However, despite the alarming and sustained nature of the losses and overwhelming consensus about the necessary reforms, this entire area of Government has proven distressingly resistant to change.

I would urge the Committee to take as its mission the development of a systematic implementation plan for the large number of these recommendations which are repeatedly made over the years and about which there is consensus (although little impetus within the bureaucracy). Some of these may involve legislation, as with the Jacobs Panel recommendations, but the vast majority involve mission definition, budget enhancement, and organizational improvement. Only a few are beyond the reach of the Committee.

As you have stated Mr. Chairman, “there is a formidable agenda for action. Many of the initiatives proposed in the mid-1980's by the Stilwell Commission, the Inman Panel, the Senate Intelligence Committee, and other experts have not yet been fully implemented." I believe the cumulative effect of even modest improvements in many of these areas would be to substantially improve security, easing the burden on counterintelligence agencies and inspiring the professionals who toil at these difficult tasks with regard to these many worthwhile recommendations, the task now is not further study but to move to action.

The new intelligence threats of the 1990's

Although we need to move to action on these long-standing recommendations, there is also need for detailed study of the coming threats of the 90's. I think it would be useful to single out, in particular, five of these broader threats, where I believe this Committee has a critical and, indeed, unique role to play.

Because the Committee's vision in creating the Jacobs Panel has already resulted in an obvious success, I strongly recommend that the Committee consider the creation of similar panels in each of these five areas. While this is no small workload, I believe that issues raised in considering how to respond to these threats are so important that they justify this level of effort and commitment. I also believe the Committee would have no trouble in finding a sufficient number of distinguished citizens to assist in this work.

The strategic security threat posed by on-site inspection of arms control agreements Whatever their other benefits, the security dimension of these arms agreements for the U.S. and the Soviet Union will be asymmetrical. While the U.S. counterintelligence and security organizations and the national security communities have been able to cope with on-site inspection under the INF treaty, these efforts began belatedly and have not been cheap either in manpower or dollars. However, it is by no means clear that they have the resources and capabilities to provide the same degree of protection under the proliferation of treaty inspection sites which will encompass a wide variety of technologies and locations under various arms control treaties now under negotiation: START; a CW agreement; TTBT; PNT; CFE; “Open Skies."

There will be an expanding multidisciplinary threat from the hundreds of Soviet inspectors who will be introduced into some of the most sensitive U.S. facilities, representing an unprecedented challenge to relatively limited U.S. counterintelligence and security capabilities. Their primary mission will be collection on non-treaty related items: advanced U.S. technology and the elicitation of personal vulnerability data on key U.S. personnel. Geography, culture, the current easing of tensions with concomitant perception of reduced threat, and the scarcity of counterintelligence and security resources will assist the Soviets' work.

The Government has yet to decide on a comprehensive approach to identifying the strategically sensitive information, programs, activities, and technologies, which would be placed at higher risk because of on-site inspection. Such analysis, if supplied in a timely manner, could inform U.S. negotiating positions and be used to maximize U.S. advantages under on-site regimes while minimizing U.S. security risks. An essential requirement is for performing risk analysis which identifies and ranks the vulnerabilities of U.S. sites, as well as specific Soviet threats. A systematic process for counterintelligence and security at these installations will be required once treaties are ratified.

Without this knowledge, the U.S. might agree to inspection procedures which result in a sense of "false security" or which are overly protective of U.S. programs whose security is not further threatened by on-site inspection regimes. As a result, U.S. negotiators may fail to press the Soviets on necessary inspection procedures and limits, erroneously believing they are protecting U.S. systems.

Even if security priorities are understood, individual departments and agencies and the Government as a whole, lack systems for efficiently marshalling protection assets in a coordinated, efficient, and cost effective fashion. I mention efficiency be

cause I think without a coordinated approach the Government could well wind up paying for a lot of "stupid" security. In some cases, security officers protect against the "wrong" threat-wasting limited resources and further jeopardizing the technologies and secrets to be protected. In other cases, lacking a comprehensive systematic "OPSEC" approach, telltale "signatures" remain exposed to Soviet collectors after all conventional security procedures have been taken.

The strategic security dimension of economic competitiveness

A second expanding threat is the foreign intelligence threat to American economic competitiveness. As you have pointed out, Mr. Chairman, "an increasing share of the espionage directed against the United States comes from spying by foreign governments against private American companies aimed at stealing commercial secrets to gain a national economic advantage."

In recent years, we have all come to recognize what has long been true: that the strength of the U.S. economy-the result of liberty and free enterprise-is a key element of our total national security. We also understand that national security allies are becoming economic competitors. Some have a "mercantilist" approach to international relations-their foreign policies are driven increasingly by the search for advantage for their commercial sectors and domestic economy. As DDCI Dick Kerr pointed out last April, many, if not most, industrialized nations spy against the U.S.-both the Government and commercial secrets-and share the strategic information they collect with companies in their own industrial sectors. Thus, many foreign_corporations enjoy an advantage, and U.S. companies face a very unlevel playing field.

Because U.S. economic strength is directly attributable to our free market and the minimization of Government involvement in the private sector and because it would be contrary to our other values, I do not believe the answer to U.S. competitiveness lies in trying to mimic this mercantilist approach. Rather, the issue is how to level the playing field and encourage Government decisions which maximize both competitiveness and national security.

Some have proposed U.S. Government intelligence sharing with the U.S. private sector. Perhaps some kinds of information can be shared with the private sector. For example, a general technology database, accessed via subscription to the Commerce Department might be helpful as a clearinghouse function. But the answer is likely to be no to the sharing of secret intelligence (clandestine intelligence/SIGINT, etc.) with private U.S. companies for many reasons, including: security, fairness, legality and morality; to name but a few.

I believe that the playing field can best be leveled by a national effort to protect U.S. Government and commercial strategic secrets. While at first glance this seems the least compatible with the "American way," in fact, it would do the least violence to American values. However, many problems and issues must be addressed. Balancing the importance of the "free exchange of ideas" with the need to protect some information from being proliferated in an uncontrolled way (recognized domestically in patents, copyrights, and proprietary information).

-the need for a process and capabilities in both the U.S. Government and the private sector to identify strategically vital information and understand its vulnerabilities and "signature."

-the appropriate role of the U.S. Government in providing security, countermeasures, and counterintelligence support to, or on behalf of, the private sector.

-the need for a national process to balance various intelligence and security equities as the U.S. Government attempts to remove obstacles to U.S. economic competitiveness.

The continuing threat to telecommunications and computers

A third area of threat for the 1990's, which I would single out both because of its potential for strategic damage and because of the particular difficulty we have had in addressing it, is the security and protection of our information system: telecommunications and computers.

The Government must ensure the absolute 100 percent security of the communications and computer systems which process classified information because these systems are the nerves that link together the rest of the national security system. Indeed, the Jacobs Panel correctly has focused a number of its legislative recommendations in the area of protecting our cryptographic integrity.

But, in studying the issue in the Reagan Administration, we also found that the less than 100 percent effective area of of our telecommunications and computers which process and transmit ostensibly unclassified information was also necessary and worthwhile (as opposed to the securing of classified information). Technical protection to the systems which communicate and process this information must be

based on an informed risk assessment which balances known and potential threats with actual vulnerabilities. The need for this protection owes to the telling fact that, in today's world, because of the power of machines to aggregate information and to sort, the most highly classified information can be gleaned from data that is, in fact, unclassified when taken in isolation. Here I am thinking of such vulnerabilities as Government telephone calls within the Washington, D.C. area or the accessing of large Government or commercial computer databases. This problem is exacerbated by the fact that the technology to exploit information systems has become ever cheaper and easier to access. The ability to glean this information is now readily and cheaply available, not just to the KGB, but to anyone who knows what to buy at Erol's or Radio Shack.

Much progress was made in the Carter Administration and early Reagan years in developing policies, and capabilities for improving both security and protection of telecommunications and computer systems. Experience has shown that this protection function, which is aimed solely at preventing illegal acquisition of this information while it is being transmitted or processed, responds well to incremental improvements. Unfortunately, because of particular political and perceptual problems (which I believe were extraneous to the foreign intelligence threat issue), progress has been halted in this area. Indeed, there has, in my view, been some retrenchment.

Because of its special understanding of both intelligence and counterintelligence needs, this Committee is uniquely equipped to sort out these difficult policy and practical issues and to reenergize this vital security effort.

Threats from non-State run intelligence activities

The fourth threat I would single out for the Committee's attention is that posed by what political scientists might call non-State intelligence actors. Here I am thinking, in particular, about intelligence operations run against U.S. interests by terrorists, illegal narcotic traffickers, and other criminals. Increasingly, sophisticated intelligence operations being run by foreign and domestic drug traffickers threaten U.S. counternarcotics operations. At present, it appears that the Government lacks a comprehensive security doctrine, as well as many of the counterintelligence and security capabilities, needed to protect our counternarcotics operations. Here again the Committee is uniquely qualified to address this problem, because it understands the need for comprehensive security efforts and has experience with the difficult issues of the interface between intelligence information and information gathered for criminal prosecution, given its past work in FISA, and the Classified Information Procedures Act.

The continuing Soviet threat in a period of declining awareness and increased access A fifth threat of the 1990's, which I believe requires special attention from the Committee, is, in fact, an old one. Mr. Chairman, you have been in the forefront of those cautioning that the tremendous changes we are seeing in the Soviet Union and particularly in Eastern Europe will place greater, not lesser, demands on U.S. intelligence. But I am concerned that in this era of warming relations, the Administration, the American people, and others in the Congress may come to believe that the Soviet intelligence threat, and indeed strategic intelligence threat, has disappeared. When coupled with the additional degree of threat in real terms which will result from the greatly expanded Soviet access to American society (particularly that threat directed against our high technology), and the continuing pressure on resources, we may find a counterintelligence and security community simply overwhelmed by the challenges they will face, despite the carefully developed reforms and enhancements of the past decade.

I am concerned that, as the overall national security budget is sharply reduced, cuts not be visited upon the security, countermeasures, and counterintelligence activities where, as we know, the threat, in reality, is increasing. An immediate example comes to mind. The number of investigators handling background checks for the Defense Investigative Service (D.I.S.) has been slowly built up in recent years directly as a result of the work of this Committee, concerned about the very real problem of reinvestigation (an issue addressed by the Jacobs Panel). Yet, I have heard that D.I.S. has been told to prepare for a 25 percent cut in its approximately 4,000 employees. After all of this painstaking work, and with the requirements increasing, I believe it would be the height of folly to allow a meat-ax approach to cutting the defense budget to damage this security capability, and put us once again behind the eightball on personnel security.

I am aware that the complexity of our budget process and the size and peculiarities of the bureaucracy often make it difficult to selectively protect such areas, but I believe that the Committee's understanding of how our capabilities are funded

give it grounds and opportunity to intercede on behalf of reason and protect, and where necessary enhance, the budgets of the security, countermeasures, and counterintelligence elements of the Government.

Further, Mr. Chairman, I also worry about a more insidious problem. That is the possibility that those in U.S. security and counterintelligence professions will see the lessening of restrictions on the flow of technology to the Soviet Union-e.g., COCOM control reductions-as a signal that American policy in this area is no longer seriously concerned with protecting our vital technology. If these policy changes are misconstrued as official indifference, those extremely sensitive and vital technologies which we have determined must be protected at all costs will be put at risk. There are a finite number of vital secrets in this democracy which are, relatively speaking, more precious strategically than may be the case with governments which have far more of them. Our deterrence, defense, and security depend on our keeping those secrets secure, even in times of lessened tension. It is important that those charged with their protection continue their effort even in a period of change. I would urge this Committee to continue to make the case that despite the events in Eastern Europe, the foreign intelligence threat is not receding, but is increasing in quality, quantity, and breadth. To argue for sufficient resources, and to help the American people understand that good security and counterintelligence will allow us to keep our "peace dividend" of freedom, security, and prosperity and compete economically in the world on a more level playing field.

SPECIFIC COMMENTS ON THE PROVISIONS OF S. 2728

From a security and counterintelligence policy perspective, I support each of the recommendations made by the Jacobs Panel and the provisions of S. 2726 which would implement them. If fully and enthusiastically implemented by the Executive branch, they will improve counterintelligence and security capabilities. These recommendations are reasonable, carefully crafted, and, in my view, are respectful of the rights of all Americans, including especially those who incur added obligation as a result of their access to classified information.

I am particularly impressed that S. 2726 focuses largely on the most sensitive categories of classified information and places the additional security burdens on those with access to TOP SECRET or to other sensitive categories such as cryptographic information. I believe these provisions, tailored to protecting the most sensitive information, demonstrate both the careful approach the Committee has taken and its recognition that our security and counterintelligence efforts must proceed from an understanding of the importance of our secret information and programs, their security, vulnerability and threat they face.

I would underscore once again that virtually all of these provisions, especially those directed at improvements in personnel security, require sophisticated analysis to make practical use of the information developed. As I have indicated at the present time, all-source analytic centers with full access to security vulnerability and threat data to conduct such analysis do not exist.

Uniform requirement for access to TOP SECRET

The failure of the Executive branch to solve the easily remedied problem of uniform minimum standards for access to TOP SECRET exemplifies virtually all of the factors which work against an effective counterintelligence and security policy: fragmentation; lack of leadership; extreme bureaucratization; the repeated placing of turf consideration above the good of the country; and a general unwillingness to consider reform.

If the Executive branch has been unable to solve this problem after all these years, it is time for congressional action.

I would also point out that the Jacobs Panel looked at past cases, which is sensible; but, to the extent that we make progress in dealing with the volunteer/venal type of spy, we should expect foreign intelligence services to adapt by shifting their strategies (perhaps back to ideological recruitment. This again points out the need for an ongoing analytical capability to monitor the situation and make sure that the next time around, it doesn't take us twenty years to realize that the adversary has changed tactics.

This section of S. 2726 also requires agreement to report foreign contacts where an apparent effort is being made to acquire classified information. There are such policies within the Executive branch now; the problem is that they are not effective because the Executive branch has not developed a well publicized, workable system for carrying out this obligation. I believe the Committee should direct that the Administration bring forth such a plan as part of the requirement for implementation (in section 805).

Another issue related to this section of the proposed legislation is the standardization of the background check procedures. It should not be that agencies refuse to recognize the background check of another agency, or refuse to recognize clearances from another agency, or that one individual requires several background checks by different agencies. The Committee should insist that the procedures of each agency meet a commonly recognized performance standard.

Requirements for access to cryptographic information

Given the Executive branch's continuing inability or unwillingness to set and enforce such standards, I believe that this very sensible legislation is absolutely required.

Amendment to right the financial privacy act

This amendment is necessary, but again, alone it will not produce the required security improvement without a practical plan for implementation. My impression is that Panel and Committee envisage that Government would request reports on a selective basis, but since it would rely on these reports as an early indicator of trouble, selective access would not be enough. To make effective use of access to financial records as a screening indicator, it would seem that the Government would want to receive, on a periodic basis, reports on everyone with a TOP SECRET clearance. Such a requirement seems reasonable-we do much the same for conflict of interest financial reporting, which presumably is a lesser threat to national security. Some automated way of screening the reports for indicators of trouble would be needed and appropriate protection against misuse developed.

Extending FISA to physical searches

Perhaps the most difficult provision for me, from at least one perspective, is the proposed extension of the Foreign Intelligence Surveillance Act (FISA) to physical searches. I am not a lawyer and cannot speak to the legal theories involved. However, I do believe the Committee should question the Administration carefully because it is my impression they believe strongly that the President has constitutional authority to conduct these searches for intelligence purposes. I do feel qualified to address this issue from a national security policy perspective, however, since I spent six years staffing the President and his national security advisors on FISA requests and was thus intimately involved in the FISA process.

In general, Mr. Chairman, I am concerned that the impetus for this provision stems from a perception of unease among intelligence officers that they do not feel comfortable acting on a claim of inherent presidential authority. If that is the case, I think the President and his advisors and other officials should be under some obligation to bolster the Intelligence Community's confidence and take measures to ensure that this necessary tool is available. Further, I know of no suggestion that the Intelligence Community is abusing this intelligence technique. Thus, the presumed danger to intelligence officers in conducting these intelligence operations seems to me vastly overblown.

Moreover, I personally believe we have learned much in the last twenty years about intelligence activities and the prevention of abuse of civil liberties. Today, we have this Committee and the House Permanent Select Committee on Intelligence. A systematic misuse of an intelligence tool that could have occurred twenty or thirty years ago simply cannot, as a practical matter, occur today. And if an individual breaks the rules, procedures are in place (in many cases, far more effectively than in other areas of Government) to deal with such a transgression.

Thus, I believe that concerted leadership should be able to overcome any uneasiness of officials over the use of physical search for intelligence and security purposes. However, if such an effort is not possible and the Committee is satisfied that there is absolutely no other way to ensure the necessary use of this counterintelligence activity, I believe that this provision is acceptable.

Thank you Mr. Chairman for the opportunity to share these views with the Committee.

ENDNOTE

1 These studies include:

-numerous Senate Select Committee on Intelligence and House Permanent Select Committee on Intelligence Reports: Senate Report 101-78, "FY 1990-1991 Appropriations Authorization for Intelligence Activities," July 1989; HPSCI Report 100-1094, "U.S. Counterintelligence and Security Concerns: A Status Report-Personnel and Information Security," October 1988; HPSCI Report 100-5, "U.S. Counterintelligence and Security Concerns-1986," February 1987;