They are just different. Therefore, culturally, things have got to work out in a way that can harmonize these two things together. I think the recommendation of our commission would be that the fusion center creates a vehicle for the gathering together of all the different organizations. There even should be some facility or some ability to have an open channel of communication with private enterprise.

Chairman COLLINS. I want to thank both of you very much for your testimony this morning. Both of you have been extremely generous with your time and your experience and we very much appreciate your appearing this morning. So thank you, both.

I now would like to call forth our second panel of witnesses this morning. James Steinberg is the vice president and director of foreign policy studies at the Brookings Institution. He served as deputy national security adviser in the Clinton Administration as well as director of policy planning staff and deputy assistant secretary for the Bureau of Intelligence and Research at the Department of State.

Jeffrey Smith is a formal general counsel of the CIA and formal general counsel of the Senate Armed Services Committee under Senator Nunn. He is now a partner at Arnold and Porter.

We welcome you both here this morning. We very much appreciate your taking the time to appear. Mr. Steinberg, we are going to begin with you.

TESTIMONY OF JAMES B. STEINBERG,1 VICE PRESIDENT AND DIRECTOR OF FOREIGN POLICY STUDIES, THE BROOKINGS INSTITUTION

Mr. STEINBERG. Thank you very much, Madam Chairman. I very much appreciate the opportunity to be here, and I commend you and the Committee on having these hearings because I think this is one of the most critical topics that we as a Nation face. As you pointed out, although a number of actions have been taken concerning homeland security, one area that has not gotten the degree of attention that I think it deserves is the organization of our intelligence efforts, so I think this is very welcome.

I have a longer statement for the record and I will just summarize a few points for you. As you heard from the previous panel I think there is a general agreement that there is a need for greater integration of our efforts to analyze the threat and the nature of the challenges that we face in the area of counterterrorism. Where I differ from my distinguished colleagues who you heard from in the previous panel is that I believe that this effort should be focused in the Department of Homeland Security, and I think that is consistent with the intention of the Congress when it created the department, and particularly the Office of Intelligence Analysis and Infrastructure Protection.

As you stated in your opening statement, the House and Senate joint inquiry into the attacks of September 11 really demonstrated the problem that we have in terms of bringing together and sharing information. I will not repeat the quote that you gave because I think it is exactly to the point of the challenge that we faced. Be

1 The prepared statement of Mr. Steinberg appears in the Appendix on page 95.

fore I discuss the specific ways of how we should respond, it is important to spend a minute discussing the nature of the intelligence challenge that we face in dealing with counterterrorism, because only by understanding the dimensions of the problem can we develop an appropriate architecture or organizational structure that is appropriate to the task.

The intelligence challenge in counterterrorism has four key components. First we need to collect timely, relevant, and in the best case, actionable information. Second, we need to collate or bring together the information from the full spectrum of sources. Third, we need to analyze the information; as others have said, connect the dots. And finally, we need to disseminate that information to those who need to act on it, policymakers, law enforcement officials, the private sector, and the public in a form that allows them to use that information to accomplish their mission.

In the fight against terrorism these tasks are far more difficult in many ways than the intelligence challenge we faced during the Cold War. Today, terrorists threaten us at home and abroad. As Senator Rudman observed, they have no fixed addresses and we only occasionally know their identities or their targets. Technology and globalization have made it easier for would-be terrorists to bring dangerous people and weapons into the United States, and to conceal their activities.

Key information that we need to detect and prevent terrorist attacks lie in the private sector, at airlines and flight schools, with operators of chemical plants, and high-rise buildings, with local police and community doctors, and we must increasingly count on the private sector and State and local governments to take the actions necessary to prevent attacks or deal with their consequences. We need to adopt our intelligence efforts and the organization of our intelligence community to meet this radically different challenge.

In your opening statement you identified a number of the small steps that have been taken today and these are welcome. But I think that is true that as many of the witnesses and the Members of the Committee have noticed, that there is a tendency to focus primarily on the role of the Federal Government in carrying out these tasks, but in reality we see that there are a wide variety of actors who are crucial: Foreign governments, State and local officials, business, and private citizens. They all have access to information that may be relevant to the terrorist threat. They have expertise that can help us transform this raw information into meaningful intelligence. And perhaps most important, they are the key players who need to act on this intelligence, to apprehend a suspect, to prepare public health facilities in the event of an attack, to secure critical infrastructures, etc.

Now the reason I have stressed the importance of understanding these different functions is because they provide key guidance for the critical question of how we should organize the intelligence efforts. The necessary elements, in my view are, first, we need a strategy for identifying the kinds of information we need to collect on threats and vulnerabilities.

Second, we need a network, a decentralized network designed to permit sharing of information among the widest possible group of

collectors, analysts, and implementers at all levels of government, and between government and the private sector.

Third, we need a focal point for bringing all the information together to be integrated and analyzed.

And fourth, and I think this is extremely important, we need an accountable organization that assures that the right information is being collected and the results of collection and analysis are shared in a timely, usable way with those who need to act on it.

Judged by these tests, the administration's proposed Terrorist Threat Integration Center represents a partial step forward in helping to build a network bringing together foreign and domestic intelligence collection and a place where this information can be integrated. But it fails to meet the other key tests, particularly in developing a structure that will increase the chances that we will collect the right information and that will link the collection and analysis to those who are responsible for taking the necessary actions to prevent attacks, protect our people and critical infrastructure, and mitigate the consequences of any attack that might take place.

I think, therefore, in this respect that the Terrorist Threat Integration Center is a step backwards from the approach that you adopted in the Homeland Security Act of 2002 creating the Department of Homeland Security. Yes, we have closed the seam between foreign and domestic intelligence, and it does recognize the need to draw on broad expertise. But by placing the TTIC under the direction of the Director of Central Intelligence rather than the Secretary of Homeland Security, and disconnecting it from those with direct responsibility for safeguarding homeland security, the administration fails to develop an effective and integrated approach to countering the terrorist threat to the United States, and risks, as many of the members of the panel have suggested, creating more duplication that could harm the homeland security effort.

After all, the Department of Homeland Security was created to be the hub of our homeland security efforts. Unlike any other official, the Secretary of Homeland Security's sole responsibility is to see that the necessary actions are taken to secure our borders, to protect critical infrastructure, to defend against biological, chemical, nuclear, and radiological attacks, and to respond to emergencies that do occur.

Importantly, the statute specifically gives the Secretary responsibility for coordinating with State and local officials and with the private sector. So in order to carry out the functions that you gave him in the statute, he has got to be able to link the decisions about what information we collect and what information we share with his responsibility to take the necessary actions. I think that is the important difference between locating this effort in the Department of Homeland Security and making it a separate entity, whether a joint venture or an independent effort.

I think the importance of this linkage is most clear in the case of protecting our critical infrastructures. Only by matching analysis of the threat against the analysis of vulnerabilities that the department is responsible for can we know how to prioritize both what intelligence we collect and what protective measures we must take. The synergy created by linking intelligence and collection analysis

and operational responsibility can lead to better quality intelligence, more actionable intelligence, and greater incentives for the intelligence to flow to those who need it in a form that they can

use.

By taking these functions away from the Department of Homeland Security we risk having a secretary and department who have accountability for homeland security but no authority to assure it. In my judgment, this has been the consistent problem in dealing with threats to the homeland with responsibility widely dispersed throughout the Federal Government and that has seriously hampered our efforts.

I think there is an important question about maintaining the independence of this analysis. Therefore this fusion center in the Department of Homeland Security should also have the general oversight of the Director of Central Intelligence just as he has oversight over the Department of Intelligence Research at the State Department, the Defense Intelligence Agency, etc.

But along with this authority that I would give to the Secretary of Homeland Security there is also a responsibility to make sure that this information is collected consistent with fundamental civil liberties, because the homeland security challenge will rely heavily on information collected from the private sector, and from a wide range of domestic activities.

Moreover, to carry out the homeland security challenge, vital information will need to be widely disseminated. It will be, therefore, all the more important to develop clear, public guidelines for the acquisition, retention, and dissemination of information, particularly personally identifiable information.

Whether the new threat integration center is placed under the authority of the DCI, or as I have suggested under the Secretary of Homeland Security, the long-term acceptability to the American people of our heightened intelligence effort will depend on our ability to demonstrate that we are undertaking these new tasks with due regard for privacy and individual liberty. Formal guidelines subject to public comment and Congressional oversight, and accountable mechanisms to make sure those guidelines are adhered to, are essential to this goal.

Thank you for the opportunity to appear today. I look forward to your questions.

Chairman COLLINS. Thank you, Mr. Steinberg. Mr. Smith.

TESTIMONY OF JEFFREY H. SMITH,1 FORMER GENERAL COUNSEL (1995–1996), CENTRAL INTELLIGENCE AGENCY (CIA) Mr. SMITH. Thank you, Madam Chairman, for inviting me to appear. As with Mr. Steinberg, I have a longer statement that I would like to submit for the record that I will summarize very quickly and we can get to questions.

This is an extremely important issues. There have been a lot of changes, so I think we might begin by listing a few principles that ought to govern the collection and analysis of intelligence for domestic security.

First, there should be a unity of effort and unity of command.

1 The prepared statement of Mr. Smith appears in the Appendix on page 100.

Second, there must be clear channels among collectors, analysts, operators, and consumers-the linkages that Jim spoke of. This has to be a two-way channel with information flowing up and down.

Third, there has to be a smooth flow of information among other sources of information and between State, local and Federal officials.

Fourth, we should avoid overlap between intelligence agencies. The boundaries should be clear but not impervious or rigid, and some competition, as Senator Pryor suggested, can be helpful.

Fifth, intelligence analysts must be independent. Indeed, that is why the CIA was created in the first place.

Sixth, the analysts and indeed all intelligence activities must be accountable to the political leadership of this country and to the Congress.

Seventh, we must take all measures to protect the civil liberties of American citizens.

Eighth, any organizational structure can be made to work even if it looks dysfunctional on paper. The keys to success, in my judgment, are good people, strong leadership, and stability. In that regard I am reminded of Norm Augustine's wisdom that sometimes we check on the health of a plant by pulling it up to look at the roots, and that is not a good thing.

Finally, an analytical organization is only as good as the information it has to analyze. There was much criticism after September 11 that we had not connected the dots. The major problem is, we just do not have enough dots. I think a renewed emphasis must be placed on collecting more intelligence, especially human intelligence.

Now let me turn to a few of the specifics of the President's proposal. It is a good idea and I support both the concept and the proposed implementation of it. However, I believe it is only a first step toward what I believe we ultimately need, which is a viable domestic intelligence service. The Department of Homeland Security clearly needs an intelligence function. I agree with everything that Jim has said about the need to have it linked to ultimately the responsibilities of the Secretary. However, I think for the moment I would leave it under the Director of Central Intelligence until ultimately it would be moved, in my judgment, to a domestic security service that would be part of the Department of Homeland Security.

Indeed, as Governor Gilmore said, many people believed after Congress passed the homeland security bill that this function would be housed in the directorate of infrastructure security at Homeland Security. However, the President has decided that it ought to be under the DCI. As I understand the plans of the administration it is to create the TTIC as a fusion center that will ultimately combine the databanks of several agencies including the FBI. It will be a joint venture that will build on the strengths of the current organizations. People will remain employees of their agencies but will be secunded to this center.

The recent changes in the Patriot Act now permit wider exchange of information between law enforcement and intelligence agencies and that should make it possible to permit a common