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EvolutionUSIntelCommunity.pdf

Intelligence Authorization Act For Fiscal Year 1995

Public Law 103-359 October 14, 1994

Title IX-Commission on the Roles and Capabilities of the United States Intelligence Community

Sec. 901. Establishment.

There is established a commission to be known as the Commission on the Roles and Capabilities of the

United States Intelligence Community (hereafter in this title referred to as the "Commission").

Full Commission report available at: http://www.fas.org/irp/offdocs/report.html

Appendix A:

The Evolution of the U.S. Intelligence

Community-An Historical Overview

The function of intelligence as an activity of the U.S. Government is often regarded as a product of the

Cold War. Indeed, much of what is known today as the Intelligence Community was created and

developed during the Cold War period. But intelligence has been a function of the Government since the

founding of the Republic. While it has had various incarnations over time, intelligence has historically

played a key role in providing support to U.S. military forces and in shaping the policies of the United

States toward other countries.

The Early Years of the Republic

During the Revolutionary War, General George Washington was an avid user of intelligence as well as a

consummate practitioner of the intelligence craft. Records show that shortly after taking command of the

Continental Army in 1775, Washington paid an unidentified agent to live in Boston and surreptitiously

report by use of "secret correspondence" on the movements of British forces. Indeed, Washington

recruited and ran a number of agents, set up spy rings, devised secret methods of reporting, analyzed the

raw intelligence gathered by his agents, and mounted an extensive campaign to deceive the British

armies. Historians cite these activities as having played a major role in the victory at Yorktown and in

the ability of the Continental Army to evade the British during the winters at Valley Forge.

In a letter to one of his officers written in 1777, Washington wrote that secrecy was key to the success of

intelligence activities:

"The necessity of procuring good intelligence is apparent and need not be further urged-All that

remains for me to add is, that you keep the whole matter as secret as possible. For upon Secrecy,

success depends in most Enterprises of the kind, & for want of it, they are generally defeated,

however, well planned...." [letter to Colonel Elias Dayton, 26 July 1777]

Washington was not the only one to recognize the importance of intelligence to the colonials' cause. In

November of 1775, the Continental Congress created the Committee of Secret Correspondence to gather

foreign intelligence from people in England, Ireland, and elsewhere on the European continent to help in

the prosecution of the war.

Washington's keen interest in intelligence carried over to his presidency. In the first State of the Union

address in January 1790, Washington asked the Congress for funds to finance intelligence operations. In

July of that year the Congress responded by establishing the Contingent Fund of Foreign Intercourse

(also known as the Secret Service Fund) and authorizing $40,000 for this purpose. Within three years,

the fund had grown to $1 million, about 12% of the Government's budget at the time. While the

Congress required the President to certify the amounts spent, it also allowed him to conceal the purposes

and recipients of the funds. (In 1846, this latter provision was challenged by the House of

Representatives, but President Polk, citing national security grounds of protection of sources, refused to

turn over more specific information on the use of the Fund to the Congress.)

Judging by the paucity of the historical record, interest in intelligence as a tool of the Executive appears

to have waned in succeeding Administrations, although occasional lapses in performance sometimes

produced controversy. During the War of 1812, for example, military intelligence failed to discover that

British troops were advancing on Washington until they were 16 miles from the Capital. The Secretary

of War had refused to believe that the British would invade Washington, and military intelligence

reported from this perspective.

Intelligence regained prominence during the Civil War. Both the Union and Confederate leadership

valued intelligence information, established their own spy networks, and often railed at the press for

providing intelligence to the other side. The Confederate forces established the Signal and Secret

Service Bureau with the primary charter of obtaining northern newspapers. On the Union side, the

Departments of the Navy, State, and War each maintained an intelligence service. Union codebreakers

decoded Confederate messages and learned that the plates for Confederate currency were being

manufactured in New York. In June of 1861, the first electronic transmission of information was sent

from an aerial reconnaissance platform-in this case, a balloon-directly to President Lincoln on the

ground. Two months later, Union forces established a Balloon Corps. Although disbanded after two

years, it succeeded in detecting a large concentration of Confederate troops preparing to attack at Fair

Oaks, Virginia.

In 1863, the first professional intelligence organization was established by the Union forces, the Bureau

of Military Intelligence. Headed by the Commander of the Army of the Potomac, General Joseph

Hooker, the Bureau prepared evaluations of the Confederate Army's strength and activities based on

sources that included infiltrations of the Confederacy's War and Navy Departments. It was considered

the best run intelligence operation of the Civil War. Yet, Hooker's ineffective use of intelligence

(reportedly he was inundated with information) was largely responsible for the Confederate victory at

Chancellorsville. Similarly, it has been suggested that Lee's defeat at Gettysburg was partially

attributable to his lack of intelligence on the strength and deployment of Union forces.

The Bureau of Military Intelligence was disestablished at the end of the war. A byproduct of its

dissolution was the Secret Service, established in 1865 to combat counterfeiting.

A Peacetime Role for Intelligence

Prior to the 1880s, intelligence activities were devoted almost exclusively to support of military

operations, either to support deployed forces or to obtain information on the views or participation of

other countries in a particular conflict. In March 1882, however, the first permanent intelligence

organization-the Office of Naval Intelligence-was created within the Department of the Navy to collect

intelligence on foreign navies in peacetime and in war. Three years later, a similar organization-the

Military Intelligence Division-was created within the Army to collect foreign and domestic military data

for the War Department and the Army.

The Administration of Theodore Roosevelt saw perhaps the most active use of intelligence for foreign

policy purposes by any President until that time. Historians note that Roosevelt used intelligence

operatives to incite a revolution in Panama to justify annexing the Panama Canal. In 1907, the President

also relied on intelligence that showed the military build-up of the Japanese as justification to launch the

worldwide cruise of the "Great White Fleet" as a display of U.S. naval force.

For the most part, however, the early part of the twentieth century was marked not by an expanded use

of intelligence for foreign policy purposes, but by an expansion of domestic intelligence capabilities.

The Justice Department's Bureau of Investigation (the forerunner of the FBI) was established in 1908

out of concern that Secret Service agents were spying on members of Congress. By 1916, the Bureau

had grown from 34 agents focusing primarily on banking issues to 300 agents with an expanded charter

that included internal security, Mexican border smuggling activities, neutrality violations in the Mexican

revolution, and Central American unrest. After war broke out in Europe, but before the United States

joined the Allied cause, the Bureau turned its attention to activities of German and British nationals

within our borders.

World War I

At the time the United States entered the war, it lacked a coordinated intelligence effort. As a champion

of open diplomacy, President Woodrow Wilson had disdained the use of spies and was generally

suspicious of intelligence. His views on the subject appeared to change, however, as a result of a close

association developed with the British intelligence chief in Washington.

In fact, British intelligence played a major role in bringing the United States into World War I. Public

revelations of German intelligence attempts to prevent U.S. industry and the financial sector from

assisting Great Britain greatly angered the American public. Subsequently, British intelligence presented

Wilson with the decryption of German diplomatic and naval traffic showing a German effort to entice

the Mexican government into joining Germany against the United States in return for Texas, Arizona,

and New Mexico if Germany won the war. Later declassified and disclosed to the public, this

intercepted communication, known as the "Zimmerman Telegram," infuriated Wilson and added support

to his address before a joint session of Congress in 1917 urging that the U.S. declare war on Germany.

In June of 1917, the first U.S. signals intelligence agency was formed within the Army. Known as "MI-

8," the agency was charged with decoding military communications and providing codes for use by the

U.S. military. In 1919, at the end of the war, the agency was transferred to the State Department. Known

as the "Black Chamber," it focused on diplomatic rather than military communications. In 1921, the

Black Chamber celebrated perhaps its most significant success by decrypting certain Japanese

diplomatic traffic. The intelligence gained from this feat was used to support U.S. negotiators at a

Washington conference on naval disarmament. Yet, despite such successes, President Hoover decided

that the State Department's interception of diplomatic cables and correspondence could not be tolerated.

Apparently agreeing with the alleged, yet oft-quoted statement of his Secretary of State, Henry Stimson,

that "Gentlemen do not read each other's mail," Hoover returned the agency to a military orientation

under the Army Signal Corps.

Other intelligence entities remained in existence after the end of WWI but saw their resources cut

substantially. An exception to this general trend was the Justice Department's Bureau of Investigation

which saw a marked expansion of its mission and workforce. In 1924, J. Edgar Hoover was named

director of the Bureau (renamed the Federal Bureau of Investigation (FBI) in 1935). The FBI's charter

was broadened particularly in the years leading to World War II, when concerns for U.S. internal

security were mounting in the face of German aggression in Europe. The FBI was made responsible for

investigating espionage, counterespionage, sabotage, and violations of the neutrality laws. It was also

during this period that the first effort was made to coordinate the activities of the various intelligence

elements of the Government. An Interdepartmental Intelligence Coordinating Committee was created for

this purpose, but because the Committee lacked a permanent chair and participating agencies were

reluctant to share information, it had limited impact.

World War II & Its Aftermath

The years immediately before the United States entered World War II saw American interest in

developments in Europe and the Pacific intensify dramatically, prompting both formal and informal

efforts to gather and analyze information. President Franklin Roosevelt relied heavily on American and

British friends traveling abroad to provide him with intelligence on the intentions of other leaders. One

such friend was William J. Donovan, an aficionado of intelligence and a veteran of World War I, whom

Roosevelt sent to Europe in 1940 to gather information on the stability of Britain and again in the spring

of 1941 to gather information on Italian Dictator Mussolini, among other matters. Upon his return,

Donovan lobbied hard for the creation of a centralized, civilian intelligence apparatus to complement

that of the military.

In July 1941, in response to Donovan's urging, Roosevelt appointed Donovan as Coordinator of

Information to form a non-military intelligence organization. The Coordinator of Information was to

"collect and analyze all information and data which may bear upon the national security" for the

President and those he designated. The Coordinator was given the authority, "with the approval of the

President," to request data from other agencies and departments, but was specifically admonished not to

interfere with the duties and responsibilities of the President's military and naval advisers. FBI Director

J. Edgar Hoover, fearing a loss of authority to the new Coordinator, secured the President's commitment

that the Bureau's primacy in South America would not change.

Borrowing heavily from the British intelligence model, Donovan created a special staff to pull together

and analyze all national security information and empaneled an eight-member review board, drawn from

academia, to review analysis and test its conclusions. In concert with the Librarian of Congress, COI

Donovan organized the Division of Special Information at the Library, to work with Donovan's

analytical staff and to coordinate scholarship within the Library and in academia. In theory, the Division

was to provide unclassified information to Donovan's staff, who would combine it with classified

information to produce an analysis that would be reviewed by the special board before presentation to

the President. Although in practice the process did not operate precisely as planned, the concept of

centralized analysis was established.

The surprise attack on Pearl Harbor by the Japanese on December 7, 1941, brought America into the war

and revealed a significant failure on the part of the U.S. intelligence apparatus. As subsequent

investigations found, intelligence had been handled in a casual, uncoordinated manner, and there had

been insufficient attention to certain collection requirements. The lack of coordination among agencies,

principally the Army and the Navy, resulted in a failure to provide timely dissemination of relevant

information to key decisionmakers. Moreover, intelligence analysts had grossly underestimated Japanese

capabilities and intentions, revealing a tendency to misunderstand Japanese actions by looking at them

with American cultural biases. After the war, the resolve of America's leaders "never again" to permit

another Pearl Harbor largely prompted the establishment of a centralized intelligence structure.

America's entrance into World War II created an immediate need for intelligence to support the

warfighter. While the Army and the Navy maintained their own intelligence capabilities, none were

prepared to provide the kind of support needed.1 To bolster this effort, the Office of Strategic Services

(OSS) was created in June 1942, under the recently established Joint Chiefs of Staff to succeed the

Coordinator of Information. William Donovan remained in charge of the reorganized unit. In addition to

assuming the analytical role of its predecessor, the OSS was chartered to carry out clandestine

operations against the Axis powers on a worldwide scale. It was not, however, readily accepted by the

Joint Chiefs of Staff (JCS), who remained skeptical of the value of OSS activities, and the new unit

faced strong competition from the FBI and the Army's intelligence organization.

Usually glamorized as the dashing operations arm of the U.S. Army (with its well-known espionage

exploits with the Resistance in Europe), the OSS' contribution to intelligence production has gone

largely unnoticed. It was, however, one of the seven major intelligence producers and was an important

training ground for a generation of intelligence analysts, as well as operatives. Decidedly different than

the British system, the OSS established the tradition of putting analysts and operatives in the same

organization. The difficulties, however, that the OSS had in establishing itself within the JCS structure

reaffirmed Donovan's belief that the peacetime successor to the OSS should be a civilian organization

directly responsible to the President. In 1944, Donovan started campaigning for this model.

In the meantime, substantial intelligence capabilities were created in the military services to support the

war effort. Army intelligence operations were supervised by the Military Intelligence Division of the

Army General Staff. Its operating arm, the Military Intelligence Service (MIS), was created in 1942 and

carried out collection activities around the world, including agent operations, signals interception, and

photo reconnaissance. MIS also provided intelligence analysis to U.S. and allied commands. At the same

time, intelligence elements were assigned directly to operating forces in the field. These intelligence

units collected and analyzed tactical signals intelligence, interpreted photos, and performed ground

reconnaissance missions. Aerial reconnaissance missions were run by the Army Air Corps. To provide

counterintelligence support, including the debriefing of prisoners and defectors, the Army

Counterintelligence Corps was established in 1942 with both domestic and overseas missions.

Army signals intelligence analysts succeeded in breaking and exploiting the code systems used by the

Imperial Japanese Army, producing intelligence which many believe shortened the war in the Pacific. In

England, after the U.S. joined the war, Army teams participated in the work begun by the Polish and

continued by the British to decode German military communications encrypted with the Enigma cipher

machines. The intelligence produced by this effort, codenamed "ULTRA," gave the Allies unparalleled

insight into the workings of the German military and shortened the war in Europe.

Within three days of the devastating and embarrassing attack on Pearl Harbor, the Navy's Combat

Intelligence Unit at Pearl Harbor was busy trying to crack the Japanese Fleet code, JN25. By April 1942,

enough information was known to allow the American Pacific Fleet to deal the first blow without visual

sighting of the Japanese Fleet at the Battle of Coral Sea. By May 1942, Navy cryptanalysts succeeded in

cracking the Japanese code. This significant naval intelligence capability, on par with the British and

Polish decryption of the German code, allowed the Americans to defeat the Japanese at the Battle of

Midway and to countermeasure the Japanese during the rest of the war in the Pacific.

Also in the Pacific theater, an Allied Translator and Interpreter Section, composed of 2,000 American

Nisei soldiers, interrogated Japanese prisoners and exploited captured documents. Since the OSS did not

operate in the South Pacific Theater, special human source intelligence capabilities were established,

using Australian and Philippine guerrilla forces as well as a special Army long-distance reconnaissance

team known as the Alamo Scouts.

Similarly, the Marine Corps developed and deployed the Navajo Code Talker Program in May 1942. By

1945, operating in both theaters of the War, 400 Native American Navajo members of the Corps were

encoding, transmitting, and decoding English messages in the complex language of the Navajo Indians.

The Code Talkers have been credited with playing a significant role in the Marine Corps victory on Iwo

Jima. So successful was this method of encryption and communication that it was employed in the

Korean and Vietnam conflicts.

Toward the end of the war, the Administration was left to decide what to do with these intelligence

capabilities. A vigorous and heated debate ensued between those who favored the Donovan idea of an

independent, civilian intelligence organization reporting directly to the President and those who favored

retention and control of intelligence by the military. The State Department, among others, weighed in

heavily against the Donovan approach.

In September 1945, while the debate continued, President Truman, acting on a recommendation from his

Budget Director, abolished the OSS by Executive Order and divided its functions between the War and

State Departments. State received the research and analysis function, combining it with the existing

analytical office to form the Interim Research and Intelligence Service (IRIS). The War Department

formed the Strategic Services Unit (SSU) out of the clandestine side of the OSS. President Truman had

unrealized hopes that the State Department would take over the coordination of intelligence for the

Government.

At about the time the OSS was being disbanded, a study commissioned by Navy Secretary James

Forrestal and chaired by private businessman Ferdinand Eberstadt was published. While the report dealt

principally with the issue of military unification, it also recommended coordination of the intelligence

function through the establishment of a National Security Council (NSC) and a Central Intelligence

Agency (CIA). The NSC would coordinate the civilian and military national security policy for the

President. The CIA, under the auspices of the NSC, would serve "to coordinate national security

intelligence." While the military generally supported the recommendation calling for centralized

coordination of "national security" intelligence, it was unwilling to give up its own collection programs

and analytical capabilities.

The Central Intelligence Group

While the recommendations of the Eberstadt study were to influence significantly the content of what

eventually became the National Security Act of 1947, they were not immediately implemented.

However, President Truman decided to settle the question of whether there should be a centralized

civilian intelligence organization.

Reflecting his dissatisfaction with what he perceived to be the haphazard nature of intelligence

collection, his desire to have one authoritative source for intelligence advice, and, above all, his desire to

avoid another Pearl Harbor, President Truman issued an executive directive on 22 January 1946

establishing a National Intelligence Authority, a Central Intelligence Group (CIG) "under the direction

of a Director of Central Intelligence" (DCI), and an Intelligence Advisory Board. The latter body

comprised civilian and military heads of intelligence agencies who were to advise the DCI. The National

Intelligence Authority, comprising the Secretaries of War, State, Navy, and the President's personal

representative, was charged with planning, developing, and coordinating the intelligence effort. Finally,

the CIG (a small interdepartmental group-not an independent agency) was responsible for coordinating,

planning, evaluating, and disseminating intelligence and overtly collected information. Funding and

staffing of the CIG were provided by other departments and agencies which retained control over their

own intelligence efforts.

The first DCI, Rear Admiral Sidney Souers (who wrote the intelligence section of the Eberstadt study),

reluctantly accepted the appointment and stayed in the position only six months. Under his tenure, the

CIG played a limited analytical role due to Souers' reluctance to challenge the analytical product of the

State Department's IRIS. But the IRIS was soon decimated by congressional budget cutting, and most of

its positions were dispersed throughout the Department and to other agencies. In all, 600 positions were

transferred from the IRIS to the National Intelligence Authority, the CIG, and the military services. This

left the Department with a skeleton analytic group, thus limiting its mission to providing intelligence

support only to the policymakers within the Department of State.2

The second DCI, Lieutenant General Hoyt Vandenberg, proved more aggressive than his predecessor,

gaining authority for the CIG to hire personnel and acquire its own administrative support, as well as

expanding clandestine collection, research and analysis, and the overall size of the organization. At the

behest of the President, the first national estimate, on Soviet intentions and capabilities, was produced in

1946 during Vandenberg's tenure.

At the time Vandenberg became DCI, in June of 1946, legislation was being drafted in the Congress and

in concert with the Truman Administration to provide for the unification of the military establishment

under a Secretary of Defense. Inasmuch as the CIG would need an annual appropriation to continue in

existence, Vandenberg saw an opportunity to incorporate legislative language creating an independent

central intelligence agency with several features modeled on the existing charter of the CIG. Within a

month of assuming the duties of DCI, Vandenberg submitted a proposal describing this new entity, with

the support of the Truman Administration, which consisted basically of the pertinent language from the

1946 presidential directive and language that had been previously published in the Federal Register.

The National Security Act of 1947

In the ensuing congressional debate on the Vandenberg proposal, several issues emerged about the role

of the DCI.

One was whether the DCI should be a civilian or military officer. Some argued that if the DCI were an

active duty military officer, he would be subject to the control of his parent service. On the other hand,

the military was recognized as the principal consumer of intelligence and controlled most of the

resources devoted to it. The legislation ultimately provided that the President could appoint either a

civilian or a military officer as the DCI, but if a military officer were appointed, he would be removed

from the control of his parent service.

Another issue was whether the DCI should be a member of the National Security Council that was being

established by the bill as the White House focal point for national security matters. Navy Secretary

James Forrestal argued strongly against this proposal saying that the Council would be too large to

accomplish its business and that the new DCI would have ready access without formal membership. His

argument was persuasive and the DCI's proposed membership on the NSC was dropped.

A third issue was the relationship of the DCI to other agencies, in particular, the FBI. The draft proposal

provided that the new Central Intelligence Agency would serve as the focal point within the Government

where intelligence would be gathered and evaluated. As such, the CIA would necessarily require access

to information collected by other agencies. The military agreed to this coordinating role for the CIA so

long as the military was able to maintain its own collection and analytical capabilities to support military

operations. The FBI, however, insisted on limiting the CIA's access to FBI files only if written notice

was given first and only if access was "essential to the national security."

On July 27, 1947, President Truman signed into law the National Security Act of 1947, creating a

postwar national security framework. A National Security Council was created to coordinate national

security policy. The Act created the position of Secretary of Defense and unified the separate military

departments (the Army, the Navy, and the newly-created Air Force) under this position. The Act also

established the Joint Chiefs of Staff to serve as the principal military advisers to the President and the

Secretary of Defense. Finally, a Central Intelligence Agency was established with the Director of

Central Intelligence as its head. At the time of its creation, the CIA was the only agency charged with a

"national" intelligence mission.

The statutory language regarding the authorities and functions of the new Central Intelligence Agency

was left intentionally vague. In part this reflected the bureaucratic sensitivities involved in specifying in

the law the DCI's roles and missions in regard to other agencies, and, in part, the desire to avoid wording

that other governments might find offensive. Thus, there was no mention of "espionage" or "spying" in

the statute, nor was there any wording to suggest that covert actions (i.e. secret operations to influence

political conditions in other countries) were part of the new agency's charter. Rather, the CIA was

authorized to perform "services of common concern" to other intelligence agencies as may be

determined by the National Security Council and to perform "such other functions and duties related to

intelligence affecting the national security as the National Security Council may from time-to-time

direct." (The NSC did, in fact, issue directives in 1947 and 1948, providing specific authority for CIA's

operational and analytical functions.)

The 1947 Act also included an express prohibition on the CIA's having any "police, subpoena, law-

enforcement powers, or internal security functions," reflecting the congressional and public desire to

ensure that they were not creating a U.S. "Gestapo" and to preserve the FBI's primacy in domestic

matters. The law also made the DCI responsible for "protecting intelligence sources and methods from

unauthorized disclosure."

The Early Years of the CIA

The early years of the CIA appear to have been difficult ones as the Agency attempted to establish itself

within the Government, amid growing concern about Communist gains in Eastern Europe and Soviet

expansionism.

Rear Admiral Roscoe Hillenkoetter was DCI at the time the CIA was created. He organized the Agency

into two principal divisions: one dealing with intelligence operations and the other with analysis. The

analytical arm, in response to policymaker interest, prepared and disseminated short-term intelligence

pieces. DCI Hillenkoetter found it difficult, however, to force other agencies to participate in the

development of longer papers despite the language of the 1947 Act. The emphasis on producing short-

term pieces, on the other hand, was often seen as intruding on the role of other producers such as the

State Department, the military departments, and the FBI. There was also conflict on the operational side.

The Government considered initiating psychological warfare operations overseas to counter Soviet

expansionism, but the NSC preferred that the State Department, rather than the CIA, be responsible for

them. It was only when the Secretary of State vigorously objected to this role for the Department that it

was assigned to the CIA.

In January 1948, less than a year after the CIA was created, the National Security Council, exercising its

oversight role under its Executive Secretary Sidney Souers,3 asked three private citizens to examine

comprehensively CIA's "structure, administration, activities, and interagency relations." Allen Dulles,

William Jackson and Matthias Correa, three New York lawyers with experience in intelligence,

submitted their highly critical report in January 1949. Although the NSC found the criticism of DCI

Hillenkoetter and the CIA "too sweeping," it nevertheless accepted the report's basic findings: CIA was

not coordinating intelligence activities in the Government; the correlation and evaluation functions were

not well organized, and other members of the fledgling Intelligence Community were not fully included

in the estimates process; and the DCI lacked sufficient day-to-day contact with the work of CIA. The

Dulles-Jackson-Correa report called upon the DCI to exert "forthright leadership," and to actively use

existing coordination bodies, such as the Intelligence Advisory Committee ((IAC) comprising the

leaders of the military and civilian intelligence agencies). For example, the report urged that the final

coordination of intelligence estimates be done through IAC, to establish estimates as "the most

authoritative statement[s] available to policymakers."

The Dulles-Jackson-Correa report also made the point that coordination and planning could only be

effective with a strong DCI and CIA. It therefore recommended that the DCI reorganize his office to

include on his immediate staff the heads of CIA's main components. The report also stated that the CIA

would benefit from civilian leadership and recommended that if another military DCI was appointed, he

should resign his military commission "to free him from all service ties and from rotations that would

preclude the continuity needed for good intelligence work." 4

Also during 1948, the Congress established "The Commission on Organization of the Executive Branch

of the Government." Chaired by former President Herbert Hoover, the Commission established a sub-

group to look at national security organizations, including CIA. This group, headed by New York

businessman Ferdinand Eberstadt,5 concluded that the basic organizational arrangements for national

security were sound, but there were problems in carrying out the function. The CIA was specifically

criticized for not being properly organized to assimilate all information concerning scientific

developments abroad, to estimate the significance of these developments, and to give direction to

collectors. Concern was also expressed that the CIA was not being given access to all available

information within the Government. The fear that other countries might develop nuclear weapons led the

Eberstadt group, with some urgency, to state: "Failure properly to appraise the extent of scientific

developments in enemy countries may have more immediate and catastrophic consequences than failure

in any other field of intelligence."

In its November 1948 report, the Hoover Commission called for "vigorous efforts" to improve CIA's

internal structure and the quality of its product, especially in scientific and medical intelligence. A

senior-level "evaluation board or section" within CIA was proposed to work solely on intelligence

evaluations. Finally, the Commission urged positive efforts to foster "relations of mutual confidence"

between CIA and its consumers.6

Lieutenant General Walter Bedell Smith, who succeeded Hillenkoetter as DCI soon after the outbreak of

the Korean War, took the initial steps to implement the recommendations of the Hoover and the Dulles-

Jackson-Correa reports. Among his first steps was to recruit Allen Dulles, an OSS veteran, as Deputy

Director for Plans, and to establish a Board of National Estimates chaired by William Langer of Harvard

University.

In 1949, Congress enacted additional legislation for the CIA providing its Director with certain

administrative authorities necessary for the conduct of clandestine intelligence activities that were not

available to government agencies generally. In particular, the new law permitted the DCI to expend

appropriated funds for procuring goods and services to carry out the Agency's functions without having

to comply with the cumbersome procurement rules applicable to other government agencies. It also

permitted the Agency to expend appropriated funds based solely on a voucher signed by the DCI.

1950s & 1960s: The Development of the Intelligence Community

The decades of the 1950s and 1960s saw an expansion and an intensification of the Cold War as well as

an expansion in the size and responsibilities of U.S. intelligence agencies to cope with its challenges.

The 1950s

Acting on the recommendations of a commission of senior officials headed by George Brownell,

President Truman, by classified memorandum, established the National Security Agency (NSA) in

October 1952 in recognition of the need for a single entity to be responsible for the signals intelligence

mission of the United States. Placed within the Department of Defense, NSA assumed the

responsibilities of the former Armed Forces Security Agency as well as the signals intelligence

responsibilities of the CIA and other military elements. In 1958, the National Security Council issued

directives that detailed NSA's mission and authority under the Secretary of Defense.

CIA meanwhile made important strides. Its analytical efforts during the Korean War established the

Agency as a key player in the defense and foreign policy areas. On the operational side, the National

Security Council reissued its 1948 directive on covert action to achieve peacetime foreign policy

objectives in 1955, reemphasizing that implementation responsibility was with the CIA. In 1954,

President Eisenhower approved the concept of a high-flying reconnaissance aircraft to fly above the

Soviet air defense systems. Due largely to CIA's special procurement authorities and ability to carry out

the mission in secret, the President established the effort as a joint CIA-Air Force program. The ability

of the program to develop and field the U-2 (by 1955) earlier than planned and below the original cost

estimate was a clear success for the participants. Before the end of the decade photos provided by the U-

2 figured prominently in defense planning.

In 1954, Congress once again sought to examine the organization and efficiency of the Executive

Branch and revived "The Commission on Organization of the Executive Branch of the Government."

With former President Hoover again at the helm, the "Second Hoover Commission" formed a sub-group

headed by General Mark Clark to study the agencies of the Intelligence Community. 7

The Clark task force recommended that the CIA be reorganized internally to focus better on its primary

missions, and that the DCI appoint a "Chief of Staff" or executive officer to run the day-to-day

operations.8 It also called for a permanent "watchdog" commission to oversee the CIA, comprising

members of the House and Senate and distinguished private citizens appointed by the President.9 A year

later, in 1956, President Eisenhower established the Presidential Board of Consultants on Foreign

Intelligence Activities (later renamed the President's Foreign Intelligence Advisory Board by President

Kennedy). Shortly after it was formed, the Board issued a critical review of the DCI's management of

the Intelligence Community. Later, in 1957, on the Board's recommendation, President Eisenhower

established the United States Intelligence Board as the single forum for all intelligence chiefs to provide

advice to the DCI on intelligence activities.

In 1957, spurred by the Soviet launch of Sputnik, the CIA and the Air Force began planning for the first

photo reconnaissance satellite. Publicly referred to as "the Discoverer Weather System" and recently

declassified as "CORONA," the system was successfully operational by 1962.

The 1960s

The decade of the 1960s was marked by significant technological advances, further expansion of the

Intelligence Community, and the first tentative efforts of a DCI to exert control over it. But, as far as the

public was concerned, it started with the notable failure of the CIA at the Bay of Pigs. An invasion of

Cuban expatriates, trained by the CIA, launched an invasion of Cuba in the spring of 1961 with the

intent of ousting the Castro regime. Without U.S. military assistance, the invasion crumbled. The

reputation of the Agency suffered significantly.

In August of the same year, Secretary of Defense McNamara created the Defense Intelligence Agency

(DIA) to consolidate and to coordinate the production of intelligence analysis by each of the military

services and to serve as the principal source of intelligence support to the Secretary and his staff, as well

as to the Joint Chiefs of Staff and the unified commands. DIA opened a new production center in 1963,

but the military departments continued to maintain their own analytical capabilities. In 1965, DIA was

given responsibility for administering the newly-created Defense Attache system, consisting of

uniformed military personnel serving in embassies and collecting, by overt means, information useful to

the military.

In the meantime, there were substantial advances in U.S. technical collection capabilities. Photographs

taken by the U-2 were a large factor in the successful resolution of the Cuban missile crisis in 1962. The

first photo reconnaissance satellite was launched the same year. The first high altitude, high speed

reconnaissance aircraft, the SR-71, was built and tested by the CIA a short while later. While these

technical collection efforts had been ongoing for several years in both CIA and the Air Force, they were

formally consolidated, pursuant to a national security directive, in 1961 within the National

Reconnaissance Office (NRO).

While the fact of its existence remained classified, the NRO was designated a separate operating agency

of the Department of Defense, reporting to the Secretary of Defense albeit with the DCI retaining a role

in selecting key personnel as well as substantial control over the budget, requirements, and priorities of

the organization. Using the special procurement authorities of the DCI, the NRO was able expeditiously

to procure and to operate satellite collection systems for the Intelligence Community.

In addition to the NSA, DIA, and NRO, each of the military services maintained substantial intelligence

organizations, both at the departmental level and at the tactical level. These organizations typically

collected information and provided analysis regarding the weapons systems, tactics, and capabilities of

foreign counterpart forces. This information and analysis were used to support the weapons acquisition

process in each service, to support force development and contingency planning, and were incorporated

into training programs.

The growth of intelligence efforts within the Department of Defense served to accentuate the relative

lack of the DCI's role over the rest of the Community. In July 1961, the President's Foreign Intelligence

Advisory Board proposed to the President that the DCI be separated from the CIA and head-up an

Office of Coordination in the White House. President Kennedy did not endorse the recommendation but

in January 1962 issued a letter to his new DCI John McCone stating:

"As head of the Central Intelligence Agency, while you will continue to have overall

responsibility for the Agency, I shall expect you to delegate to your principal deputy, as you may

deem necessary, so much of the detailed operation of the Agency as may be required to permit

you to carry out your primary task as Director of Central Intelligence."

In 1963, DCI McCone established a National Intelligence Programs Evaluation Staff to review and

evaluate Community programs and cost-effectiveness. Later in the decade, DCI Helms set up a National

Intelligence Resources Board to review all community programs and budgets, and to referee community

disputes.10

But the burgeoning U.S. military involvement in the Vietnam War, the efforts to block Communist

expansion in Laos and to deal with conflicts in the Middle East (notably the Arab-Israeli Six-Day War

of 1967), effectively precluded serious efforts by the DCIs to assert greater control over the Intelligence

Community.

The 1970s: The Decade of Turmoil & Reform

The decade of the 1970s began with serious efforts to institute DCI control over the Intelligence

Community, but they were eventually undermined by a series of sensational disclosures in the media,

followed by unprecedented investigations of the Intelligence Community within the Executive Branch

and by the Congress. During the latter half of the decade, new reforms were adopted and new oversight

mechanisms put into place. While the intelligence functions of the Government continued, Congress

began to take a much more active role in determining their cost and overseeing their execution.

In December 1970, President Nixon directed Deputy Director of the Office of Management and Budget

James Schlesinger to recommend how the organizational structure of the Intelligence Community should

be changed to bring about greater efficiency and effectiveness. The Schlesinger report, completed in

March 1971, found, among other things, that intelligence functions were fragmented and disorganized;

collection activities were unnecessarily competitive and redundant; intelligence suffered from unplanned

and unguided growth; intelligence activities were too costly; and, because analytical products were

provided on such a broad range of topics, they often suffered in quality. The report called for basic

reform of the management structure with a strong DCI who could bring intelligence costs under control

and improve analytic quality and responsiveness. Among other things, the study recommended that the

DCI put together a consolidated budget for the Intelligence Community and oversee its execution.

Following-up on the recommendations in November 1971, President Nixon issued a directive calling for

improvement in the intelligence product and for more efficient use of resources. The DCI was made

responsible for "planning, reviewing, and evaluating all intelligence programs and activities and in the

production of national intelligence." The Nixon directive reconstituted the United States Intelligence

Board to assist the DCI, and set up the Intelligence Committee11 of the NSC to coordinate and to review

intelligence activities. It also established an Intelligence Resources Advisory Committee, comprising

representatives from the State and Defense Departments and OMB, to advise the DCI on the

consolidated intelligence budget. In March 1972, DCI Helms created a special "Intelligence Community

Staff" to assist him in the daily execution of his Community responsibilities.

None of these changes had a substantial impact at the time, however, because the Government became

largely preoccupied with the Watergate affair in 1973 and 1974. There was only tangential involvement

by the CIA in Watergate primarily through the activities of former employees, and in the preparation of

a psychological profile of Daniel Ellsberg.12 The press, however, motivated to some extent by the

distrust generated by Watergate, increasingly began to report critically on intelligence activities. Press

articles covered allegations of collection efforts undertaken against U.S. citizens during the Vietnam era,

attempts to assassinate foreign leaders or destabilize communist regimes, and efforts to raise the remains

of a Soviet submarine off the floor of the Pacific.

In December 1974, in reaction to reports of CIA's support to the non-Communist resistance forces in

Angola, Congress passed an amendment to the Foreign Assistance Act, known as the "Hughes-Ryan

amendment," which for the first time required that the President report any covert CIA operations in a

foreign country (other than for intelligence collection) to the relevant congressional committees (which,

at that time, included the armed services committees, foreign relations committees, and appropriations

committees in each house of Congress).

The various media revelations also led to official investigations in both the Executive branch and the

Congress:

A. The Rockefeller Commission.

The Commission on CIA Activities Within the United States, chaired by Vice President Rockefeller,

was created by President Ford on 4 January 1975, to determine whether CIA employees had engaged in

illegal activities in the United States. The inquiry was later expanded to include the CIA's foreign

intelligence charter and to make suggestions for operational guidelines. In June 1975, the Commission

issued its report which, among other things, confirmed the existence of a CIA domestic mail opening

operation; found that in the late 1960s and early 1970s the Agency had kept files on 300,000 U.S.

citizens and organizations relating to domestic dissident activities; found that President Nixon tried to

use CIA records for political ends; and concluded that the CIA had no involvement in President

Kennedy's assassination. The Commission also found "that the great majority of the CIA's domestic

activities comply with its statutory authority." In looking to the future, the Commission called for a joint

congressional oversight committee and a stronger executive oversight mechanism; consideration by the

Congress to disclose "to some extent" CIA's budget; and appointment of two confirmed deputy

directors, one to manage the CIA and one to advise the DCI on military matters. The Commission

further recommended that the DCI serve no more than 10 years.

B. The Church Committee.

Twenty-three days after the Rockefeller Commission was impanelled, the Senate announced its own

investigatory body, the Committee to Study Government Operations with Respect to Intelligence

Activities (also known as the Church Committee after its Chairman). Handling one of the largest

investigations ever undertaken by the Senate, the Church Committee was charged with looking at CIA

domestic activities; covert activity abroad, including alleged assassinations of foreign leaders; alleged

abuses by the Internal Revenue Service and the FBI; alleged domestic spying by the military; and the

alleged interceptions of the conversations of U.S. citizens by the National Security Agency. The

Committee's inquiry lasted for almost a year, resulting in a six-volume report, released in April 1976.

The Committee recommended, among other things, that the President consider separating the DCI from

the CIA; that the authorities of the DCI over elements of the Intelligence Community be enhanced; that

statutory charters be established for CIA, DIA and NSA; that the National Foreign Intelligence Budget

be published; and that clandestine support to repressive regimes that disregarded human rights be

prohibited by law. The Committee lauded several reforms (including a ban on assassination) already

implemented by President Ford.

C. The Pike Committee.

The House counterpart to the Church Committee was the Select Committee on Intelligence to

Investigate Allegations of Illegal or Improper Activities of Federal Intelligence Agencies. Impanelled in

February 1975, the committee was also known by the name of its Chairman, Congressman Otis Pike.

The Pike Committee's report was voted down by the House in January 1976, and was never officially

issued. Portions, however, were leaked to a New York newspaper, The Village Voice.

D. The Murphy Commission.

In June 1975, around the time that the Rockefeller Commission was completing its inquiry into

intelligence improprieties, another congressional commission, the Commission on the Organization of

the Government for the Conduct of Foreign Policy, was culminating a three-year study which included

an examination of the organization and performance of the Intelligence Community. Headed by veteran

diplomat Robert Murphy,13 the Commission recommended that the DCI be given greater status in the

White House and the Intelligence Community; that the DCI delegate his responsibility for running the

CIA to a deputy; that the DCI occupy an office geographically closer to the White House to better

enable him to carry out his role as presidential adviser; and that the CIA change its name to the Foreign

Intelligence Agency.14 The Commission also recommended that covert action should be employed only

where it is clearly essential to vital U.S. purposes and only after a careful process of high level review. It

further urged that the NSC's Committee on Intelligence be actively used as the principal forum to

resolve the differing perspectives of intelligence consumers and producers, and "should meet frequently

for that purpose."

Reform and Oversight

Even as the Church and Pike Committees were continuing their investigations, the Executive branch

undertook extensive efforts to bring about reform.15

In the summer of 1975, President Ford ordered the implementation of 20 of the 30 recommendations of

the Rockefeller Commission, to include measures to provide improved internal supervision of CIA

activities; additional restrictions on CIA's domestic activities; a ban on mail openings; and an end to

wiretaps, abuse of tax information, and the testing of drugs on unsuspecting persons. Ford did not agree

to public disclosure of the intelligence budget, however, nor did he readily agree to a separate

congressional oversight committee.

President Ford issued the first Executive Order on intelligence on 18 February 1976 (E.O. 11905),16

before either the Church or Pike investigating committees had reported. For the first time, a description

of the Intelligence Community and the authorities and responsibilities of the DCI and the heads of other

intelligence agencies, were specified in a public presidential document. The order also set up a

Committee on Foreign Intelligence as part of the National Security Council, chaired by the DCI and

reporting directly to the President, as the focal point for policy and resource allocation on intelligence.17

A number of restrictions on intelligence agencies were also instituted, including a ban on assassinations

as an instrument of U.S. policy. To monitor compliance with the Order, a new Intelligence Oversight

Board was established within the Executive Office of the President.

Both congressional investigating committees recommended in their final reports that permanent follow-

on committees be created to provide oversight of the intelligence function and to consider further

legislative actions as might be necessary.

The Senate acted first in May 1976, creating the Select Committee on Intelligence. The House followed

suit a little over a year later, creating the Permanent Select Committee on Intelligence. Both committees

were made responsible for authorizing expenditures for intelligence activities (although the Senate was

limited to "national" intelligence, whereas the House mandate included both "national" and "tactical"

intelligence activities), and for conducting necessary oversight. The resolutions creating both

committees recognized that they would be kept "fully and currently informed" of intelligence activities

under their purview. Both committees were added to the list of those to receive notice of covert actions

under the Hughes-Ryan amendment. The Senate committee also was given responsibility for handling

the confirmation proceedings when the DCI and the Deputy DCI were nominated by the President.

While efforts were made in succeeding months to let emotions over intelligence activities subside and to

establish more "normal" relationships between the Legislative and Executive branches, the hiatus was

relatively short-lived. In 1977, the Senate Committee reexamined the question whether the aggregate

intelligence budget should be released publicly. This issue would continue to be debated for the next two

decades. The statement of newly-appointed DCI Turner that he had no problem with the release of this

figure aroused protests from those who believed disclosure could assist hostile intelligence services in

deciphering U.S. intelligence activity.

In August 1977, DCI Turner prompted a more substantial controversy by announcing his intention to

reduce the CIA's Directorate of Operations by 800 people. The first reductions occurred on 31 October

1977 (called the "Halloween Massacre" within CIA) when 200 officers were fired. Critics of the DCI

charged that he was destroying the CIA's human source collection capability in favor of technical

collection programs run by the Department of Defense. (Some in Defense, on the other hand, perceived

Turner as attempting to take over those programs.)

On 24 January 1978, President Carter issued a new Executive Order on intelligence which reaffirmed

the DCI's Community-wide authority over priorities, tasking, and the budget; contained additional

restrictions on collection techniques, participation in domestic activities, and human experimentation;

and reiterated the ban on assassinations. Intelligence agencies were specifically required to promulgate

procedures to govern the collection of information on U.S. citizens and persons admitted to the U.S. for

permanent residence.

Notwithstanding the new presidential order, both congressional committees proceeded to consider bills

in 1978 which would have dramatically overhauled the Intelligence Community. Following the

suggestions of the Church Committee as well as incorporating various aspects of the Executive branch

reforms, the Senate committee developed a comprehensive bill entitled the "National Intelligence

Reorganization and Reform Act of 1978." The bill called for the creation of a "Director of National

Intelligence" with broader powers than the DCI to serve as head of the Intelligence Community. The

Director of National Intelligence would have retained leadership of CIA18 with the authority to delegate

this responsibility to a Deputy or Assistant Director at the President's discretion. The bill also contained

a long list of restricted or banned activities, provided specific missions and functions for each element of

the Intelligence Community, stipulated rigorous review and notification procedures for covert action and

clandestine collection, and instituted numerous requirements for reporting to Congress.

While the Carter Administration initially supported the attempt to draft "charter" legislation, it

ultimately withdrew its support in the face of growing concern that the intelligence function would be

hamstrung by having too much detailed regulation in statute. After extended negotiations with the two

intelligence committees, the Administration agreed to a measure limited to establishing the ground rules

for congressional oversight. The Intelligence Oversight Act of 1980 provided that the heads of

intelligence agencies would keep the oversight committees "fully and currently informed" of their

activities including "any significant anticipated intelligence activity." Detailed ground rules were

established for reporting covert actions to the Congress, in return for the number of congressional

committees receiving notice of covert actions being limited to the two oversight committees.

Congress also passed, with the support of the Carter Administration, the Foreign Intelligence

Surveillance Act of 1978, providing for a special court order procedure to authorize electronic

surveillance for intelligence purposes, activities that had previously been conducted based upon a claim

of constitutional authority of the President.

Finally, in response to continued criticism from the congressional committees over the usefulness of

national intelligence estimates, a new mechanism for the development of estimates was established. DCI

Colby, in 1973, had established the National Intelligence Officer system in lieu of the Board of

Estimates. He had appointed the first six NIOs in an effort to make intelligence more responsive to

policymaking. By the end of the decade, DCI Turner formed the NIOs into the National Intelligence

Council. Reporting to the DCI, the Council comprised a Chairman and eight National Intelligence

Officers, who were considered the senior analysts of the Intelligence Community within their respective

areas of expertise. As such, they would supervise the preparation of estimates, ensure quality control,

and present the results of their work to policymakers as required.

1980s: A Decade of Growth & Scandal

The beginning of the decade saw the election of a new President, Ronald Reagan, who had made the

revitalization of intelligence part of his campaign. Intelligence budgets were increased, and new

personnel were hired. The vast majority of rules and guidelines adopted during the Ford and Carter

Administrations remained in place. However, by the middle of the decade, the U.S. experienced a series

of spy scandals, and the first serious breach of the oversight arrangements with the Congress. While the

organization of the Intelligence Community remained stable during the decade, it was a period of

burgeoning growth and activity.

During the 1980 presidential election, intelligence became a targeted campaign issue. The Republican

Party platform contained a plank asserting that the Democrats had impaired the efficiency of the

Intelligence Community and had underestimated the Soviet's military strength. President Reagan came

into office promising to improve intelligence capabilities by upgrading technical systems and

strengthening counterintelligence.

To make good on these promises, Reagan appointed William Casey, a veteran of the OSS, as DCI, and

announced that the DCI, for the first time, would hold cabinet rank. With this presidential mandate,

Casey sought and received higher budgets for intelligence and instituted an unprecedented period of

personnel growth across the Intelligence Community.

On 4 December 1981, almost a year into his Administration, President Reagan issued his Executive

Order on intelligence (E.O. 12333). It generally reaffirmed the functions of intelligence agencies (as

outlined in the previous order) and continued most of the previous restrictions, but it set a more positive

tone than its predecessor, and gave the CIA greater latitude to gather foreign intelligence within the

United States and to provide assistance to law enforcement. The Executive Order also provided a new

NSC structure for reviewing intelligence activities, including covert actions.19

Meanwhile, the congressional intelligence committees demonstrated a willingness to provide legislative

authority sought by the Intelligence Community. In 1980, the Classified Information Procedures Act

was passed to protect classified information used in criminal trials. In 1982, following the public

revelation of the names of certain CIA officers that appeared to result in the murder of one officer, the

Congress passed a new law making it a crime to reveal the names of covert intelligence personnel. In

October 1984, Congress exempted certain operational files of the CIA from disclosure under the

Freedom of Information Act. However, legislative proposals offered in 1984 calling for a fixed term for

the DCI and Deputy DCI and requiring that they be career intelligence officers, were not passed.

The 1986 Goldwater-Nichols Act, which reorganized the Department of Defense and shifted authority

from the military departments to the Joint Chiefs and theater commands, also had an impact on

intelligence. The Defense Intelligence Agency and Defense Mapping Agency were specifically

designated as combat support agencies, and the Secretary of Defense, in consultation with the DCI, was

directed to establish policies and procedures to assist the National Security Agency in fulfilling its

combat support functions. The Act also required that the President submit annually to Congress a report

on U.S. national security strategy, including an assessment of the adequacy of the intelligence capability

to carry out the strategy.

1985: The Year of the Spy

Beginning in 1985, the Intelligence Community experienced an unprecedented rash of spy cases that led

to numerous recommendations for change.

The defection of former CIA officer Edward Lee Howard in the spring of 1985 was followed by the

arrests of John A. Walker, Jr. and Jerry A. Whitworth, Navy personnel with access to highly sensitive

information; CIA employees, Sharon Scranage and Larry Wu-Tai Chin; former NSA employee, Ronald

W. Pelton; FBI agent, Richard Miller; and an employee of Naval intelligence, Jonathan J. Pollard. The

Walker-Whitworth, Pelton, and Howard cases dealt especially serious blows to U.S. intelligence. As the

year drew to a close, a Marine guard at the U.S. Embassy in Moscow confessed to having passed

information to the Soviets and was charged with allowing Soviet personnel to enter the chancery

building. It was further disclosed that the U.S. had determined its new chancery in Moscow had been

thoroughly bugged during its construction. Coming in close succession, these disclosures shocked the

public and the Congress.

Various efforts were taken within the Executive branch to identify and correct shortcomings in

counterintelligence and security. The Secretary of Defense commissioned a special inquiry into Defense

policy and practice. The Secretary of State commissioned a review of embassy security, including the

vulnerability of U.S. diplomatic establishments to electronic penetration. The CIA undertook an internal

review of counterintelligence and its procedures for handling defectors.

The congressional intelligence committees also investigated these problems and prepared lengthy

reports recommending change. In 1988, the Senate committee asked a group of distinguished private

citizens, led by New York businessman Eli Jacobs, to review the progress that had been made in

counterintelligence and to provide recommendations for further improvements. Their report was

provided in 1989, but did not result in any legislation being enacted at the time. This was due in part to

the fall of the Berlin Wall, and dramatic changes taking place in the Soviet Union, which lessened the

intensity of focusing on problems with spies.

The Iran-Contra Affair and its Aftermath

In November 1986, Congress learned that representatives of the Reagan Administration, contrary to the

announced policies of the Government, had sold arms to the Government of Iran in return for its

assistance in securing the release of U.S. hostages held in Lebanon. Initiated by members of the NSC

staff, the operation was accomplished with the assistance of some officers of the CIA and the Defense

Department pursuant to a retroactive covert action "finding" signed by President Reagan in January

1986, which had never been reported to the Congress. It was also disclosed that the NSC staff members

involved in the sales had overcharged the Iranians for the weapons and had used the proceeds to support

the anti-Communist rebels, the "Contras," in Nicaragua at a time when such assistance was prohibited

by law. The veracity of public statements made by the President and other senior officials with

knowledge of the episode appeared in doubt. CIA and other intelligence agencies were quickly drawn

into the controversy, which collectively became known as the Iran-Contra affair.

A special prosecutor was appointed to look into possible criminal activity, and investigations ensued in

both the Executive branch and the Congress. In December 1986, the President commissioned a Special

Review Board, chaired by former Senator John Tower. Three months later, the Tower Board found that

the Iran and Contra operations were conducted outside of regularly established channels and that

intelligence oversight requirements had been ignored. The Board also faulted President Reagan's

management style. While not recommending organizational changes per se, the Board urged that a better

set of guidelines be developed for approving and reporting covert action. The Board also recommended

that Congress consider merging the two intelligence committees into a single joint committee.

In early 1987, the House and Senate formed separate investigating committees, but later agreed to form

a Joint Committee for purposes of interviewing witnesses and holding hearings. After months of intense

public hearings, a majority of the Committee issued a lengthy account of its work in the fall of 1987. It

recommended, among other things, that a statutory Inspector General be created at the CIA and that the

legal requirements for reporting covert actions to the congressional oversight committees be tightened.

Lawrence Walsh, the special prosecutor appointed in January 1987, carried on his investigation of the

Iran-Contra affair for almost seven years, and brought criminal prosecutions against the key NSC figures

involved, some CIA employees, and a former Secretary of Defense. President Bush later issued pardons

to six of those charged.

Legislation creating a statutory Inspector General for the CIA was enacted in 1989. Although the

Inspector General reported to the DCI, he could be removed only by the President. Among other things,

the law required that the Inspector General submit semiannual reports to the congressional intelligence

committees, summarizing problems that had been identified and corrective actions taken.

Legislative efforts to tighten the covert action reporting requirements did not succeed for several more

years. In 1988, with the election of President George Bush, a former DCI, Congress received assurances

that the experience of Iran-Contra would not be repeated and that appropriate consultations would occur

on future covert actions. These assurances did not put the matter to rest as far as the committees were

concerned, but did serve to dampen congressional fervor to legislate precise time requirements for

reporting.

1990-1995: The End of the Cold War and Retrenchment

The three years following the election of President Bush saw profound changes in the world that had

enormous impacts on the Intelligence Community. In the fall of 1989, the Berlin Wall came down and

Germany began the process of reunification. The Communist regimes of Eastern Europe gave way to

democratic rule. In August 1990, Iraq invaded Kuwait. Shortly thereafter, the Soviet Union began to

break apart with many former Soviet Republics declaring independence. In early 1991, the U.S. together

with NATO allies (and the agreement of the Soviet Union) invaded Kuwait to oust the occupying Iraqi

forces with a fearsome display of modern weaponry. Later in the year, Communist rule ended in Russia.

Some began to question whether an intelligence capability was needed any longer; others urged

significant retrenchment. Leaders within the Intelligence Community began streamlining their agencies

and reorienting toward new missions, with a greater focus on transnational threats. Congress pushed

them along by proposing a new Intelligence Community structure, and mandating across-the-board

reductions in personnel.

The period ended with a shocking new spy case at the CIA and renewed calls for reform.

The Gulf War

The Gulf War of 1991, brief though it was, had profound repercussions for U.S. intelligence. Never had

so much information been conveyed so quickly from intelligence systems to warfighters with such

devastating effect. The accuracy of U.S. precision guided weapons astounded the world. The war also

highlighted the need for the United States to expand its own efforts to link intelligence systems with

combat systems and to train military personnel to use these systems effectively. The U.S. recognized

that the future of warfare was apt to be battles fought at a distance between opposing forces, placing a

premium on the availability of intelligence on the nature and disposition of hostile forces.

Yet the Gulf War also demonstrated problems with intelligence. Initially, the Intelligence Community

was not well prepared to support military operations in this locale, but given time in the fall and winter

of 1990 to put together a capability, the job was done. The Joint Intelligence Center was established

during the war with representation from the key intelligence agencies and provided a model of providing

crisis support to military operations. Indeed, a permanent National Military Joint Intelligence Center was

established shortly after the conflict at the Pentagon and later at all unified commands. Still, the war

illuminated problems in disseminating imagery to the field as well as the limitations of U.S. human

intelligence capabilities. In addition, a substantial problem arose with competing CIA and military

assessments of the damage caused by allied bombing.

The Gates Task Forces

In 1991, after a wrenching confirmation process which provided the first public examination of the

analytical process at the CIA, DCI Robert Gates undertook a comprehensive reexamination of the post-

Cold War Intelligence Community. The recommendations of 14 separate task forces produced

significant change: analysis would be made more responsive to decisionmakers; a formalized

requirements process would be established for human source intelligence collection; new offices were

created at the CIA to coordinate the use of publicly available ("open source") information and to

improve CIA support to the military. The staff of the DCI, which supported him in his Community role,

was strengthened. And, after much negotiating about which entities to include, a new Central Imagery

Office, under the joint control of the DCI and the Secretary of Defense, was established to coordinate

imagery collection and to establish uniform standards for the interpretation and dissemination of

imagery to the field.

Boren-McCurdy Legislation

While the Gates task forces were at work, legislation was introduced by the respective Chairmen of the

Senate and House intelligence committees to restructure the Intelligence Community. The bills called

for the creation of a Director of National Intelligence with authority over the intelligence budget as well

as authority to transfer personnel temporarily from one intelligence agency to another. The DNI would

continue to establish requirements and priorities for intelligence collection and serve as the President's

intelligence adviser. In this regard, the analytical element of the CIA would be transferred under the

control of the DNI, leaving the remainder of the CIA to be administered by a separate agency director.

The legislation also proposed a National Imagery Agency to coordinate imagery tasking, collection,

processing, and dissemination.

Given the actions taken by DCI Gates to implement the results of his task forces, however, the

committees did not push for enactment of their alternative proposals. Instead they opted to codify and to

clarify the existing statutory framework that had been largely unchanged since 1947. The Intelligence

Organization Act of 1992 (enacted as part of the Intelligence Authorization Act for 1993) for the first

time defined the Intelligence Community by law, enunciated the three roles of the DCI, set forth the

authorities and responsibilities of the DCI in relation to other elements of the Intelligence Community,

and articulated the responsibilities of the Secretary of Defense for the execution of national intelligence

programs. Among other things, the Secretary was required to consult with the DCI prior to appointing

the Directors of the NSA, the NRO,20 and the DIA.

Congress continued to debate whether the intelligence budget should be declassified. In 1991 and 1992,

Congress passed non-binding "Sense of Congress" resolutions urging the President to make public the

aggregate funding for intelligence. President Bush declined to do so, as did President Clinton in 1993.

The Vice President's National Performance Review

In 1993, as part of the Clinton Administration's overall effort to "reinvent" government, a team from the

Vice President's National Performance Review looked at the Intelligence Community and suggested that

several actions be taken to consolidate activities and build a sense of Community in order to be more

efficient and to better serve customers. The review found that the Community was too often drawn apart

by the competition for new programs and budget allocations and recommended rotational assignments

among agencies as a means of promoting a broader, more collegial perspective. The review's

recommendation that the Intelligence Oversight Board be merged into the President's Foreign

Intelligence Advisory Board was accomplished by Executive Order in September 1993.

The Ames Spy Case

In February 1994, Aldrich H. Ames, a CIA employee with almost 30 years experience in operations, was

charged with spying for the Soviet Union since at least 1985. During this period, he was alleged to have

disclosed virtually all of the CIA's active Soviet agents, many of whom were later executed or

imprisoned. In May, Ames and his wife pled guilty and were sent to prison.

The ensuing investigations by the CIA Inspector General and by the congressional intelligence

committees reported that Ames had exhibited serious personal problems and a penchant for exorbitant

spending which should have brought him under security scrutiny. The investigations also highlighted

problems in coordinating counterintelligence cases between the FBI and the CIA. Notwithstanding the

seriousness of Ames' disclosures and the numerous shortcomings on the part of CIA officers, DCI

Woolsey meted out what were perceived as relatively mild disciplinary measures. The confidence of the

public and the Congress in the CIA appeared considerably eroded.

In the fall of 1994, new legislation was enacted to improve counterintelligence and security practices

across the Intelligence Community, and, in particular, to improve the coordination between the FBI and

CIA. In addition, the President created a new bureaucratic framework for handling counterintelligence

matters, to include the placement of FBI counterintelligence specialists within the CIA.

The Creation of a New Commission

Even before the Ames case provided the immediate impetus, the congressional intelligence committees

anticipated that the Executive branch would conduct a comprehensive review of the Intelligence

Community. When this failed to materialize, the Senate committee, and, in particular, its Vice

Chairman, Senator John Warner, developed legislation to establish a commission to study the roles and

capabilities of intelligence agencies in the post-Cold War era, and to make recommendations for change.

The legislation was approved in October 1994, as part of the Intelligence Authorization Act for 1995.21

Footnotes

1 Former Secretary of State Dean Rusk recalled the 1941 state of the U.S.'s intelligence effort in

testimony before a Senate subcommittee: "When I was assigned to G-2 in 1941, well over a year after

the war had started in Europe, I was asked to take charge of a new section that had been organized to

cover everything from Afghanistan right through southern Asia, southeast Asia, Australia, and the

Pacific. Because we had no intelligence organization that had been giving attention to that area up to that

time, the materials available to me when I reported for duty consisted of a tourist handbook on India and

Ceylon, a 1924 military attache's report from London on the Indian Army, and a drawer full of clippings

from the New York Times that had gathered since World War One. That was literally the resources of

the G-2 on that vast part of the world a year after the war in Europe started."

2 In 1957, this group was renamed the Bureau of Intelligence and Research.

3 The same Sidney Souers who had been appointed the first DCI by President Truman in January 1946.

Souers served as Executive Secretary of the NSC from 1947 to 1950.

4 Although NSC 50 was issued to implement the report's recommendations, DCI Hillenkoetter did not

take follow-up action on its numerous recommendations.

5 The same person who proposed the creation of the National Security Council and the CIA in a 1945

report to Navy Secretary Forrestal.

6 The depth and importance of this problem was revealed when President Truman announced that the

Soviets had detonated a nuclear device in September 1949. The CIA's only coordinated estimate on the

urgent question of when the Soviets would have a nuclear weapon gave three incorrect predictions:

1958, 1955 and 1950-1953, and none of the predictions was accepted by all departments.

7 In its 1955 report, the Second Hoover Commission recognized for the first time the existence of an

"intelligence community" within the Government, naming the NSC, CIA, NSA, FBI, Department of

State, Army, Navy, Air Force, and the Atomic Energy Commission as its members.

8 Allen Dulles, who had been elevated to DCI in 1953, did not appoint a Chief of Staff, due to his active

interest in the operation of the CIA. Instead, he appointed General Lucien Truscott as his deputy to

resolve jurisdictional disputes between CIA and the military services, in an attempt to increase his

community coordination capabilities.

9 In 1956, the House and Senate Armed Services Committees, and the Senate Appropriations

Committee established intelligence subcommittees, and the House Appropriations Committee formed a

"special group" under its chairman.

10 The United States Intelligence Board, previously established in the 1950s to serve as the DCI's

primary advisory body, was used unevenly by DCIs depending on their interests in Community

management.

11 The Intelligence Committee, chaired by the National Security Advisor, consisted of the Attorney

General, the Under Secretary of State, the Deputy Secretary of Defense, the Chairman of the Joint

Chiefs of Staff, and the DCI.

12 CIA officials refused the White House request that the CIA be used to cover-up the Watergate affair.

13 In 1976, Murphy was appointed by President Ford as the first chairman of the newly formed

Intelligence Oversight Board, and as a member of PFIAB.

14 The principal author of these conclusions was reportedly William Casey, later to become DCI.

15 It should also be noted that DCI Colby appointed a study group within CIA, headed by James Taylor,

which issued an internal report in October 1975: "American Intelligence: A Framework for the Future."

The Taylor study asserted that intelligence needed to become more efficient and effective, and more

compatible with our democracy. The study suggested refining the current intelligence system and

focused on the role of the DCI, including the relationship with the Secretary of Defense and the

Intelligence Community, arguing that the DCI needed more influence over both substantive judgments

and resource management. The report noted that the DCI's responsibilities, but not his authorities, had

grown considerably since 1947. The study recommended separating the DCI from CIA (which would be

run by its own director), and appropriating funds to the DCI who would allocate them to program

managers.

16 This order and succeeding orders issued by President Carter (E.O. 12036, 1978) and President

Reagan (E.O. 12333, 1981) listed the following members of the Intelligence Community: CIA, NSA,

DIA, DOD reconnaissance offices, INR/State, intelligence elements of Army, Navy, Air Force, Marines,

FBI, Treasury, and DOE (then known as the Energy Research & Development Administration). Staff

elements of the DCI were added in the Carter and Reagan orders.

17 The other members of the CFI were the Deputy Secretary of Defense for Intelligence and the Deputy

Assistant to the President for National Security Affairs. The CFI reported directly to the NSC.

18 Those who thought the DNI must retain a direct management role over the CIA argued that

separating the DNI from the CIA would deprive the Director of a strong institutional base and would

subject him to more pressure from the policymakers.

19 Neither President Bush nor President Clinton issued executive orders on intelligence that supersede

E.O. 12333. It remains in effect.

20 In 1992, as the legislation was under consideration, the President declassified the fact of the NRO's

21 See Appendix E for the text of the Commission's charter.