Playing Defense

Its backers dubbed it the "big idea." CIA Director Michael Hayden says it was "pass/fail" for the nation's espionage agencies. For years, America's allies had complained about the one-way flow of information with U.S. intelligence. Now, things were going to be different, according to the nation's first director of national intelligence. Founded in April 2005, the DNI was to be the change agent in the Washington intelligence game, the outfit that would fix the spy agencies caught flat-footed by the 9/11 attacks and embarrassed by their failure to accurately diagnose the weapons threat from Saddam Hussein's Iraq.

Change had to start somewhere, and in the DNI's view, there was no better place than SIPRNET. The Pentagon's workhorse computer network is jam-packed with real-time operational information from the CIA and other spy agencies. U.S. allies had long coveted SIPRNET access, but past efforts to share the information with them had foundered on the usual intelligence bugbear: "security concerns." Not this time, vowed DNI officials. They had a key assist: Hayden, a four-star Air Force general, had just arrived at the CIA after a brief stint as the deputy DNI. As the agency's new boss, he could have sought to curry favor with its espionage mandarins and balked at sharing SIPRNET's secrets. But his time at the DNI and, before that, as the head of the global eavesdropping National Security Agency allowed him a broader view. "If that didn't happen," Hayden says, referring to the opening up of SIPRNET, "then I think everyone would have doubted our seriousness about information sharing."

Hayden made the call: The CIA would play ball. As a result, in a bloody summer that saw sectarian death squads wreaking havoc in Iraq and terrorists in Britain plotting to hijack nearly a dozen airplanes, America's closest allies suddenly had a powerful new tool to use against terrorists. For the first time, Australian, British, and Canadian officials had immediate access to video feeds from unmanned Predator drones over Afghanistan and other real-time intelligence that allowed them to better coordinate search-and-rescue operations in Iraq. The allies were ecstatic; on a DNI executive's recent visit to Australia, espionage officials there practically fell over each other trying to thank the man.

Today, even with the SIPRNET chapter and other early successes, the DNI's effort to transform the nation's sprawling intelligence community is still in its early days. Veteran diplomat John Negroponte moved into the DNI's office with a sweeping reform mandate from Congress but missing some key tools he might need to accomplish the task. In the legislation that created the DNI, lawmakers failed to give the office full authority over the 16 agencies that make upthe intelligence community.


Front lines. Despite some criticism that Negroponte and his staff have moved too slowly, U.S. News found that the DNI has embarked on an impressive array of reform efforts. Some, like pushing through a first-ever communitywide security badge, have had an immediate impact. Others, more ambitious, will take years to succeed-or fail. If they succeed, however, they will result in nothing less than the most sweeping reform of the intelligence community since its creation nearly 60 years ago.

For this report, U.S. News was granted extraordinary access to nearly two dozen of the most senior intelligence officials in the government, including Negroponte and the chiefs of the CIA, military intelligence, and the National Counterterrorism Center. In addition, the magazine interviewed dozens of former officials, congressional sources, and outside experts and reviewed hundreds of pages of documents. The results offer an unusual inside look at how, five years after 9/11, America's frontline defense against terrorism and rogue states is faring.


From its first cramped quarters in the White House's New Executive ffice Building, the fledgling DNI staff began by simply taking stock. Negroponte and his staff-most, veterans of other U.S. intelligence agencies-lacked some very basic information about the size and scope of their new empire. The intelligence community numbers nearly 100,000 people, but nobody had ever succeeded in taking a complete inventory of its resources. What were all those analysts working on? Who was keeping track of them? And what about the spies on the ground? Who was making sure they were focusing on the right targets? The questions were endless; the answers, in many cases, disturbing. A DNI survey turned up 17,000 intelligence analysts in various corners of the government-that was 1,500 more than anyone knew about.

Even before the 9/11 attacks, the nation's budget for intelligence activity of all kinds had grown sharply, and no one had succeeded in reining in all the spending. In just eight years, Washington's intelligence budget more than doubled, making it one of the fastest-growing parts of the government. Officials insist on keeping the exact figure secret, but U.S. News has learned that the annual budget (excluding that for tactical military intelligence) soared from $15.5 billion in 1998 to $44.4 billion last year-an increase of 139 percent, after adjusting for inflation. With 16 agencies, hundreds of offices, and scores of different E-mail systems, DNI managers had to figure out how to make their authority felt across the patchwork-quilt intelligence bureaucracy. "How do you communicate down from where we sit?" asks DNI Chief of Staff David Shedd, a former CIA case officer. "It is a huge challenge."

And it's unlikely to be met anytime soon. To date, most of the nascent reform efforts don't seem to have penetrated deeply into the intelligence agencies' rank and file, where many remain skeptical about the DNI's chances for success. Intelligence veterans have seen would-be reformers come and go before, and many may just be waiting for the DNI to go the way of its predecessors. Since 1991, no fewer than 16 federal studies and commissions have called for major reform of the U.S. intelligence community, but for the past half century, its basic structure has remained essentially unchanged. Many of the reforms were attempted under CIA Director George Tenet, who, like other CIA chiefs before the advent of the DNI, also held the role of coordinating the community as the director of central intelligence. Joan Dempsey knows how tough the DNI's job will be. Until 2003, Dempsey worked as Tenet's deputy director in charge of "community management." Her reform efforts were largely stymied by the bureaucracy. Today, Dempsey wants to see the DNI leadership push hard for change. "We haven't started transformation in the intelligence community yet," she says. "We're still nibbling around the edges."

The offices of the DNI are now in more expansive, if temporary, quarters on the Potomac River, at Bolling Air Force Base, in Washington, D.C. Behind steel doors marked "Restricted Area," Negroponte and his top aides believe they have an unprecedented opportunity to drive real reform. "You've got a group of leaders in the community who, to a very large degree, are playing as a community," says Mary Margaret Graham, a veteran of the CIA's Clandestine Service who is the deputy DNI for collection. "In the early days ... there wasn't much give and take. Now there is an extraordinary amount at the senior levels of the community."




The Money


The problem is the ambiguity of the DNI's authority. At least 85 percent of the nation's intelligence budget is administered by the Pentagon, which runs the National Security Agency, the National Reconnaissance Office (which builds satellites), and the Defense Intelligence Agency. The DNI has been given the authority to "determine" the intelligence budget, but its exact powers are untested.

Many observers have been waiting for a showdon between the DNI and the Pentagon over one of its massive procurement programs, which are notoriously late and billions of dollars over budget. "They haven't yet taken a two-by-four to anybody's head and said, 'Go do this,'" says one prominent reformer who works closely with the DNI. Officials at the DNI acknowledge those expectations. "There were people who were just looking for high noon on the Memorial Bridge between John Negroponte and Don Rumsfeld-you know, .45s at 20 paces," says Patrick Kennedy, the deputy DNI for management. "We've resolved every issue to date in a way that I think has not surrendered one iota of the DNI's rights and authorities and, in fact, [has] advanced them."One factor that helps: Many top DNI officials are respected military brass who know how to work with the Pentagon.

An early test of the DNI's authority involved a $25 billion satellite system called Future Imagery Architecture. Run by the National Reconnaissance Office, FIA was meant to be the foundation for the next generation of America's space-based surveillance efforts. Instead, it was a managerial nightmare-five years behind schedule and billions over budget. Poor quality control and technical problems raised questions about whether the system would ever work properly. With aging U.S. spy satellites needing replacement and FIA sucking money from other projects, the DNI moved decisively, canceling half the classified project-the part that dealt with telescopelike electrical lenses.

The move took Negroponte's personal intervention-and support from the White House. "It was killed, dead, buried, stake in the heart," says Kennedy, who oversees the budget. "We have an alternate [system] that will deliver the capability that we've needed cheaper, better, faster." The move ruffled feathers, but DNI officials believe it sent the right message on runaway programs. "The DNI demonstrated that it will take those on," says Lt. Gen. Ronald Burgess, the DNI's acting deputy director. "Everybody certainly isn't going to be happy."

The real test for the DNI will come next year, with preparation of the 2008 budget, the first budget the office is developing from scratch. To prepare for it, the DNI and the Pentagon are surveying the vast array of technical capabilities, from surveillance and eavesdropping to top-secret sensors that detect heat signals, radiation, and other kinds of emissions. U.S. Newshas learned that there are some two dozen intelligence programs that each cost over $500 million a year. Despite the big budgets, officials have already identified some key gaps, particularly in locating terrorists and detecting underground activities relating to weapons of mass destruction. "I think the toughest beast remains getting good, reliable information about the hardest targets," Negroponte says, "whether it's North Korea or Iran or counterproliferation or counterterrorism."

At stake is nothing less than the future of U.S. intelligence capabilities. Officials face some tough funding trade-offs-for example, relying less heavily on what insiders call "big buses," or billion-dollar satellites that take years to build, and more on unmanned aerial vehicles, or drones, for surveillance. In particular, the DNI must decide whether to invest in another big $20 billion satellite system known as Space Radar, which, if successful, could detect objects in virtually all weather conditions at any time of day or night. Another source of concern is the NSA, which is in the throes of a 10-year, $5 billion modernization effort. So loosely managed have the agency's programs been that in 2003, Congress gave the Pentagon authority to sign NSA contracts.




The Spies


One constant struggle is over how to deploy the community's precious "collection" assets. Satellites can cover only limited areas. An even scarcer resource is HUMINT, or human intelligence-spies. It has been difficult to increase the numbe of CIA case officers much beyond about 1,200, sources say. "The challenge, of course, is that the resources that you have in today's world are heavily tilted at Iraq, Afghanistan, and the war on terrorism," says the DNI's Graham. When war broke out between Israel and the Hezbollah militia in Lebanon this summer, for instance, DNI officials worried over whether they needed to shift already scarce human spies and satellites to cover the conflict.

To better marshal resources, the DNI appointed six "mission managers" to assess and try to fill intelligence gaps on the hardest targets, including one for Iran, one for North Korea, and one for Cuba and Venezuela. In the days after North Korea's recent nuclear test, the DNI put mission manager and CIA veteran Joseph DeTrani at the center of the developing crisis. Along with issuing a twice-daily intelligence summary, DeTrani served as a "traffic cop," coordinating analysis, briefing the White House, and tasking spies on what to target, says a senior intelligence official.

In the wake of the intelligence failures on 9/11 and Iraq's banned weapons programs, the CIA, FBI, and Pentagon intelligence agencies have been under pressure to raise their standards of tradecraft. The DNI's answer was to rename the CIA's storied Directorate of Operations the National Clandestine Service and expand its role in defining and monitoring spying standards across the intelligence community. At the same time, officials pushed for the creation of the new National Security Bureau at the FBI, to help integrate the law enforcement agency more fully into the intelligence community and enable it to better detect and counter domestic threats. One result: FBI agents are currently taking the months-long CIA case officer tradecraft course at the "Farm," the CIA's top-secret training campus-where they are taught skills like detecting surveillance and recruiting clandestine sources. A fifth of the current entry-level training class at the Farm is today, in fact, made up of trainees from agencies other than the CIA.

But the new National Clandestine Service has its critics, who say that little has changed beyond the nameplate on the door. "The CIA is a player-coach when it comes to coordinating human operations," says a congressional staffer who works on intelligence issues. "When the CIA comes to your door to coordinate these issues, there is a lot of distrust and suspicion." CIA officials counter that they are working on a set of common standards for the community, on everything from the training curriculum to ensuring the quality of informants-one big reason for the faulty prewar intelligence on Iraq. DNI officials are also considering a controversial effort to create a registry of all the most sensitive clandestine sources in order to prevent overlap by different agencies.

Other concerns center on reports that the Pentagon is pushing into the CIA's traditional realm of overseas spying. Hayden strongly rejects any talk of ambiguity. "I'm the national HUMINT manager," he says, stressing that his role is to coordinate, evaluate, and "deconflict" human spying operations. "If you were collecting information from human beings for foreign intelligence purposes, you just slipped into the box that the national HUMINT manager governs." Hayden says the Pentagon has been working cooperatively with him. Stephen Cambone, the under secretary of defense for intelligence, agrees that after a year's hard work by both sides, the CIA's and Pentagon's spy programs are finding ways to coordinate better. "The battlefield is a crowded, chaotic place," Cambone says. "We did not want to have people falling over each other, competing for sources."

Recruiting poses another challenge. In the midst of a massive drive to shore up the ranks of spies, it is still difficult for the intelligence community to recruit-and get security clearances for-first-generation Americans who speak foreign languages and an better blend into the cultures of important target countries. Because it's tough to do background checks on people who have family in Damascus or Tehran, security officers have found it easier to just screen them out. "We haven't got the right kind of people," admits Mark Ewing, a senior DNI official.




The Computers


Perhaps the most transformational work the DNI staff is doing involves the effort to retool the creaky electronic infrastructure of the intelligence community. The effort is aimed at essentially rewiring all the community's separate and unique computerized networks, so that systems can talk to systems and analysts to analysts. The task is huge: Roughly a third of the intelligence community's 100,000-strong workforce is involved in providing information technology support of some kind, officials say; that workforce is bigger than the IT departments of even the nation's largest corporations. All the computer systems must be secure, handling everything from the CIA's most sensitive overseas cables to the masses of digital imagery and electronic intercepts from satellites. There are literally thousands of individual systems, most of them developed largely for specific tasks over the past 30 years. The result is a dysfunctional web of unwieldy, often duplicative networks, with different rules for access to files, databases, E-mail, and the Internet.

Rewiring the system is the job of the DNI's chief information officer, retired Air Force Gen. Dale Meyerrose. A 30-year intelligence veteran, Meyerrose ran IT for NORAD-the North American Aerospace Defense Command-where he earned a reputation for bucking the bureaucracy to get things done. At the DNI office, Meyerrose has focused his efforts on revamping the community's security protocols-the bedrock standards that, while protecting sensitive data, are also among the biggest obstacles to communication and sharing intelligence. To find the best way forward, Meyerrose took a novel tack: He opened up discussion of the nation's most sensitive computer networks to outsiders. Over the objections of some, Meyerrose brought together 700 experts from across the government, industry, and academia to a conference on how to put together a state-of-the-art security infrastructure that could be built upon for years. "We don't have the corner on the market on technology and technology brains," says Meyerrose, who argues that the DNI is merely looking for the best ideas, not giving away secrets. "Even today, I have people within the government who say, 'You're treading on thin ice here.'OK, so I'm treading on thin ice. But we're pressing ahead. We're going to completely take a new approach." A new plan is expected by early next year.

Meyerrose's office was the prime mover in the effort to open up the Pentagon's SIPRNET to U.S. allies. He has also helped pry open Intelink, a closed Internet system that contains millions of intelligence documents and hundreds of databases, ranging from top secret to unclassified. In the past five months, Intelink users have grown from 40,000 to over a million, and it can now link to some 4 million computers around the globe.

Still, there are growing pains. In the spring, Meyerrose was asked by officials to set up an electronic network to plan for an avian flu pandemic, to run at both the classified and unclassified level. Within a week, Meyerrose's people had put up the classified system on Intelink, but it took eight weeks to launch the unclassified one. The problem: When intelligence agencies have unclassified information, they tend to reflexively stamp it ORCON-Originator Controlled-meaning that no other agency can access it without explicit permission. It's the kind of information hoarding that drives intelligence reformers up the wall. Because of ORCON, says Meyerrose, "95 percent of the information put on the unclassified portal was inaccessible by any other organization." Once the DNI insisted he information be released, the avian flu network grew 10-fold in just four weeks, to 38,000 users. "It had nothing to do with technology," says Meyerrose. "Setting up the portals only took a few hours."

Eradicating ORCON remains a top priority for the DNI's reformers. "In my home agency, ORCON is somewhere between Genesis and Revelation-dutiful religious dogma," says Chief of Staff Shedd. "ORCON is slapped on virtually everything." But tackling ORCON is just part of the DNI's information-sharing effort. Within weeks, the White House is expected to approve over 30 DNI recommendations on how to improve the flow of intelligence. Many of the measures are designed to speed terrorism data to local and state authorities. Key to the effort is welding the nation's 42 regional intelligence hubs-called "fusion" centers-into a national network. The proposals also are intended to end a running feud between the FBI and the Department of Homeland Security over who has the lead role in sharing intelligence information on terrorism with local officials.

None of this will be easy. For years, security concerns have been among the biggest impediments to change. But some security concerns border on paranoia, reformers say, and have complicated one of the DNI's most far-reaching reform efforts-a requirement that intelligence officials serve outside their home agencies before they can be promoted. One of the biggest obstacles to this "joint duty" is security clearances, which are regulated by individual agencies. In practice, this has meant that even a 20-year veteran of the National Security Agency with the highest clearances might have to wait as long as a year for new clearances after being transferred to the CIA.

Early on, the DNI required spy agencies to accept each other's clearances. But problems remain. CIA Director Hayden recalls the effort to create a 24-hour DNI watch center last year, where he brought in several senior analysts from around the community. They had the highest-level clearances, but CIA security officials said it would still take four months to clear them to use the CIA's classified network. Hayden was told that even a high-ranking CIA official he'd tapped for the center needed a new clearance-because the analyst would be using a different computer server. ("I had to excuse people from the room so I could unscrew the general from the ceiling," recalls one of Hayden's aides.) After Hayden raised questions, the analysts were cleared in 24 hours.




The Analysts


Some of the toughest intelligence jobs are at home, making sense of all the eavesdropping information, satellite imagery, and stolen secrets. The intelligence community's analysts are still smarting after getting wrong nearly every aspect of Iraq's weapons programs before the war. To prevent "groupthink" and other failures, the DNI is moving to open up the analytic process to new ideas and new people. Its deputy director for analysis, former State Department intelligence chief Thomas Fingar, is pushing the biggest outreach program by U.S. intelligence in 40 years, hoping to draw upon expertise in the business and academic worlds. A year ago, the DNI established an Open Source Center at the CIA, designed to broaden the flow of ideas to analysts who rely so heavily on classified material that they sometimes fail to see the big picture or consider alternative views. DNI officials are also calling for more Red Teams-groups of critical, out-of-the-box thinkers who challenge conventional wisdom. One clear change, they say, can be seen in the President's Daily Brief, the top secret report given to the president each morning. Once prepared by the CIA, it is now compiled by the DNI and makes broader use of items not only from across the government but from public sources (although more than 85 percent still comes from the CIA, officials say). Another big change: creation of the National Counterterrorism Center, under the DNIwhich brings together some 200 terrorism specialists from across the community.

Some reforms are so obvious that it seems surprising they weren't made earlier. Fingar's staff is creating a National Digital Intelligence Library, a central repository that for the first time will hold all newly completed intelligence reports. Other problems are more intimidating, such as the torrent of information swamping analysts. "In the Cold War, we struggled to get data," says John McLaughlin, a former deputy CIA director. "Today, the problem is that there is too much data-more than we can handle." So voluminous is the flow that experts say more than 30 percent of the imagery collected by U.S. spy agencies goes unexamined. Even the flow of "finished" intelligence can be overwhelming. Fingar estimates that the community produces some 50,000 analytical reports a year, many of them redundant and unread. "There can't conceivably be a market for 50,000 pieces of finished intelligence," Fingar has said.

A more controversial task will be protecting the community's analytical judgments from political manipulation-a charge leveled repeatedly against the Bush administration in its attempts to justify the Iraq war. "That's the elephant in the room," says a longtime reformer. The DNI has established an analytic ombudsman, but she has almost no staff. The lack of resources has prompted criticism from some on Capitol Hill who have called for the DNI to do its own "audits" to ensure the integrity of reports on key issues.




The Scientists


Among the DNI's more unlikely reformers is Eric Haseltine, its associate director for science and technology. Before joining the intelligence world, Haseltine headed research and development at Walt Disney Imagineering, where he managed the company's Virtual Reality Studio and oversaw key technology projects. After three years at the NSA, Haseltine arrived at the DNI convinced that the community's R&D efforts-once noted for innovation and speed-had grown bureaucratic and sluggish and too focused on big-budget projects that were obsolete before they were completed. "If we only do ho-hum stuff," asks Haseltine, "are we really going to surprise anybody? Are we going to be surprised? Can we be as agile as some of our enemies?"

Haseltine launched a survey of all R&D projects, zeroing in on outfits rarely in the news, like the NSA's Disruptive Technology Office and the CIA's Intelligence Technology Innovation Center. "There is some astonishing work going on," he says. Haseltine then began to push innovative programs into development and now has 57 proposals from various agencies for cutting-edge technology tools that can be rapidly deployed. Most are for the war on terrorism. Haseltine is reluctant to give away too much, but he hints at what's on the drawing boards: computer modeling of underground nuclear sites, new techniques to detect and defuse roadside bombs, and behavior modeling that anticipates evasive patterns by insurgents. Perhaps most intriguing is sensing technology that, he says, goes "right up to the edge of what physics allows" and may soon revolutionize the hunt for terrorists. Even more far out is longer-range work on Star Trek-like sensors that can remotely detect human beings by their DNA.

Another project generating excitement within the intelligence community is Argus, which began at the CIA as an experimental warning system for biological weapons attacks. Even natural outbreaks of disease can spread for weeks before they're identified by healthcare systems. Instead of waiting for reports from local doctors and hospitals, Argus uses software that treats the Earth's communications almost like a giant EKG, looking for certain kinds of spikes in global information networks. Search programs zero in on key words on the Internet and in news media that might indicate an epidemic, such as heavy rates of absenteeism, runs on pharmaceutical drugs, and igration away from villages and towns. When Haseltine found Argus at the CIA, the project's funding was in danger. Fascinated, Haseltine quickly provided the needed money.

Today, Argus is being used by the National Institutes of Health and the U.N.'s World Health Organization to check for outbreaks of all kinds, from SARS to avian flu. "Argus has allowed us to take a giant leap forward," says KimothySmith, who runs the biosurveillance unit at DHS. In the intelligence community, its use continues to expand. Argus, says one source, is now used to detect "anything that disrupts the social fabric."




The Future


Every morning at 8:00, DNI chief Negroponte walks into the Oval Office and briefs President Bush on the latest intelligence. "I believe what I can bring to the community is a sense of what our most important customer is interested in," Negroponte says. But the president is more than just a customer; his political backing will be essential to the success of the DNI's reform efforts. Bush was initially reluctant to support the creation of the DNI office, which was pushed by Congress, and the depth of his commitment remains untested.

Negroponte and his top aides will need all the help they can get. Sooner, rather than later, the DNI's relationship with the Pentagon will be tested. Congress may lose patience if reforms don't take hold quickly. "You can't just hide behind these Washington clichC)s that this is a work in progress," says Rep. Mac Thornberry, the Texas Republican who chairs a House intelligence subcommittee, which in July issued a report calling for the DNI to be more aggressive. "I don't think Negroponte has taken full advantage of his authorities."

The reforms could also be derailed by allegations that some of the nation's spying efforts have gone too far. Already, the complaints about warrantless eavesdropping and abuse in secret CIA prisons have complicated the DNI's job.

As the nation's top intelligence official, can John Negroponte keep America safe? The veteran diplomat knows better than just about anyone what a tall order that is. But he and his staff have made a promising start-and, remarkably, encountered an apparent willingness to embark on the necessary reforms. "I expected resistance finding a parking place. I expected knives and daggers coming at me," says Meyerrose, the IT chief. "What I found instead were a lot of people with pent-up frustration that said we need some change." In an era of so many lethal and rapidly shifting threats, much will depend on whether that change comes fast enough.




www.usnews.com


The full two-part series is posted at www.usnews.com/intelligence, along with a photo tour of the National Counterterrorism Center, extended interviews with DNI John Negroponte and CIA Director Michael Hayden, and Web exclusives on the North Korea mission manager and the soaring cost of U.S. intelligence.


By David E. Kaplan and Kevin Whitelaw
  • CBSNews

Comments