both substantive
and resource matters
- NIO and intelligence community staffs wove with DFI
- No operational or production responsibilities
-
,
- Review entire intelligence community budget
- Provir!e executive oversight through enhanced JInspector

General responsibilities
- Respon;flble for NIEs
T,
.
- Integrate intelligence production activities

- CiA Qnuld
be rechartered under
a Director
(D/CIA)
- woule report
to NSC through DFI
- Most CIA SIGIN'f functions consolidated
in CCP
in DOD
- Each department engage
in intelligence production consistent
with its mission.
Additional JCS proposals
for Option
#3
.
- Designate
a senior military GEEicer
as Deputy Director
Foreign Intelligence.
-
- DFI appointed
by President
and confirmed by Senate
for
fixed term of office.
N
- Defense responsible
for development and aperation
of
all
scientific and technical intelligence collection system.

- NIOs perform as
DFI adviser/liaison
to the .USIB
in
the
preparation of national estimates and other natioqel
level
w
estimates requested
by NSC and other Aqencies.
Classified
by
bDirector,
J-5
SUBJECT TO GENERAL DECLASSIFICATICN
SCHEDULE OF EXECUTIVE ORDLR
11652
AUTOMATICALLY DOWNGRADED AT TWO
YEAR INTERVALS
o
DECLASSIFIED
ON DECEMBER
31,. 1983
1
.
Appendix
A
.
)

## Jcs )\N.A'Lysis Of The Proposed Study Group Options Option 1L: Centralized Nationai Intelligence Program S

This alternaci;re is considered the least practical solution.

T{xe creetion of a Secretary of Intelligence is an expensive over-
.

reaction to the community's alleg.ed improper activities-and would tend to isolate the intelligence producers and consumers.

Furthermore, it would inappropriately place intelligence at the same level as the senior national policy decision makers., Such an arrangement {b'filld complica'te the national intelligence effort, the national departmental interface, and provision of responsive national inteiljgence support to the operating forces.

. Additionally, such centxaiiza.tion of authority'c_ould heighten rather than diminish congressional concera., Creation of a new department

. with its attendant expenditures would likely result in strong coflgr'essio;ia]_
and public opposition.

-


OPTION
2:
Centralized
Resource Control
This option is undesirable from the JCS viewpoint because it is contrary to efficient and effective management.

Separat'ing.

resource ffom line control causes conflict and leadership ambiguity: which wou_ld seriously detract from US national intelligence effort.

It is inappropriate to rely solely on b;xdget control for effective directicon of intelligence activities.

1t is a check, but daily routine guidance and dizection should.

stem from'establis.hing goals and evaluating the achievement of
"same 'and not from the inefficient approach of pericdically loosening or tightening thz; purse strings.

## Option 3A: Deletion Of Cia Production

This variation of Option
3 should be withdrawn from further consideration.

The Joint Chiefs of Scaff'support the retention of CIA as a separate organization disassociated with the present o
2

2
s
|3
|
DCI responsibilities.

'
Classifiod by.. RiTegtor, J=5 ...

SUBJECT TO GENERAL DLCLAS.;!HCATlOH
SCHEDULE OF FXCUTIVE ORDER 11652
AUTOIATIG
T
 COWNGRADED AT TWO
YESR INTERVILS
1983
.

ECLAS
 14
JECEMPE]
SECRET, s
?

R
'
3esmiA4
2
.

Appendix B

## Opt16N 4: Modified Status Quo

rhis option is not supported because the preposal does not

respond to ccr;gtessional desire for a strengthened executive cognizance of the intelligence community.

It is also deficient in that it continues the DCI
as pirector, CIA, with line authority
[
over one of the elements of the foreign intelligence community.

## Comments On Letter From The Associate 3. Director Of Omb And The Chairman Of The '3 Senior Steering Group -

1.
(S)
on 14 December 1975, Mr. Donald Ogilvie, Associate
4
Directox, OMB,
and Chairman of the Senior Steering Group that
3
directed the study on
the Organization and Management of
the
s
-!'oxeign Intelligence Community,
requested- agency recommendations
A
- on
a number of specific issues addressed in that study.
Detailed
8
answers
to Mr. Ogilvie's letter are contained below.
2
2,
(S)
The Joint Chiefs of Staff recommend that:
'
10
a.
An executive order providing
for guidalines
for intelli-
23
gence agencies be approved and promulgated.
12
13
-
.b.
A community-wide Inspector General under the DFI
(as
-
R
defined in Option
#3)
be established.
4
c. The Attorney General be assigned
a staff within the
15
Depe:tment of Justice
to advise
the President on the legai
'
1s
aspects of intellieence activities.
-
-
co
d.
The PFIAB chartar be expanded
to give
it an oversight
18
Vfunction but members net be approved by Congress
as some have
L
l
- recently suggested.
n
b
e.
Intelligence policy coordination be strengthened by
an
a
expanded use
of
the NSC structure.
Cx
f.
Control of
40 Committee activities could be improved by
2
reinstituting
f.orrial committee meetings
on all.significant
'
u
.
25
covert and sensitive recommendations
and periodic review of
| Classified    | by         | Director,    | J-5              |
|---------------|------------|--------------|------------------|
| SUBJECT       | TO         | GENERAL      | DECLASSIFICATION |
| '             | SCHEDULE   | OF           | EXECUTIVE        |
| AUTOMATICALLY | DOWHGRADED | AT           | TWO              |
| YEAR          |            |              |                  |
| INTERVALS     |            |              |                  |
| DECLASSIFIED  | ON         | DECEMBER     | 31,              |

ongolng activities as recommen'det_:l by the Murphy Commission.

'Questions on membership of the
40 Committee and staff raquirements are more properly addressed by the President.

g. Option
#3,
as modified by comments
in the basic memorandum,
-
'
be considered'the only viable option deveioped.
Specific
reasons for rejection
of Options
1,
2,
2A,
3A,
and
4
are
alsc presented.
h. Covert action remain within the CIA under any circum-
stances, including any of the four options developed in the gtudy.

i.

No decision be made on the two options presented to change the budget process since the Intelligence Organization Group

'did not consider all possible optioms.
-Furthezmre, neither
P
of the two options p:cpoeed
is considered sufficiently
EV
-
:
promising nor adequately developed to warrant serious consideration without detailed study in the context of
an effort
devoted to
a review of
the financial and budgetary aspects
B
BEEY
o
of management of the foreiyn intelligence community.
This
study addressed the subject
in only an indirect and incompleee
manner.
However,
the provision of
a classified intelligence
budget has
some merit.
The Honorable James T.

Lynn Director, Office of Management and Budget
01d Executive Office Building
"
Washington, D.C.

20503
Dear Jim:
The following are my comments on the report prepared by Don Ogilvie and his colleagues.

Each of us will have
'his own personal views and his-own problems with the paper.

In stating my.own, I
do not want to detract from the effort and expertise that went into it, especially
'against the deadlines imposed.

What follows, however, must necessarily emphasize the problems rather than the strengths.,
-
In responding to the outline that accompanied the report, I discuss the full range of topics covered by -
-the Study Group
(Attachment B).

Here I wish to concentrate on organization and management, the most difficult and ultimately the most important of the issues we face..

I believe the future structure for American intelligence should rest on the following principles:

-~The
DCI should have
full, .easy,
and regular
access
to
the President and National Security
Council,
but should
not
act
as
a partisan
political supporter
of the Administration.
Two way communication between the DCI
and
the President
is essential.
DECLASSIFIED
 .0. 12958 Sec. 3.8
~He should
be able
to provide the President
With PORTIONS EXEMPTED
-
and the NSC
and,
to
the extent feasible,
-
EO. 129588&.1.5(;)3.4@)(:)
the Congress with assessments of foreign events based on analysis under his control k-
.


LG Lt ) G)09
and independent of the major government By_lit__NARA, Date 34&"-";
departments.

P
11 7 S

~~The system that supports
him should be
shaped to provide
the best possible intelligence;
resource allocations;, procedures,
and organization should be driven by the
substantive goals set by naticnal needs
for intelligence.
-~The DCI should have
an established relationship with the Secretaries of State and
Defense that enables them to work efficiently
together.
| The Department of Defense should be assured
_that the intelligence capabilities
it needs
in wartime will
be avilable.
-That portion of the Defense budget allotted
to national intelligence resources
should
be clearly identified and segregated from
the Defense budget proper.
.
-In assessing foreign events competition:
in analysis should
be encouraged.
In
collection,
duplication should
be aveided
except where
it greatly increases
the
chances
of acquiring vital intelligence.
~~The Intelligence Community should be
managed with due regard
for resource
constraints.
(This point
is put
last
for
a reason.
Too many studies
of intelligence
approach
it with
a total focus
on economy.
Economy
is necessary,
indeed
it
is
incumbent
on all intelligence managers
to make hard
choices
to that end,
but
it should not
be
'an end
in itself.
The primary purpose must
be
to produce good intelligence).
Effective management of an intelligence organization built on these principles will depend to a considerable extent on the way it structures the relationship between the DCI
and the Secretary of Defense.

My basic difficulty with the Study Grouvp's report is that it deals with a number of separate aspects of this problem, but does not pull them together so as to focus attention on a.matter of such fundamental importance.

In simplest
" terms, the DCI
is supposedly responsible for
"planning and reviewing all intelligence activities and the allo-~
cation.

of all intelligence resources.""
Of the total intelligence budget, however, the Secretary of Defense controls *"*-*--+and the DCI.-.+ O the other hand, the CIAP, NRP, and CCP make up the bulk of the national intelligence budget, yet they are egqual to less than
<ecesssvetof the Defense budget.

These two statistics mean that:

--Defense has
a preponderant'voice
in how
intelligence money
is spent.
-
-When faced with
a choice between primary
and secondary goals, warfighting capabilities
or intelligence capabilities,
Defense
will tend
to choose warfighting.
- ==Intelligence money
is
so small
a part of
' the total Defense picture that
it cannot
get the attention
I think
it deserves.
Together these facts mean thet, under present
)
arrangements, unless a DCI and a Secretary of Defense see things the same way, the former is not going to be able to do his job.

There are several other topics which must be addressed in any study of Intelligence Community
"management that seem to me not fully treated in this report.

a.
I have noted the importance
to the DCI
.
of
an independent. analytic capability.
This
is crucial
to
an understanding
of the DCI's role.
Without
it,
no matter what the DCI's paper independence,
he
is
the prisoner
of departmental
_analysis.
With
it,
he can challenge long-.
standing departmental positions
and stimulate
_new attacks
on stubborn problems.
b.
The paper gives insufficient emphasis
to the importance
of an authoritative
and informed
focus
in the Executive
for preparing the intelligence program and defending the budget before
congress.

.Congress is mbving aggressively toward assuming what are essentially management functicns
" over intelligence programs.

This trend can only be reversed if the congressional members of the oversight committees develop confidence in the Executive both with respect to the intelligence
-
program and the execution of its budget.

C.

The document does not discuss the importance of maintaining an independent and innovative capability for developing technology and applying this technology to technical collection programs.

this background, my reaction to the options Against developed by the Study Group papex is that they get ahead of the problem by being too specific on complicated issues.

The fact is we are not yet ready to ask the president to make a definitive choice on a future intelligence structure.

There is no
""one"
solution to the problems that face us, and every change in one
:
function has repercussions in others that may be impossible to foresee.

The Study Group's options will be extremely useful in illustrating for the pPresident the range of choice, but should not be used as a basis for decision.

In my view, we should use them to seek from the President a general indication of the direction in which he wants to move.

On that basis we can then set in motion detailed studies of the conseguences that will ensue from a given choice, and can present for him in some detail the choices he has in reaching that goal.

ptions themselves are derived My comments on the
0]
ated above.

by testing them against the principles st By that standard:
:

--Option
1, which centralizes control of
national systems under
a DCI,
cannot meet
Defense's legitimate requirements.
--Option
3 effectively destroys
the DCI's
present limited authority,
and thereby
makes
it impossible
for him to be
an
effective advocate
of independent intelligence positions
at the NSC level.
--Options
2 and
4 would appear compatible
*
with the principles
stated.
Option
2
in
its present form has serious workability
problems
but goes
as
far
as
I think we
can
go
in strengthening the DCI relative
to
Defense.
Option
4 does not have these
problems but,
as
it stands,
leaves
the
basic problems
of management and resource
allocation about where they are now.
The first question that the President must decide is whether major change in intelligence organization is a goal to. be sought this year.

Congress appears to be moving in this direction, but I doubt that the disruption of our effort that would result from major reorganization would be repaid by the results.

I would
- propose instead to take the initiative by moving to achieve better management of the Community in a way that will not regquire lengthy Congressional debate.

Option
4 provides a basis for such a move, but I
believe it is somewhat too weak for the purpose.

'For this reason I suggest a stronger modification.

This proposal, Attachment A, differs from Option
4 more in intent than in substance.

It is specifically aimed at reaching the kind of DCI-SechDef relationship that I believe essential, but without the traumatic change in bureaucratic equities required by Option
2.

(bn the other hand, it gives no additional muscle to the DCI).

It provides a central mechanism for managing the Community, and it makes a clearer distinction between resource issues, where the DCI
is at best first among egquals, and substantive issues, where he is and should be a great deal more.

I think it offers promise for real progress with a minimum of disruption.

.

While it is true, as the Study Group emphasizes, -
that Option
4
(or the attached modification)
could be carried out by administrative rather than legislative action, I believe that strong confirmatory legislation will eventually be required if the recommended changes are to endure.

The authorities and responsibilities

of our complex Intelligence Community should not be
left
to bureaucratic conflict and changes
in Administration.
~
Executive
action
could start
us
on
our way
to
the
changes
we think essential,
but the ambiguities.
of the existent
statutes must
be corrected
if there
is
to be any degree
of stability
in
the new organizational arrangements,
and
if the Congress
is
to stand behind them.
All of the above is predicated on a decision by the President to avoid major change this year.

If, however, the President feels that a major reorganization is required, then I believe we should look to some form of Option
2.

I believe it provides a tentative basis for planning a proposal, primarily because it seeks a solution to the central DCI-SecDef problem.

Should the President go that route I would recommend that he give the departments and agencies time to consider the detailed consequences of the Option
2 approach before finally committing himself to it.

Sincerely, Attachments:
Attachment A
Attachment B
tion
4, Modified = "Collective Mana 'ement""
o

## Rationale

This Option starts from the premise that stronger management of the Intelligence Community is highly des1rable, but that the balance of interests reflected in the present structure is a realistic one and should be maintained.

It presents a concept for achlev1ng a degree of collective management while preserving

)
present organizational relationships.
It requires
a
- minimum of leglslatlve change.
'

## Summary Description

:
The DCI would continue
to
be advisor
to the
President,
coordinator
of
the Community,
and Director
of CIA.
The present structure
of Committees
and Boards:
would
be consolidated into
two,
both chaired by the DCI:
an Executive Committee
of
the NSC
for Intelligence
at
the deputy secretary level,
responsible
for all Community
management and policy matters,
and
a National Intelligence
"Board
at the present USIB Principals
level,
respon51ble
for substantive production.
To enable the DCI to give
. more attentiom
to his Community respons;bllltles
he would
be provided with
a second deputy.

## Primary Changes And Effects _The Dci's Respodsibilities

The DCI would be the pPresident's chief intelligence advisor, and would remain pirector of CIA.

With a view to raising thee stature of the job, consideration should He would be be given to granting him Cabinet rank.

for the coordination of
- responsible, under the NSC, national intelligence policy and for the production of national intelligence.

A clear distinction would be made, however, between his Community and CIA roles.

" 7To this end, he would be provided with an additional Deputy, appointed by the President and confirmed by Congress.

The present Deputy would be specifically responsible for managing the Agency under the DCI;
the other Deputy would be responsible under the DCI for
'
coordination of the community.

The DCI would have an Agency office at Langley and a Community office downtown, where his Community Deputy would be located.

## Coordination Of National Intelligehce

The present struct would be rationalized, ure of boards and committees on the basic principle that policy and resource matters requiring a balancing of departmental interests would be considered collectively by the senior officers controlling the assets and resources concerned.

A separate forum would be provided for substantive intelligence issues, on the grounds
- that these are inappropriate for policy officers to adjudicate and that departmental interests are protected by the right of dissent.

## Policy And Resources

. For the first of these purposes the DCI would chair an NSC Executive Committee for Intelligence, taries of State and Defense as members.

. with Deputy Secre
The committee would have under control of its members all important intelligence assets, and would act as a board of directors for national intelligence.

EXCOM(I)

"
yould absorb
the functions
of NSCIC,
EXCOM
(NRO plus
for NSA),
IRAC,
and USIB
sevseevosssrevse
equivalent responsibilities
(except national intelligence production)
.

...... '------------.ooo.-o-o..---c...-on.-a--oo-.
. 'e
---_;-.----......---.-f..oo-..---.-..a.-...-.--..--o-'-.or-
R
R
R
R
N
AR
R
R
R
AN
R AR
@
8
6 8680000000800 0000080000000 00TRCCIRNTERERE
RS M
T
ssesesccsca

The DCI's Community Deputy would be his alternate in EXCOM(I)
but would not sexrve as Chairman in his absence.

The IC Staff would be the secretariat of EXCOM(I).

The DCI would carry out his existing responsi i NFIP
(less its tactical and departmental components)
with the assistance of the Committee.

EXCOM(I}
would have approval authority for the NFIP
(CIAP, NRP, CCP,
).

and its decisions would
.and some elements of the GDIP
ve administrative and resource be binding.

The DCI would ha authority only over CIA.

present administrative arrangements for the NRP and CCP would be preserved.

## Production Of National Intelligence

USIB would be reconstituted as a National Intelligence Board, limited by charter to substantive matters, and advisory to the DCI.

The NIO's would act as the DCI's staff for the NIB.

The Board would be chaired by the DCI, with his Agency Deputy as CIA member.

The latter would serve as Chairman in his absence.

## Coverfi Action

The DCI would be a me
" pot its Chairman, with his mber of the
40 Committee, but Agency Deputy as alternate.

t action would remain present arrangements.

clandestine cellection and cover assigned to CIA, without change in

## Oversight

_.Without administrative authority over the Community, it would be inappropriate for the DCI
to have an IG
:esponsibility except over CIA.

This Option assumes Executive oversight at the NSC or White House level.

## Congress

he Community spokesman The DCI would continue to be t
.to Congress.

## Nationel/Tactical Problems

EXCOM(I)})
would ha ndle matters relating to the actical and national intelligence.

responsibility for the tactical
 the military services.

~ relationship between
t
The DCI would have
no
intelligence budgets
o

## "Abuses" A, 1. Guidelines On Propriety

An Executive Order which promulgates a code of standards for the conduct of intelligence activities, as proposed, could serve constructive purposes, both internally and publicly.

## .2. Executive Branch Oversight

a.
I have already taken steps
to strengthen
the CIA Inspector-General,
in accordance with the
Rockefeller Commission recommendations.
As
to
a Community-wide
IG,
this should depend on the
- degree
of authority vested
in the DCI.
Under
Option
1
he could exercise this responsibility.
Under Option
2,
3,
and
4
he clearly could not.
b.

I believe that the current efforts of.

the Congress and the changed attitudes of the Executive will provide more than enough oversight over the Community.

The. problem of the future may be to protect the Community from being so
_over-overseen as to be hamstrung.

If, however,
" the President feels that an additional body is needed, then I would only urge that this be made a responsibility of the National Security Council Intelllgence Committee or of the PFIAB.

My preferred course is Option
4 Modified, which would change markedly the character of NSCIC.

Moreover, the missions of preventing abuses and improving product do not mix well.

As to PFIAB, I have the same problem of mixing imcompatible functions.

Despite the findings of the Rockefeller and Murphy Commissions, it is doubtful that a part-time Board, even with a greatly expanded permanent staff, could effectlvely
"engage this problem.

3.
IntEliigence policy coordination
.
S
Intelligence policy coordination should follow
'
the same lines as Executive oversight, in view of integrating domestic, the NSC's statutory duty of int i i relating to national
-
foreign, and military policies be made through the i This suggests_that whatever new coordination
+t be invo d if needed.

A
to the president for this jsable.

On the lyved in matters It is unfortunate that the Study Group's charter did not extend to counter=
"intelligence., because it is here that the problem of i i is thorniest.

intelligence po

4.
The
40 committee
I believe the
40 Commitfiee

and strengthened to provide policy approval for covert action.

B.
Tntelligence Community T.eadership
o
-
A
i ained in my basic e matters is cont i
4 appended thereto.

The t only other comment I have is that I strongly suppor up's.recommen dation that the DCI be relieved ibili r the tactical intelligence
1971, This is the DCI should pbe re budget assigne presidential Letter of an unworkable arrangement.

I believe g the integration sponsible for ensurin of tactical and national systems* but that the armed services should proposer defend, and execute their own pudgets for their own tactical intelligence requirements.

-
Including the responsibility to avoid duplication of national capabilities jn tactical systems.

## C. Covert Action

I believe it essential that responsibility for covert., action remain in CIA and remain an integral function of A
CIA's Clandestine Service.

For the reasons stated in the Study Group report, separation of clandestine collection and covert action is a recipe for operational disaster.

## D. Management Imgrovements 1. Budgetary And Fiscal Controls

a.
As
I have
stated on numerous occasions,
I
am
opposed
to the publication of
any U.S.
intelligence
.
budget figures.
I recognize,
however,
there
is need
. t0 improve the flow
of budget information to those
members
the Congress selects
to review the intelli-
~gence budget,
under appropriate security safeguards.
b.
I believe that additional controls by OMB,
particularly on reprogramming,
would
serve no purpose
whatever
in preventing
"szbuses"
or reassuring
.the
public.
Rather,
they would further reduce the ability
.
of US intelligence
to respond
to new challenges.
If
the purpose
is better intelligence,
we are already
~going
in
thee wrong direction.
In the past flexibility
in intelligence budget execution has been provided
primarily through informal understandings between
the Executive and key congressmen and senators.
Changes
in Congress have largely negated this
flexibility and no adequate alternatives have
.been developed.
It
is particularly important that
the intelligence budget not be subjected
to
all
Defense appropriation expenditure rules.
The FY-76
Appropriation Bill contains language moving
strongly
in that direction.
I believe what
is needed
is
legislaticn establishing rules unigquely tailored
to intelligence programs.

## 2.  Miscellaneous

a.

In regard to compartmentation, I would note that there is no barrier to provision of any intelli-
~gence to the senior consumer who really needs to know.

The problem is somewhat more complicated, and I have a study in progress on how to simplify and rationalize the present system.

.

b.
The Study's comments
on consumer interaction with the Intelligence Community and needed
improvements are valid.
c.
With respect
to
a Performance Evaluation
System,
we are continuing
to develop such
a
system,
with the advice and cocperation
of USIB
and IRAC,
through the mechanisms
of
the Key Intelligence
Question Evaluation Program.
d.
I would put rather more strongly the
need for
the NSC
to address
the problem of
cover
for CIA abroad.
Without adequate cover,'
pious affirmations
of
the value of clandestine
collection have
no meaning.
- e..
Lastly,
although
it does not fall within
the -strict definition
of the Study Group's respon-
_ sibility,
I would note yet again the necessity for
_better legislation
to protect intelligence
sources
and methodsq_
To:
James T.

Lynn
:
OMB
-
~ From:
Joseph J.

Sisce%(p Subject:
Preliminary Comments on Draft Report to the President on Organization and Management of the Foreign Intelligence Community We have reviewed the final draft of the Intelligence Organization Group's
(IOG)
study of possible future reor-
S
ganization of the Intelligence Community.

As your staff
(
)
knows, the State Department has commented in detall at
-
:
'
each stage in the study's development.

Secretary Kissinger has been abroad and will have had no opportunity to review the report and familiarize himself with the issues it poses prior to the noon deadline December
18.

Therefore, I
am sure you will understand why the Department's comments on each of the specific issues could only be tentative and preliminary at this stage.

We believe that this report does a good job in raising and presenting the fundamental issues that have to be faced in any consideration of the future organization of the US
Government's intelligence effort..

It will provide a good basis for inter-Departmental discussion.

However, because any decisions taken could set the shape of the Community for many years and would have potentially major foreign policy implications, we believe that time must now be allowed for discussion at an inter-
Departmental high level before the formulation of final Departmental views and specific recommendations for decision to the President.

We intend to suggest this approach to the Secretary.

It seems to us that handling of the report now that it has been completed could well be discussed in an appropriate Cabinet-level forum as soon as the report
" is turned over to it.

e
-
)

## Withdrawal Sheet (Presidential Libraries)

{A)
Closed by Executive Order 12356" governing access to national security infarmation,
{B)
Closed by statute or by the agency which originated the document.

(C)
Closed in accordance with restrictions contained in the donor's deed of gift.

Rccqnuncminlr'on' (3)
Y
a. The functions of the President's Foreign Intellizence Advisory Board should be expanded fo include oversight of the CIA.

This expanded oversight board should be composed of distinguished citizens with varying backgrounds and experience.

It should be headed by a full-time chairman and should have a full-
1iime sfafl appropriate fo its role. Its functions related to the CIA
should include:,

1. Assessing compliance, by the CIA with
its statutory
" authority.

2, Assessing the quality of foreign intelligence collection.
3.
Assessing the quality of foreign intelligence estimates.
4. Assessing
the qualily
of the organization
of the CIA.
5. Assessing the quality
of the management
of the CIA.
G. Making recommendations with respect to the above subjeets
1o the President and ihe Direcior of Central
Intelligence, and, where appropriate, the Aitoiney General.
b. The Board should have access to all information in the CIA.

It should be authorized to audit and inv c<t:~1.e CIA expenditures and activities on its own initjative.

*c. The Inspector General of tlie ClA should be 'mlhoxucd 1o report direcily to the Doard, after having notified the Director of Central Intelligence, in cases he deems appropriate.

## " Treasury Ccoents On Recomyendation (5)

I think that it is very important thet the President's Foreign Intelligence Adnsory Board be strengthened by mcreasmg
1ts responsibilities and assuring that its membership haes a 'broad base of public representation.

An Advisory Board consisting of citizens of great distinetion and leaders of demonstrated integrity can be very effective in assuring the President, the Congress, end the .public of the intggrity, as well as the quality, of our intelligence operations.

It is important. that all of the members of the Advisory Board have the personal trust and coni'iience of the President.

The Chairman of vthe Board should be a person of publicly demonstrated leadership-and integrlty vho should have i'ree and dlrect access to the H'es:.dent to
(h.scuss the Board's work.

A man who best exemplifies the oual:.'bles I
wotild like to see in a Chairman is George Shultz, 'who is elready a member of the Board.

T recommend that you appoint him Chairman of the Advisory Board.

The Board is already carrying out certain of the responsibilities noted in the Commission report
(e.g., 2ssessing the quality of foreign intelligence est:.mates)
"
In view of the additional responsi'bilities proposed, particularly with respect to FIAB's role in "assessing compliance by the CIA with statutory authority", we would suggest that itwould be appropriate for the Board to meet more frequently than it has in the past.

'More importantly, I believe thet it is essential thet the Board's
' oversight'responsibilifies be perceived by the public as an ongoing and regulsr review process.

This can best be accomplished, in my view, by going a step further than is proposed in the Cormission's recommendation.

Section
"C" i;:oposes that the Inspector General of the CIA
be suthorized to report directly to the FIAB after notifying
'the Director of Central Intelligence in cases he deems appropriete.

I suggest that

the reporting relation between the Inspector General and the Board be
"strengthened and formalized.

I also believe that an important working

relationship should be developed between the FIAB and the CIA General
Counsel, as the latter position is proposed to be restructured (see Recommendation 10).

The . General Counsel and Inspector General would v_each appear per-

-
sonally, outside
of the presence 'of other CIA officials, before the
FIAB to report on the sufficiency
of the agency's compliance efforts
any CIA activities that either official viewed as beyond the agency's
charter.
Of course,
the Board would conduct such other inquiries
as
it deemed appropriate to satisfy itself of the propriety and effective-
-
pess
of CIA operations.
If, after its review, the Poard had no reason to believe that the agehcy had violated its statutory authority, the Board would make public
& written finding to that effect.

Any shorteomings would be reported promptly to the President an4 the officials responsible for remedial action.

The Board should also establish procedures for effective follow-=up on the implementatiofi of its recommendations.

A procedu.re such as that outlined above would serve to assure the
_ public that adequate independent overs:.ght of CIA ectivities was tak:.ng
:
"place, while limiting the risk tHat the agency's mission would be campromised through release of information about sensitive operations.

" Having the two senior CIA 6fficials responsible for monitori_.ng fihe agenc&"s activities \report to the FIAB would provide a us.eful external The fact that CIA
check on Agency conduct that is not now availsble, operations would be subject to review by distinguished citizens who would be giving their public assu.rance' that
'l_:iley were satisi'ied'a.s to tllne propr.iety of CIA activities would provide a significan;tv degree of accountability that is now absent.

In addition to providing an assurence to the American people that
-
the CIA vas operating within the bounds of its authority, the Board would 'maintain its important role in reportingvto the President how effectively the CIA wfis carrying out its mission to render en assessment of the quality of the CIA's performance.

AAs well as working through the Inspector General and General Counsel at CIA, the Board will have the res;mrces of other CIA components available to it and will continue to draw on the views .of othe;' depart-
.

The Beard ments and agencies concerned with intelligence activities.

will also have the benefit of reports and recommendations mzde by the soint Congressional Comnittee.

Thus, it would be unnecessarily dupliperform investigatory functions, cative to build up & large staff to ould be nent staff or secretariat definitely wi altbough & small perme essential.

# - Offire Of The Attomep Genrral Washington, B. . 20530 December 18, 1975

## Memorandum For The President

Re:
Options
for the President on Organization and Management
.
of the Foreign Intelligence Community
.
T
am limiting my comments
to those portions
of the
options paper which are of principal concern
to the Justice
Department,
namely,
those relating
to executive branch
oversight
of intelligence operations
and means
of assuring
compliance with
law.
I may note,
however,
that
in deciding
upon organizational issues affecting
the intelligence
community,
you should bear
in mind that
the FBI, while
engaged primarily
in counterintelligence
and
law enforcement activities,
does conduct certain foreign intelligence
.
activities
{e.g.; wiretapping within
the United States)
. when specifically tasked to.do
so by other agencies.
I
believe that
all standardized wiretapping
and other forms
of electronic surveillance within the United States which.
regularly require factual determinations bearing upon
Jawfulness under the Fourth Amendment should continue to
be performed by the FBI,
under the immediate supervision
of &
the Attorney General,and that,as
new techniques
are
.
developed,
those that require similar factual determinations
should be treated
in the
same fashion.
.
I, of course, support the proposal for detailed guidelines governing intelligence-gathering activities here and abroad, and governing the conduct of covert operations.

I presume that the Attorney General would have a major part in the development of those guidelines.

He can only be assured, however, that they reach all aspects of activity which should be covered if the Department is proximately involved in the continuing oversight of the intelligence community, as discussed below.

For example, I think it important that the guidelines address each individual type of electronic surveillance now conducted and that they forbid the use of any new types until they are reviewed and included.

But there may be other issues and practices which should be looked. at.

S
. Concerning oversight arrangements:
On the basis of our experience and practice within the Department of Justice, I believe it would be desirable to establish B
_ both agency. inspector generals and a similar official
- for the entire community.

The latter would be responsible for reviewing practices of the agency-inspecting units, thereby assuring development of community-wide standards and practices without the necessity of creating a massive office.

The community-wide inspector -general would also-:
conduct specific. investigations when it is believed an.

agency unit is unable to act forcefully.

I think it important that inspector generals at every level be required to consult with the Attorney General whenever they have information concerning impropriety which may rise to the level of criminal violations and whenever they have reason to believe that the guidelines for the conduct of intelligence gathering and covert action programs have been violated.

L
As for oversight from outside the intelligence community:
I think the concept of a special counsel to the President concerning intelligence community abuses is radically unsound.

Both the Attorney General and the S
President would be placed in intolerable positions if action approved by the special counsel were subsequently found by the Attorney General to be in violation of law.

"
A government-wide inspector general raises
the
same problem
to
a certain degree,
and
a special Justice Department
staff unit
seems
to me unnecessary
and unrealistic.
If
the guidelines
are developed
as discussed above,
and
a
community inspector general
system which reports violations
to the Attorney General
is estahlished,
it seems
to me
no
more
is needed than the cross-check
of Attorney General
membership
on the National Security Council
and Justice
Department participation
in the appropriate NSC committees,
including the Forty Committee.
.

The Attorney Genqgal ought
to be
in
a position
#5 sothat ho-cas raise
am erewm& about practices which those
intimately
engaged;may not think
to raise
or which the
,/""IHESEEEBEXEEEg?givgight not raise.
Thus,
while there are
_Innegfirwg
obvious arguments
in favor
of protecting
the Attorney
Ld%d%H
General,
I
think
it
is
important
that
the Attorney General

.
be
a member
of
the relevant committees which will indicate
the policy decisions
and practices.
A fairly good example
would
be
the
use
of United States corporations
in
such
a
way
as
to raise problems with domestic
law where
it may be
important
to
find appropriate legal solutions.
This
was something which should have been alerted.
(Hindsight
i
is easy,
of course.)
But there are other circumstances
recounted
in
the Rockefeller Commission report.
DTS

## 5 1 Appendix 2 - Index

Six Summary Legal
Issue Papers
Draft Executive Order Imposing Restrictions
praft Restrictions Order Fact Sheet
Summary of Agency Comments on Restrictions Order
)

## Legal Issues

Attached are summaries of six legal issue papers relating to intelligence activities.

These papers do not represent the official views of the Justice Department nor of any other department.

Should you desire more authoritative views on any of these issues, opinions of the Attorney General on desired subjects will be obtained.

The topics covered in these papers include:

1.
Intelligence Activities
and Individual Rights
2.
Statutory Charters
for Intelligence Organizations
and Functions
Separation
of Powers
and Congressional Oversight
over Foreien Intelligence Functions
The Constitutional, Statutory and Legal Basis for Covert Action Secrecy and Protection of Intelligence Sources and Methods Legal Issues Related to Classified Intelligence Budgets

## Intelligence Activities An'].Da].Ndiv'Ij.Dual Rights -- Summary

'1..
Cc>'n"s;ituti'ona1 and legal eirbblems p{fesented by ix-fi:elligex;xce;
gafhering activities..
A.vEle'ctronic surveillance
-
Title IT of the Omnibus Crime
. .Contr.ol ax;d Safe Streets Act e_s,teblishee
a defailed_ prqcedure for
inter;:eption of wire and ora;.l coxm'.nunica-tions; within the_ Um".ted States,
ihcluding:a judicial warrant requiremefit applicable,
in general,
to
criminal investigations.
The Title containsv'a proviso,' .howeve'r,
stating
that it was not intended to limit the President's power in the national
secw;lrity, and foreign intelligence area.
;I'flue sur.veillance in this area
is go'verned only by constitutional restriction.
The present s'tate of the
law is as follows:
1. Under the Supreme Court's 1972 Keith-decision, domestic security
.-
surveillances not involving the actifvities of foreign powers and their agents;
require a judicial warrant.

.2. 'Under two court of appeals decisiqns -- Brown and Butenko, glectronic surveillance for foreign intelligence and counterintelligence
-
.

purposes is lawful under the Fourth Amendment, even.in the absence of
-

.
e_ warrant,
a.t least .;Whez._'e the target bf the -surveilla.h_ce is an agent
or collabo'rator 'of a foreign po&er.
'
" Under a Decemb'er 1974, P.:_r:esidential mefilorandum,
) the Attorney General is vested with authority to ap.p.rove warrantless Ielectr'onic
. 'surveillance within the United States for forei_gp inf:elligence and couni;erv blinte]l_igenc':e purposes.

Both the Department of Defe_n_se and the CIA_
conduct electronic $urveiliance for s@ch purboses abroad.

The surveillance oeerations of the NSA present somt; probleme @der the Brown and

Butenko decisions because it may be prat.:tica]ly impossible to limit intex:cepi:s to foreign intelligence inforxfiation.

Broadly sp;aking, all of these operations are probably iegal under current law, but the special NSA 'probleme are now, at the Pr;sident's direction,' the subject of study by the Justice Department., B. Surreptitious Entrx;
.Surrepl.:itious entries are pres@ably-
.

" subject to the 'same 4th amendment rules e.s e;.ectronic su;'veillahce, incl'uding ffie Brown-Butenko exception to the warrant requirement, The Attorney Geheral presently.has authority, under Presidential directive, to authorize surreptitious -.e'ntry_ to inst_a].l electronic sfir\%efllanfie for forei'gn intelligence .purposes; no Presidential directive authorizes surreptitious entry for any reason other than electronic surveillance,
. C. Mail Covers and Openings. . Mail covers -~ the recording of
.

. infermation on the outside of mail -- is not subject to Fourth Amendment restrictions.

It is, however, governed byvposta.l regulations that do not clearly 'specify!.v;hich agencies may request covers and for what purposes.

Mail opening is 'irnpermi-ssible under the Fourth Amendment without warrant, but again this is probably subject to the Brown/Butenko
.exception for foreign intelligence and cou.nferintelligence.

Statutes, however, prohibit mail op'enings without warrant, and violations are
" subject to criminal penalty.

D. Other investigative techniques, such as use of informers, secret agents, physical surveillance and interrogations do not violate the Fourth Amendment or any statute.

It is conceivable, however, that if they are not justified by legitimate governmental purposes they may, in some circumstances, violate First Amendment rights.

## 2. :Constitutional And Legal Problems Relating To Information Dissemination And Use.

Dissemination of information obtained through intelligence investigations for partisan or otherwise illegitimate purposes could violate First Amendment or due process rights.

The recenfly enacted Privacy Act precludes all disclosure of agency records without o consent except under certain limited circuinstances.

## S Etatutorz Charters For : Intelligence Organizations And Functions I. Identification Of Issues

Thenzlnajor organizations, responeibilities, a;.nd functions of the
-IQtellieence Co@upity
- with few exc'eptions - are not vderived from stetute; they z;re largely based on b.road 'execut:.ive authority of the President for the eondfict of foreign affairs and the command of the armed services, a.nd
- to some extenff
- on tl'_xe broad efithorities of the Direct.or of Central Intelh;..gence (DCI) and the Secretary of Defense to conduct th.e oper'at;lon of their agencies.

Oniy the correl,ation/eval.uation (or production) and coordination functions of the DCI/CIA are specifically recognized in statute;
there are no similar statutory provisions for the conduct of overhead reconnaissance, clandestine human source collection, courterintelligence, electronic intercept, or cove;t action.

In terms of organization, only
.CIA has a specific statutorvy basis.

There are no specific statutes establishing the National Security 'Agency (NSA), the Defense Intelligence':-.

Agency (DI;A), the National Reconnaissance Office .(NR.O), the FBI, the Service Cryptologic Agencies (SCAS), or ether Service military intelligence entities.

Some of the functional ana o:rga.niza.tional arrangements are recognized in NSC intelligence directives, other Presidential directives, DCI directives, DOD directives, or Service or JCS directi;les; some
- the
. NRO, for example
- rest.on ho formal directive, but on informal, written interagency agreements.

Almost all of these directives/memoranda
)
are, of course, elassifieci._
- vThe absence of sl:;:utory_or ad:n';nistrafiive documents regarding these
-
organizations, their functions', and the reseon-sibi-lities gives rise to three major legal/policy issues:

(1).Would specific or more expiicit public recognifion
- in statute,
executive order,
or other docfiment
- of the functions and
organizations impreve their acti\r.ities or 51: least make them.more.
respect'ablc.e in the public eye?
(2) Should this official and public recogni-tion include prohibitions
-
or limijtations on the activities of these ;arganizati;xis that would
provide
a greater degree of public confidence in their lawfulness?
(3)' Would a variety of critical funct_ions now performed by the
_ Intelligence Community (such as covert action,
electronic
intercept,
counterintelligence,
protection of sources and methods,
etc. ) be more defensible legally and politically, arouse less
flsuspicion,
and be more efi_'.ecbti. el.y performed if officially
and publicly recognized?
Since the more specific functions mentioned in #
3 above are addressed in separate papers
-in detail, no specific effort is made to cover them further in this paper.

## Ii. Factual Background And Legal Discussion A, _Present System Of Organizational And Functional Assignments And Limitations - .

The spegific statufes dea}ing w1th the organiza:tion an& the functions of the Intelligence Com.rn_unity.are the 'N'atic.mal Security Act of 1947
and the Central Intelligence Agency Act of 1949.

.These statutes serve as th'e.orga.nic acts by which the CIA was established and is cuz;rently administered.

Thgre are no sinxilarbstatutes fof any o.ther intelligent;e ag.ency,. and the baeis for their creation and current .operations is heavily dependent on the broad executive responsibility of (1) the President, forthe condu;:t of foreign affa;re, as head of the National Security Council,
5nd as Cornrnan'der in Chief; (2) the DCI, in his role .as.coordinator of intelligence activities; (3) the. Secretary
('J.f Defense as head of the Department
-_of Defensg'; and (4) the. seearate Military Departments, the Attorney General
, and other department or agencfy heads.

"
The major current organizafional/functional'assign.r_nents and their legal bases are as follows:

(1)
DCI/CIA
-
. Tfie stat'utes noted above providve specifically for the
'
.CIA functions of advising the NSC on intelligence m;.tters,
coordinating. intelligence activities,
and correlating end evaluafine
Iintelligence; in addition, these statutes provide that CIA will perform
"such' additional services of common concern! an& "such other functions
and duties related to inte].ligex.lce'.i.
as the NSC directs.
In a series
of'
.
specific elassitfied ifisuances {NSC iu-';elligegce directives);- the I'\ISC
i1as directed DCI/CIA to assume,
among other _dl;.ties,
certain
responsibilities for coordinating production,
estaf)lishing requirements,
conducting clandestine human source collection, interpreting photography
and accomplishing some overt collection both overseas and in the U.S.
 Certain other current
CIA functions
- for example,
satellite collection,
communication support operations,
and covert action -'are not
specificelly covered in this series of directives,
but have been
'estabfisiled and conducted by.CIA'.unde;' less formal Presidential/NSC
issuances and the broad authorities implicit in the 1947 and 1949 acts.
The 1947 sAta'tute also pr'o{ride's'specific lfifiit#tion ovvq'the intelligence
:
) figtivitiesv 'of CIA,
fiamel;vr that CIA has "no eelice,
subpoena,
law
enfdrcement,
or internal secui'ity functions, .
o
Sy
)
.
2) E_e
-
NSA'S cu-ri:_ent intell_igenc.e functions
- intercept and
pi'oc'ese'ing Sf for;'eign comxfihnicat;one
- were .assigned by Presidential
memor.andun"l in 1952 a.nd ieflected in an NSC intelligence directive
at that time.
Althqugh'th'e use of NSC inte_lligen.c;e .directi\}es (NSCIDS)
had ereviously been used prima:l;ily to assigfi functions to an existing
organization (CIA), this NSCID directed the Sec;'etary of Defense to
a;:t as executive agent of the goveinment 'for the condfiet of ;:h:ese
activities and to gstablish NSA as
a separate agency to eonduct these
functions.
.The existence of NSA and the legitimacy of ifs activities
have apparently been recognized by Congress in certain statutes relating
fo the protection of communication. intelligence information,
the
)
Co.nstitutional power of the President to conduct elecfronic; sur;reilla.nce
for foreign intelligence purposes,
and the need to provide special
- administrative powers to NSA relating to employment.
(35 fiafional Pro'gra';r.l's. (NRQ)
- The 'ffir.xcfion of this pj;'ogra'.m (satellite
'vreconnvai.s'eance) and the existence of the NRO" orgafiization are
officially cla'seified;. as a re;ult,
neither the'functi_on nor the
orgah_ization h;;a specific statutory basis.
The NRO was e'st'ablis.hed
as
e 'se'pa:rate Defense agency r'eporting to the ASecretary -of Defense
by DOD-CIA Iagreement in 1965. ..The Secrefary of Defense,
of
'co;u'se,
fxas brea& authority under the N#tionel Security Act of 1947
and the Defense Reorganization Act of 1958 to control and reorganize
_ Defense activitie.s..
(4) Ql_e
-
DIA was established in 1961 by direction; of the Secretary of
Defense under the reorganization ep.thority granted by the Dgfense

Reorganization Act of 1953.
The Secretary'e plah was reported to the
Armed Services Committee as reqfiired by statute and- DIA was
su'bsequently established.
(5) FBI
- There is no statute establishing the FBI.
Under provision
of 28 U.S.C. 533,
the Attorney Gefieral may appoint officials
"(lj to detect and prosvecute cri;'nes against the United State's,
(2) to
~
assist in the.p'rotection of the President,
and (3) to condfict such
investigations regarding official metters unde'r ie control of the
Department of Justice
and the Department of State as may be directed
by the Attorney General. !

Other statutes, such as the'COngressienal Aseassination, Kidnapping and Assault Act, vest in the Bureau special resbonsibilities, but its prixicipal investigatory authorities appear to o
)
.


rest upon Executive Order and Presidential statements or directives plaeing these responsibilities on the Bureau.

(6) Service Cryptologic Agencies
(SCAs)/Military
Intelligence
Agencies
- The SCAs predated the establishment of NSA and now -
" operate under the direction of NSA for their communications intercept missious..

All were established by the se;'vice chiefs of staff pursuant to the i)road functions' and duties assigned to the sgrvices by statute, The various military intelligence agencies, which perform a wide variety of intelligence functions, also were est#blish_ed pursuant to broad Service responsibilities.

## B. Present State Of The Law

(1)> Statutory Basis:
Except for the DCI/CIA,
there is
a notable
absence of specific stetutory bases for the organization of and functions. performed by the Infelligence Community, Almost all are derivative of broad executive authorities entrusted in the Pres.iczleri;:f;;
the DCI,
>1v:;he Secfet_afy of D.efenge, van.d the miiitary services.

In almost ail cases, tfieee authorities
-have been exercised through classified directives .and '_
L
PANY
.

memo;'an&a.

Nonetheless,
-a small group of senior Congressmen was privy to the besic orge'nization and function such that a budget process could be conducted.

it is clear that the Congress did nof envision, either in. the establishment of CIA or in any specific subsequent legislation, the large, complex, and expensive-organizaticnal and functional arrangement that has come to pass.

More specifically, the aevelopment of CIA as a major element in.intelligence collection and covert action operations
- as it nowis
= does not-appear to
-
have been contemplated by existing statutes, Similarly, the importance and growth of both communications intercept and satellite reconnaissance are reflected poorly or not at all in statute and have been treated so secretively that there is a subsfantial question that these organizations and functions are appropriately conducted,

(2) Other Alfi:hofihes |
There ;appeara;. to .bveb.s.fifficientv
Aauthonty derivative from the constztutmna.l duties oi
the' President and the statutory responsibilities of the
DCI, i:;xe Secretary of Defense, 'other department heads,
_and the Services to prowde for a reasonable basis for
the current orgaxuzatmnal and functmna.l as. s1gmnents.
.Clearly, the Congl.'ess - both by spec1f1c legislation
.
and through the annual appropriations process
- has
recognized at least the major outlieee of cfirrent Inteuigence
Community organizations and functions.
(Only the NRO
is devoid of any specific congressicnal recognition.)
However, while certainly some key members of Congress were familiar with these aspects of intelligence activities, no continuing and explicit recognition is provided by an objective reading of congressional activities.

(3) Limitations
:
With the exceptien of specific limitations on
CIA's internal security role contained in the National Security
Act, there are no statutory restrictions or limitations
specifically
a.pplieabie' to the intelligence organizations and
'the.ir ffinction;.

;I'his lareely is tiae resfilt of the .al'us_ence of specific legislation covering these organizations an_d.

theil:,--f}mctions.

Non-statutory limitations and restrictions are almost nbnexistent.excep!': in the form of internal agency
.gm';delines.

)

(4j
Exceptions frofn Adminietratix;e Reguirements:
Many
statutes
- the CIA Act of 1949, the Classification Act, the CIA
Retixement Act, and f':heb preyiously menfioned acts applicabie to NSA, for example
- provide fqr spvecificv examptions. for intelligence agencies from otherwise standard administration procedures.

## Loi. Options For Dealing With Intelligence Charters And Limitations

The options available for dealing with the absence of statutory charters for intelligence organizations and functions and of limitations on their activities are heavily dependent on political and policy considerations
.as oppoeed to purely legal considerations.

## A, Options For Charters/Functions -

1.
Statute-providing basic Qutline of intelligence agencies'
' organization,: functions,
'emd;activi'l':ies.
-2,
Revised stafite for CI.A with or Without 'Specific statutes
for,
z);t least, NSA(an;i NRO,
.
3.
Specific, detailed stetfites for allbmajor elements
- CIA,
NSA, NRO,
DIA, SCAs,
BI,
and some'}Service _entities.
4.
Generic statute for basic functions and providi:zg-broad'
a.ufhority to President (or DCI or Secretary of Defense) to
allocate functiofis subject to procedural approval.
5.
Executive order(s),
rather than statutes,
covering any
of the above alternatives.
6.
Status quo,

## B Oe'Ti;O'N'S For Li;Nitations .

1.
Generic statute providing for broad lirnitafions on
foreign 'intelligence activities.
2,
Specific stat?utes covering more sensitive aspects
-
electronic intercept,
domestic activities,
covert action,
etc.
'
3,
Executive order(s),
rather than statutes,
proirid.ing for
limitations as above.
4.
Repealing some or all of existing statutory and/or
administrative exemptions.

## Separation Of Powers And Congressional Oversight . Over Foreign Intelligence Functions

" The problem with 1egal-anaIysis in- this area is that the Constitutional text is not explicit, the court cases are few and far between, and the issues arise usually in o a political ragpgr than'leeal-context.

.The most that legal ahalysis can hope for is to place pifameters around those areas within which political baftles'maf be~fought.

'
.

"Although the power of [Congress]
to 1nvestlgate is
-'broad, it is not unllmlted," Eastland v.

United States Servicemen's Fund,
421 US 491,
504 n.15
(1975).

_As a practical matter,,hcwefier, Congrees can constitutionally'
.infiestigafe intelligence agencies enq activities on a
-
varIety of bases.

Pursuant to such an investigationCongress_
ma request or subpoena a v;riety of classified mateiial.

While Congress may in its in?estigative role have a constitutional right to such material, the Executive hay
.

equell&bhave a constitutional rightftb'withhold it.

- Milita;y and foreign affairs-sedrets have traditionally been among the materials for which executive privilege has been claimed, and substantial historical precedent supports the constitufiohality qf withhfilding fiuch information.

In Senate Select Committee v.

Nixon,
498
F.

24
729
(D.C.

Cir.

1974), a congressional demand for claimed executive material was denied by the court, .

but its decision cannot be read as much of a victory'for'
- exeeutiwe privilege.

.This is.epparehtly the ohly eourt eASe
.tobdeal with a withholding from.bohgrees by the gxecutive.

Thus; while'executive.privilege may be.constitutionally based,
1t is-unclear. what the content of that prlvilege 1s when confronted with another constltutlonal prerogative -~
that of Congress.

to lnvestigate. Tradltlonally such constltutlonal confllcts between the Congress and the Executive have been polltlcally 'resolved, but the lncrea31ng use of the courts by Congress to enforce its percelved rlghts suggests that future confrontatlons over executive prlv1lege.may be put before the courts.

The resolution of suchO court test is uncertain, bgt wil; undoubtedly depend on the particular facts in the cases.

v If a Congressiohalldemand for information is denied by the Executive and/or the courts, Congress still retains an extremely powerful lever for gaining that information
-~
namely the threat not to legislate or appropriate as desired by the Executive.

This, of course, is totally a political
'weapon.

Beyond the questlon of merely gatherlng information is the substantial questlon of the limits, if any, to Congress'
power to restrict forelgn intelligence procedures on activities by legisietion.

At the present time legislation only requires various reporting procedures, and does'not'otherwise limit
'-foreign inteliigence activities outside the United States.

To an uncertain extent the President has inherent constitutional
-'powers to gather forelgn 1ntelllgence which cannot be limited
'by Congress.

" This would at the least 1nc1ude the President's and Ambassadors'
personal gatherlng of 1nformatlon.

Generally, however, lntelllgence gatherlng is done by agencies either created or funded by Congress or both.

'Where Congress creates the agency, e.g., the CIA, there'is 1ittle cohstitutional basis.

for limiting Congress'
ablllty to restrict the m1551on, functlons, or procedures of that agency !

Of course, Congress cannot act by unconstltutlonal means in maklng such restrictions, e.g., a one-house.veto.. Presumably, in the absence of statutory prohibiticns, the President may delegate to' subordinate officers of the Executive Branch his.inherent powers to gather foreign intelligence.

Bgcause these officers will usually have to operate through employees, however, whose existence arises through Congressional act rather than through Presidential appointment, llmltat;ons on the agency would
'probably apply to those employees and bar activities incon-
-
:
sistent Qith those limitations notwithstanding Presidential delegation.

Where Congress has not created an agency or place limita?

tions on it, but rather only funds.the agency,
.9., NSA, Congress. may limit'appropriations which have the effect of
" restricting intelligence activities..

In this area there is'
no-constitutional requirement for Congress to appropriate at all, hence Congress may constitutionally limit its approprlatlons only to certaln act1v1ties and not to others.

"Congfess may, however, . instead of iimiting appfopriations,
'condltlon their expendlture, e. g.r the Hughes Amendment,
22
UsC
52422(a)
' such a tactic mlght be able to expand Congre551ona1
power beyond what could be achleved by p051t1ve leglslatlon.

For 1nstance, a statute requlrlng the President to turn over executlve privileged material to Congress would, in our estimation, be uncon;tltutlonal.

It is not so clear, however, that Congress could not condltlon the expendlture of certain funds upon belng 1nformed about why and how those funds were being
.expended,
1nclud1ng any perlleged material.

Here rather than requlrlng Pre51dent1al compllance, the choice is left to the President whether to spend and disclose or not to spend and not to disclose.-
Nevertheless, there are llmlts, albeit  uncertain on what Congress can conditidn._
See, e.g., United States v.

Lovett,
328
US
303
(1946).

To summarize, while the President.mey be the Nation's isoie organ in its external relations,"
implying certain inherent powers in foreign intelligence activities, whendthe Eiecutive requires Congressienal action
-- particularly apv_propriations, Congress has a concurrent power, and pursuant to this power may impose various and substantial limitations on hose foreign intelligence activities which requife Congressional funding.

What Congress probably cannot do, nowever, consistently with the'constitutional separation of powers, is to require affirmafiive congressidnal or committee
" approval before the Executive can take an action that is
-
within the bounds of its constitutional and statutory authority,
 fundsalready'appropriafed.

Suc'"

"and involvesexfiefidituie o an affirmative approval would amount to congressional invasion of Executive functions;
especially since it would allow one House or committee to veto executive action, it is inconsistent with the Constipqtiofi's division of executive and legislative functions.

## The Constitutional, Statutory, And Legal Basis For S Covert Action

Legal autfiority_ for Ycovert' action in support of foreign policy objectives Fana
is found in three sources:

1, The constitutional authority of the President as the repository of
negxecutive'' power, primarily as it involves his responsibilities for foreignaffa'irs and as Commander-in-Chief,

. 2. The National Security Act of 1947..
3,
In the ratification by Congress of.the CIA's authority.

## 1. Constitutional Power Of The President

uExecutive!' power involves the responsibility and authority in matters of foreign relations.

Prgsidential power in foreign affairs decision-making is variously described as nexclusive, ' V'plenary' or as sole organ. 't Historical practice, accepted as customary law, and the courts have confirmed in broad language the scope of Pre,sidential power, which
.

or agents, abroad.

Even the War
- includes the authority to send troops, Powers Resolution.states that it was ''not i_ntended to alter the constitutional authority of the Pfesident. 1"
The practice of appointing agents to conduct covert actions abroad is deeply rooted in United States history.

## [ National Segufitz Ag; 0F 1947

This sta.ttute is.brooted in, and_. v}aI,Sixl.tended to embody, the;" expe.rience
"
learned undef earlier Presidential directives.

.Specifica.]i&, the CIA was intended to have the -s.ame broad authority as previously held by the Central mtenigencl:Group.'
|
|
CiA's responsibi;lities, "in more &etail, were to be s.pecified by the National Security Council, 'ana Cong._ress recognized that the'CIA
would necessarily have a broad range of operational assignments.

## I, Congres Siex;Xal Ratification Of Cia Authoritz' To Plan And Conduct Covert

'Actions;
)
.

eince its beginning, the CIA has reported on its covert action programs to 'appropr'iate members of the oversight confinittees_ of both House and Senate.

Further.more," the legisla'l.:ive history of the CIA Act of 1949 reveals that the Director told the House Armefl Services Committee of the types
.

of covert actions contemplated by the agency.

.

|
With this kind c;f in.formatiog _and knowledge distributed in ways understood by Congress, approprietions were_consistently authorized and'
approved, Such appropriations constitute ratification by Congress under the rule of Brooks vs Dewar which held that adJninistJ;Iative practices could be ratified by Congress through the appropriations practice.

## . Secrecy And Protection Of Intelligence L * Sources And Methods : I. Secrecy And National Security

Secrecy in i_ntel-ligenge activities.;s needed for two purposes.

One, intelligence afi_d the intellige.nce function are necessary to the'c;anduct of defense and -foreign relations, that is, for rea;ons of national security, In addition, in order to develop, inaintain and use sources and meth'o_ds'
for gathering intelligence it is-:.lecess.ary that they be protected from disclosure.

|
|
Pursua.nt to his constitutional and ifihergnfi authority in defense and foreign affairs, the President may provide for necessary secrecy and Protection. of national security information, which would include information in the intelligence area, and hgs done so by Executive Order.116v52.

|
Congress also h_asv authority and inte.rests concerning nationel security for which it needs information.

' Pursuant to his authori.ty, the President may opt to provicie information to Congress under such conditj.ons_ asvto secrecy and protection as he may impose.

Congress, of course, may
"resort to the courts to resolve any dis_bagreements( "The recent agreement worked out .vv)ith the Pike Comnuttee, along those lines, would s;aem
:
the workable and desirable basis fgr meet.ing the needs of both the
|
President and the Cofigress.'

## C I Se;:Rec.X'An.D.So{Lrces And Metheds Infc;Rmafion

In \vliew of file exclusive'afithority ot;'the President tfi-conduct the
'intelligence activities of'the gqvernment; 'the Presidenf's autho.rity to withhold sources and methods inforzfiation would seem beyon'dbquestion.

The responsibility of the Director of Central I'nte]libgencg to erotect sfich information fr;:m 'disclosufe, -as provided by the Natic;nal Security Act 0f 1947, indeed recognizes and buttresses that principle.

## Ii. Conclusion.

There is 'cdnstieutional and statutory authority foi' necessary secrecy for the intellig-ence function of the government.

Unauthor.ized disciosure of sources and methods informat';ion should .be prohibited l?y criminal law, Additionally, a statutory basis for enjoining di;sclosure is needed.

. The desired legislation is well advaneed and is e#pected to be agreed
among the Executive Branch agep.cies
- CIA, Justice and OMB -- in the
near future.

## L Ideetification Of Issues

)
';A. Article I,
Section
9', Clal;se 7 ;)f the Conetimt;on provides:
HNo money' shall
be drawn from the Treasu.ry but in consequence
-.of appropriations made by Law; and a regular Statement and Account
of the Receipts and Expenditures of all public money shall be
published from time to tu'ne "
.
The budgets of CIA, DIA, NSA, and some other defgnse and military service ihtelligence programs are not identified in'published federal budget documents.

Therefore, a question has been raised as to whether
'
this gurrent pra.ctice is consistent with the second half of fihe above qubted constitutional provision.

B;
A second relevant question relates to the mefhods whereby appropriations are made for certain intelli.genc.e agen_cies.'
Under the CIA Act of 1949, funds overtly appropriated to other agencies are secretly transferred to CIA.

Appropriations for DIA, NSA, and certain service and defense intelligence programs are included in DOD appropriations, but are generafly not identified explicitly.

 The issue arises as to whether such indirect funding authorizations constitute "appropriations made by law',

## I Factual Background -And Legal Discussion- :


'A,
DPresent sttem of Funding and Extent of Public Disclosure.
Published government documents now reveal almost no significant information on the funding of United: States intelligence activities.

## B Present State Of The Law (1) Statutory Background

The CIA Act of 1949 provides the basic authority for the Agency's unusual funding procedures..

One provision allows CIA to

"
receive f1_m&s transferred from any appropriation with the approval
of OMB.
CIA is also authorized to transfer funds to other agencies.'
Another provision of the 1949 Act allows the CIA to depart

.
from normal budget and accounting procedures
in making confidential
expendfiures to be accounted for solely on the DCI's certificate.
The Economy Act of 1932 (31 U.S,C, 686) authorizes government agencies to provide services and equipment to each other {on a reimbursable basis) where that course would be in the best interest of the government,..

.

## (2) Constitutional Requirement For A "Regular Statement And

'
account of receipts and expenditures
The history of this provision, although certainly not ambiguous, indicates that at least some supporters of the "from time to time e language may have felt thz.xt.the_a dc_at;ils. of some; expgnditufes s'hv.;ulc'l.

" not be .publi.cly dis';:losed, at least for 'some.pevriod'of ti.me.

-
A good arigume'nt can be made that the budget pree;entations'
of the-intlellig'ence agencies other than. CIA are cbnsis.t.:jent \;Vit};l the clafise, .in that their-funds:are included in appropriation accounte whose
' title; wb_uld reasonably be expected to include inteuigenee activities of the types actually funded.

However, the practice for funding CIA
pur.suant.'to the 1949 Act seems more diffi..cu.lt to defend finder c'laus>e 7.

'The publicv'has (or had?) no reason to .asso_ciate the CIA with the appro-
" priation account in which its funds are included.

vAlso, none of itsb
_
budgets for past years have been revealed.

## (3) Constitutional Requirement For "Appropriations Made By Law'

. The first half of clause. 1 represgnfs Congrese' 'power of the
" purse', The precedures for funding the intelligence ageneies other than
' CIA do not seem to .rai'se serious questions of ;:omplia.nce with this provision.

As pointed out above,' each agency other than CIA is really
"
a part of a larger cabinet department to which its funds are appropriated.

EVen below thj.s 'le';el, thveb invtielli.gencre egeficf funds are ipeluded_ in sfib;accounts whose titles r.n.ay i)e broad, but such that the_ intelligence activities could reasonably be seen as: a part of them, The constitfii:ional'ity of the section of the 1%}49 CIA Act


.
authorizing unlimited transfers of funds to CIA fr.om_other agencies
s'eems. open to- question,
A good ;rgu.!nent can be made iha_t CbngreSS'
violated the intent of the constitutional appriopriiatior; requirement by',
in effect,
giving the Executive a blank check to f}md the CIA out of any
appropriation available to afiy other agency.

## (4) Standing

Wl_'latever the merits of the constitutional issues discussed above, it seems unlikely that any constitutional requirements in this area will be enforced by the courts.

. The Supreme Court recently held (5-4) that

'a plaintiff lacked standing as
a taxpayer t b-ring an action to force
publication of the CIA's expenditures,

## Im. O-Etiens For Dea.Ling' With Constitutional ;'Krrii;Igx;If'Z_ -

In fiew of thexfa..ct tha.t_the exact requiren;ents of ciause
7 are far from cvlieari and the apparenf lack of standing for judicial enforce-

- ment of _these requ'.'i-:.r'%ements,
the-ques'_cio_nv of to what e;:tent inte]ligence
- budgets_ shox_zla be reveaied and the presenfi system of transferring
funds to the CIA chang.ed,
cannot be; answered By purely legai considerations.

## A, Ogtion.S For Public Budget Disclgsure '

1. Reveal total budget figfire for fii:e ihtelheence community.
2. Reveal community total.plus some additionaide;tails;
such"
:
.as DdD and CI_A totale, 'to.tals by broad function and object
classification.
.
3. Reveal confi.munity total plus normal detail on non-sensitive
aspe;:ts only,
4. Reveal total budget of CIA only; no additioz'm.xl disclosure of
non-;CIA budgets.
.
5. Reveal details of CIA budget;
no additional disclosure with
respect to other agencies.
6 Re'v:a;fl expenditufes by-intelli'gen(:e #gen.ci'es,
in'epy one
"
lof the lew're];s des'.cri.vbedvabove,
byt 6n1y seme' yeax"s afte?r: the
fjscal year involved.
|

## B. Ngions For Normalizing Cia'Aqeroeriation Process

) 'Be.ca}us'e of the ';;\bstantial constitutional doubts about the present etamtor'y scheme where.fiy funds are chan;t;e.led to CIA, and Congressional desire for g:re.at.er control ove; CIA funds, the Administration should consider possible changes in the current pr;ctice.

Options include:

1.
A single,
over;'. appropriation for the. CIA:
2.
A single, overt'appropriation for the entire 'intelligenceb
cofimmity.
3,
A single,
overt appropriation account,
part of DOD appropriation
bill,
to fund NSA,
DIA and CIA.

## Executive Order Establishing Restrictions On Foreign Intelligence Activities

Previous guidance on the relationship between the intelligence agencies and United States citizens was unclear.

This orde:'clarifies that_relationship by detailing those activities which are prohibited.

With-'
out setting forth all restrictions under which foreign inteliigence agencies are obliged to operate, nor
. derogating from any other laws, rules, regulations, or directives ffirther restricting the activities of these agencies, it is hereby ordered as follows:
SECTION
I.

Definitions.

As used in this Order the following terms shall have the meanings ascribed to them belowe

(a)
"Collection" means
the gathering
and storage
or
the gathering and forwarding,bof information.
(b)
"Domestic activitiesTM means activities within
the United States.
(c)
"Foreign intelligence" means information,
other than foreign counterintelligence,
on the capabilities,
intentions,
and activities
of foreign powers,
organizations
or
their agents.
(d)
"United States citizens" means
United States
citizens.and permanent resident aliens.
(e)
"Fereign-counterintelligence" means activities
conducted
to protect
the United States
and United States
citizens
from foreign espionage,
sabotage,
subversion,
assassination,
or terrorism.
()
"Incidental reception"
means
the
receipt of
information, 'collection of which by
an agency
is otherwise
prehibited by this order and which
is collected
in
the
course of an agency's authorized foreign intelligence
or
counterintelligence activities.
(g)
"Foreign intelligence
agency""
means
any department
or agency
of the United States government,
or component
thereof,
which
is primarily engaged
in foreign intelligence
or foreign counterintelligence actiities.
SECTIO&
II.

The following activities shall not be conducted either by any foreign intelligenee agency or by any other department or agency in pursuit of foreign intelligence or foreign counterintelligence:

.
(a)
Physical surveillance
of United States
citizens within
the United States except
to the extent that
.such surveillance is in accordance with iaw and is:

(1)
Upon w:itten approval
gy
the
head of
the
foreign intelligence department
or agency;
and
is
surveillance
of indi+iduals
currently
or formerly)emp;oyed
or Such contractors'
employees, for the Purpoge of protectlng
.

dlsclosure, or forelgn 1ntelllgence SQurceg and Methodg from unauthorized regulations .

()
Infiltration
or secret participation
in any
organization composed primarily of United States citizens
for
the purpose
of reporting on its activities
or
fiembership.
(g)
Experimentation with drugs
on human subjects,
except with
the informed consent of each such human subject
and
in accordance with
the guidelings
of
the National Commission for the Protection of Human Subjects
for Biomedical
and Behavorial Research.
(h)
Operatiofi of
a proprietary company
on
a
commercially competitive basis with United States businesses
except
to
the minimum extent necessary
to establish commercial credibility.
- No investments
by
a proprietary
company shall
be made
on
the basis
of any substantive
intelligence not available
to the public.
(i)
Collection,
evaluation,
correlation
or
analysis,
of informatidn other tfian information
from public
sources
or given voluntarily by
its subject concerning
the
dqmestic activities
of United States
citizens except:
(1)
Information about
a United States citizen
who
ie reasonably believed
to
be involved
in international
terrorist
or narcoqics activities
or working
in collaboration
with
a foreign nati#n
or organization,
but only
if the infor-
mation is collectei abroad or from foreign sources in the United States in thg course of an authorized foreign intelligence or foreign counterintelligence activity.

(2)
Information related
to
the performance
of agency contractors
or prospective bidders,
for purposes
)
of contract administration.
(3)
Information concerning criminal'activitiesv
received through incidental
receptiofi,
provided
it
is only
transmitted
to
law enforcement agencies with appropriate
jurisdiction,
"SECTION
iII, Any federal agency seeking foreign intelligence within the United States from United States citizens shall aisclose to such citizens its true identity.

When collection of foreign intelligence within tPe'
United States results in the incidental reception of information from unknowing United States citizens, however, the receiving agency shall be permitted to make appropriate use of such information.

SECTION
IV.

No information on the domestic activities of United States citizens shall be transmitted to a foreign intelligence agency
(or to any other federal agency to aid it in engaging in foreign intelligence or foreign counterintelligence)
from any other federal agency unless:

(a)
The information had been lawfully compiled
by
the transmitting agency
in furtherance
cf its authorized
mission;

(b)
The information
is
of
a
type which
the
receiving agency would itself have been permitted to collect under the provisions of this order;

(c)
The ipformation
is provided
in furtherance
of the authorized mission and responsibilities
of
the
.
receiving agency;
V
.
(d)
The information
is provided in_good
faith
'under
a reaeonable belief that'the information
is relevant
to the receiving agency;
and
(e)
The information
is provided under guidelines
and procedures issued by the Attorney General designed
to
ensure the protection
of the constitution;1 and statutory
rights
of United States
citizens.
'
SECTION
V.
Nothing
in this Order prohibits
an agency
from retaining information when retention
is required by
law,
sfich
as
retention required
to preserve evidence
or
other information
for possible court action.
.
SECTION
VI:.
No foreign intelligence agency
shall:
(a)
Provide services,
equipment,
personnel
or
facilities
to
the Law Enforcement Assistance Administration
or state
or local police organizations
of
the United States
except
as expressly authorized
by
law;
or
(b)
Participate
in or fund any
law enforcement
activity within
the United States-except
as may be
authorized
by law.
Provided, thaf this prohibition'shall not
'preclude:
.

.
(1) Cooperation between
a
foreign inEelligence
agency and appropriate
law enforcement agencies
for the
purpose
of protecting
the personnel
and facilities
of the
- foreign intelligency agency or preventing espionage or
other criminal activity related
to foreign intelligence or
foreign counterintelligence;
or
>(2)
Provision
of specialized equipment or
technical knowledge
for
use
by any other Federal depa;tment
or agency.

SECTION VII.
Foreign intelligence agency personnel
~
may not be detailed elsewhere within
the Federal government except
as
consistent with
law.
Employees
so detailed
shall
be respensible
to
the host.agency
and shall
not report
.
to their pareflt agency on
the affairs
of
the host agency
except
as may
be directed by
the host agency.
The head
of
the
host agency
and any subsequent successor shall be
informed of
the detailee's association with
the parent
agency.
.
SECTION VIII.

Nothing in this Order shall prohibit any agency having law enforcement responsibilities from discharging such responsibilities pursuant to law.-
Nor shall this Order apply to any activities of the Federal Bureau of Investigation.

T

## Executive Order Imposing Restrictions On Foreign Intelligence Activities

" Today the President issued an executive order setting forth certain restrictions on the activities of foreign intelligence agencies and other agencies which may engage in intelligence activities.

It prohibits or severely restricts the following
-activities:

-~ Collection and analysis
of information on the domestic
activities
of United States citizens
and permanent resident
aliens.
-
Physical
or electronic surveillance
of United States
citizens
and permanent resident aliens within the United States.
-
Opening
of United States mail
in violation
of law.
.-
1Illegally obtaining federal income
tax returns
or
information.
"
-
Infilfration of domestic groups
for the purpose
of
reporting on them.
-
Experimentation with drugs on humans without the
subject's informed consent;
-
Operation of a proprietary company which competes with
United States businesses more than the minimum amount necessary
to establish commercial credibility.
~
.Collection
of intelligence from United States c1t1zr~~
and permanent resident aliens within the United States w1thout disclosing the true identity of the collectlng agency.

'
Sharing among agencies information
on the domestic
activities
of United States citizens
or permanent resident
aliens except
in compliance with stringent safeguards.
-
Providing assistance
to law-enforcement agencies
'in
violation
of
law.
Certain limited exceptlons are included to the generel prohibition of collectlon of
- 1nformatlon on the domestic activities of United States c1tlzens.

These exceptions seek to recognize all leegitimate needs of foreign intelligence aeencies to collect information on the domestic activities of United States citizens.

In order to protect classified inforfiation, intelligence agenc1es must run securlty checks on appllcants for employment and employees..

Like. any Government agency, these agenc1es must also cheok out employee backgrounds to ascertain their job suitability.

Even after a person has left an 1ntelllgence agency, it has a. legitimate need to maintain
1ts records on
'that person should a security breach stemmlng from hlS employ
ment occur.

Slmllerly, each 1nte111gence agency has an interest in the suitability and security worthiness of persons who contract with it or are employees of its contractors working on 'its projects and reguiring access to cldssified information.

Each intel;igence agency fiust also maintain records on persons who, without necessarily being employed'by it, ere given access to its classified information.

Such persons would include employees of other Government agencies whb require access to its classified information
-and private citizens who voluntarily agree to be cleared to receive classified information in order to aid in their voluntary reportingzgf foreign intelligenee information to the agency.

_ Foreign intelliqence.agencies
or other'foreign groups spend
many resources
seeking
to penetrate
(i;e.,
obtain information
frofi)
United States intelligence agencies.

The United States agencies need to protect themselves from euch activities.

Such aetivities may involve aomestic activities of United States citizens.

Because United States ihtelligence egehcies have a need to undersfand fihe operating modes of foreign ihteiligence agencies, there is a legitimate need for-it to coileet and use such information.

fioweVer, the intelligence agehcies are permitted to coliect this type of information only abroad or from foreign sources, since fihe FBI
is fully capable of collectine such information from purely domestic sources.

Also, because of the unique contacts of our. foreign intelligenee agencies with information sources abroad and foreign sources within ehevUnited St&tes, these'egencies are also permitfed tocollect,'bfit only_frofi ehese'special sources, information.on United St;tesvcitizens.reasonably believed to.be involved in international'terrorist or
.

narcotics activities.

In nqrmal d;ytoday.business, many'Amerieans work with intelligence agencies and tell its employeee about their dofiestic activities;
i.e., other Govern@efit empleyeee meet with intelligence agency employees;
academics share informa
tien with them; Americans who travel talk to thefi.

In ordef to allo# these agencies to maintain records of such dayfo
d;y transactions, the order makes an appropfiate'exception.

Americans who_entef into such contact Wifh intelligence aeencies, however, should not therefore be subjecfied'to security investigations or chef scrutiny merely because they came into contact with an employee of an intelligence agency.

Therefore, thie exception only allpws useof_that information
~ voluntarily s;pplied by_fihe persons themSelves;
The Orderbrequires that the information collectea or stored under these exceptions be confified fo'a type appropriate to the pfirpose for which the corresponaing exception-was createdf For example,'an agency may not collect or store information on the political views of a United States citizen merely because he is a contractor employee working'on an agency project.

'The order also allows intelligence agencies to transmit to lawenforcefient agencies information relating to cfiminal domesfie activities of United Statesbcitizens which it happens to obtain incidentally td its proper.foreigfi inteliigence activities.

All citizens and Government agencies have an obligation to turn information releted to criminal activity over to appropriate authorities.

## Summary Of Agency Comments On Major Substantive Issues Relating To Executive Order Imposing Restrictions On Intelligence I. Department Of Defense

. Basically, DoD would prefer a fundamentally aifferent
:
version of this Order, which it has drafted.

DoD
feels its draft ""presents
~...'a more straightforward approach as compared with the somewhat complex and eleborate assembly of caveats in the current version."
Tfie primary substantive difference between the DoD versiofi and thg_current draft is that the DoD Ordef prohibits only the collection of the
'"lawful domestic activities"
of U/S.

citizens.

With respect to the two issues covered in the body of this paper, DoD's position is as follows: -

A.
Exception
to allow collection,
analysis,
and dissemination of information on the domestic activities of U.S. citizens
reasonably believed
to
be involved in international terrorist
or narcotics activities
or working
in collaboration with
a
foreign nation
or organization,
but only
if collected abroad,
or from foreign sources.
(Section II(i)(2))
DoD supports
this exception and would eliminate
the requirement that
the
information
be collected abroad or from foreign sources here.
B.
Exception which would permit sharing
of information
on the domestic activities
of
U.S.
citizens
among intelligence
and other federal agencies,
under guidelines
of
the Attorney
General, even if the receivihg agency would not otherwise be permitted to collect such a type of information under this Order
(Section IV).

DoD supports modified version under which sharing is permitted only for information which the receiving ageficy would otherwise be permitted to collect.

C.
DoD proposes certain other modifications related
to
NSA's acfivities.

They would remove NSA's communications

security activities from the Order's restrictions and also
distinguish between signal intelligence and other
forme
of
electronic surveillance.
D.
DoD would allow infiltration of organizations
of
U.S.
citizens
abroad.
It claims
to need such
an exception
to.allow gathering information
on U.S.
groups seeking to
sfibvert U.S.
military personnel abroad.

## Ii. Cia

A.
As
to
the exception for information
on citizens
engaged
in terrorist
or narcotics activities,
or working
in
collaboration with foreign organizations, the CIA proposes to add the word "secretly"
before the words
"in collaboration with a foreign nation or organization".

This would exclude such persons as registered foreign lobbyists or those'epenly dealing with foreign corporatiohs.

B.
The CIA would expand
the exception
to
the prohibition
against competition by proprietary
companies with
U.S.
bus-
inesses
(Section TII(h)).

After the CIA amendment, the pro vigion would read to pfohibit:
_"Operation of a proprietary company on a commercially competitive basis except to the minimum extent necessary to establish commercial credibility or to achieve clearly defined foreign intelligence objectives."
(CIA language underlined.)
.

-
-
This is intended to recognize'that in rare and exceptional instances a specific foreign intelligence objective may be achieved only through a successful venture.

## Department Of Justice

III.
Justice has no major problems with the 'current draft.

Department of State
Iv.
Comments not yet received.
OMB
Comments not yet received.

VI.
'NSC
Comments not yet received.

## Summary Of .Views . Presented By Selected Outside Experts

The following are major points from discussions over the past several days with McGeorge Bundy, John McCone, Admiral Moorer, Paul Nitzg, David Packard and Ted Sorensen.

## MccEorge Bundy

~
The President, as Commander in Chief, sho;lld take the lead in reforming the Intelligence Community; there is'politi'(':a.l'merit in beating the Congressional committees to the punch.

A good opportunity for Presidential action will be during the Congressional recess.

)
-
More intelligence of an open nature shouid be made available to Congress, .This will help Congress in its oversight role, although oversight will always be a difficult problem, particularly if Congress attempts to deal with prospective programs.

-
The 40 Comumittee has never been effective.
A "President's man!
is required to monitor seriously activities in this area.

Moving clandestine c;perations to State would chan_ge the character of the department and pose difficulties for the conduct of its normal operations.

-
PFIAB has been a free-wheeling b<.>dy that has been hve:lpful
from time to time,
but it has never l;xa.d an #dequate staff and would
probably be overburdened if given an oversight role..
On the other
hand, the ACDA Advisory C,omxnittee,
for example,
has had substantial
iznpect and given the President access to the ADA that he would not
otherwise have had.
|
-
A two.-ha_tted DCI will probably never work.
Allocating budgets
is a management problem and seems more appropriate
for OMRB, the
instru;fient created for these purposes.
"<
The national estimate process has never worked very well, k.eports tend to be done on given situations at times when one could care less, The national estimate is an extremely important product and it is necessary to improve its quality.

-
DIA has not provided the oversight to DOD intelligence activities
which was intended.

-
Time spent in insuring "plausible deniability" was almost
uniformly wasted.

The President can take rbesponsibility_for actions of his Administration.

The distinction between diplomatically-necessary deniability in such cases as the U-2 or the Glomar Explorer, and domestic .accountability, was drawn.

## John Mccone

-
The President must make up his mind how the Intelligence
Conmiu.nity should be organized,
do what he can to accomplish this
by Executive Order, and propose legislation for the remainder.

Congress will do nothing without Presidential initiative.

-
CIA has been tarnished and should be done away with.
A new
agency should be establish as part of the National Security Council.
The
director of the agency would be responsible for all existing CIA operations',
'would coordinate all intelligence agencies budget responsibility for all intelligence activities, He would be Chairman of USIB and have direct access to the Presidefit.

rj'.'here should be two &eputy directors, one for intelligence matters and one for community affairs.

-
A permanent subcommittee of the NSC should be established to
have oversight responsibility for the new intelligence agency,
It would
also review 40 Committee actions.
-
If CIA continues to exist,
three steps should be -tal;en:
(1) The General Counsel should be made a Deputy Director with access to the entire agency;
| (2) The Inspector General position should be given more status and strengthened;
(3) There must be a regular program of review of ongoing activities.

-
A'ioint Congressional Coi'nmift_ee on Intelligence should be
formed along the lipes of the Atomic Energy Committee.,
The Atomic
Energy Committee has never had a problem with secrecy.
-~
Legislation is necessary to irfipose penalties on government
employees who dis.clos'e secrets during or after their period of service
in government.
-
There have been problems with DIA's production, partly because
it has been staffed by the Joint Services and the services keep the best
officers for themselves.
Further,
intelligence is not a high priority
within the Services.

## Admiral Moorer

-
Radical change in the Intelligence Community should be avoided.
The primary prc;blem is not the organizational structure but people.

-
It would be
a mistake to centralize intelligence gathering under
one person.
'i'he DCI cannot control or schedule,
for example,
the real
time activities of submarines
or other military collection agents, nor
can he defend them when the&- run into trouble.
In addition,
there is a
need for duplication and competition in intelligence as there is in R&D
matters.
-
NSA is
a valuable instrument,
but individual combat units
should have their own intercept teams.
Wartime activities cannot
be centralized and run from Washington.
-
The open hearings in the House and Senate are
a "'national
disaster'.
They are exposing secrets and telling the Soviets
a great
deal about the effectiveness of our intelligence activities,
thus
permitting the Soviets to develop countermeasures.
-
A Congressional oversight committee will pose severe operational
problems.
Leaks will occur and intelligence information will be used
for political purposes,
The President needs to take action to deal with
the pressure from Congress, but it should not be drastic,

## Paul Nitze

-
To some degree, the problems the Intelligence Community now faces are cosmetic and any changes must be cosmetic as well, There is a danger, 'however, that we will not do what needs doing.

-
The NRO works well under EXCOM as far as Defense and CIA
are concerned but not, perhaps, from OMB's point of view,
A perennial
problem is the allocation of costs to various programs, and making
decisions based on the allocations will always have a highly judgmental cha:;acter.

The equipment is very expensive in certain intelligence gathering systems and new tasks require new "beasts', Decisions on new equipment require a great deal of familiarity with the programs and the technologies.

-
As organizational changes are considered for the Intelligence
Community, there is no point in further downgrading CIA, N<.>r should covert activities be separated from the rest of its operations.

The DCI
should have the National Estimating Staff.

The old Board of National Estimates worked better than the present NIO .system, where the National Intelligence Officers farm out estimates to the eepartments for writing.

-=
Crisis management is bett;er institutionalized than it was
a decade
" ago.
There are differences between mini crises which need not come
to the President and can be handled on a coordinated basis by the appropriate government agencies, and the maxi crises which will probably always be handled on an ad hoc basis, depending on the needs and predilections of the President.

-
There was much more systematic handling of 40 Committee matters
10 years ago than there is today.

-
The government has never adequately dealt with the problem
of a' "net assessments''.
At one time the initiative existed in State
in th}e Policy Planning Staff under Acheson to perform net assessments,
and under Eisenhower the NSC had the role.
The CIA is not and should
-
not be in the net assessment business,
nor should the NSC;
State
is his candidate.

## David Packard

- Consideration should be given to having the Attorney Gene.ral pa.rt.icipate in 40 Committee mieetings to focus on the legality of proposals.

Attorneys General who have participated in the past did so as the President's personal representative and did not get _into.legal or moral issues.,

-
Both national and tactical intelligence are necessary so that
(1) we know what migl;lt happen and (2) what to do if it happens.

The military must know all about Soviet radars, not just where they are.

-
DIA's analysis has tended to be influenced by the military
services! interests,
Perhaps DIA should report directly to the new
Deputy Secretary of Defense for Intelligence, and not the Joint Chiefs.