The Phase III Report of the U.S.Commission on National Security/21st Century

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The Phase III Report Of
The U.S. Commission On
National Security/21st Century
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FINAL DRAFT REPORT
EMBARGOED UNTIL JAN. 31, 2001

Road Map for National Security:
Imperative for Change

The Phase III Report of the U.S. Commission on
National Security/21st Century

The United States Commission on National Security/21st Century

DRAFT FINAL REPORT
January 31, 2001

U.S. Commission on National Security/21st Century*1
Gary Hart
Co-Chair

Warren B.Rudman
Co-Chair

Anne Armstrong Norman
Commissioner

R. Augustine
Commissioner

John Dancy
Commissioner

John R. Galvin
Commissioner

Leslie H. Gelb
Commissioner

Newt Gingrich
Commissioner

Lee H. Hamilton
Commissioner

Donald B. Rice
Commissioner

James Schlesinger
Commissioner

Harry D. Train
Commissioner

Andrew Young
Commissioner

Contents

Foreword, Gary Hart and Warren Rudman
Preface, Charles G. Boyd
EXECUTIVE SUMMARY
Introduction: Imperative for Change
I. Securing the National Homeland
A. The Strategic Framework
B. Organizational Realignment.
C. Executive-Legislative Cooperation
II. Recapitalizing America's Strengths in Science and Education
A. Investing in Innovation
B. Education as a National Security Imperative
III. Institutional Redesign
A. Strategic Planning and Budgeting
B. The National Security Council
C. Department of State
D. Department of Defense
E. Space Policy
F. The Intelligence Community
IV. The Human Requirements for National Security
A. A National Campaign for Service to the Nation
B. The Presidential Appointments Process.
C. The Foreign Service
D. The Civil Service
E. Military Personnel
V. The Role of Congress
A Final Word
Appendix 1: The Recommendations
Appendix 2: The USCNS/21 Charter
Appendix 3: Commissioner Biographies and Staff Listing

Foreword

American power and influence have been decisive factors for democracy and security throughout the last half-century. However, after more than two years of serious effort, this Commission has concluded that without significant reforms, American power and influence cannot be sustained. To be of long-term benefit to us and to others, that power and influence must be disciplined by strategy, defined as the systematic determination of the proper relationship of ends to means in support of American principles, interests, and national purpose.

This Commission was established to redefine national security in this age and to do so in a more comprehensive fashion than any other similar effort since 1947. We have carried out our duties in an independent and totally bipartisan spirit. This report is a blueprint for reorganizing the U.S. national security structure in order to focus that structure's attention on the most important new and serious problems before the nation, and to produce organizational competence capable of addressing those problems creatively.

The key to our vision is the need for a culture of coordinated strategic planning to permeate all U.S. national security institutions. Our challenges are no longer defined for us by a single prominent threat. Without creative strategic planning in this new environment, we will default in time of crisis to a reactive posture. Such a posture is inadequate to the challenges and opportunities before us.

We have concluded that, despite the end of the Cold War threat, America faces distinctly new dangers, particularly to the homeland and to our scientific and educational base. These dangers must be addressed forthwith.

We call upon the new President, the new administration, the new Congress, and the country at large to consider and debate our recommendations in the pragmatic spirit that has characterized America and its people in each new age.

Gary Hart Warren
Co-Chair

B. Rudman
Co-Chair

Preface

The U.S. Commission on National Security/21st Century was born more than two years ago out of a conviction that the entire range of U.S. national security policies and processes required reexamination in light of new circumstances. Those circumstances encompass not only the changed geopolitical reality after the Cold War, but also the significant technological, social, and intellectual changes that are occurring.

Prominent among such changes is the information revolution and the accelerating discontinuities in a range of scientific and technological areas. Another is the increased integration of global finance and commerce, commonly called "globalization." Yet another is the ascendance of democratic governance and free-market economics to unprecedented levels, and another still the increasing importance of both multinational and non-governmental actors in global affairs. The routines of professional life, too, in business, university, and other domains in advanced countries have been affected by the combination of new technologies and new management techniques. The internal cultures of organizations have been changing, usually in ways that make them more efficient and effective.

The creators of this Commission believed that unless the U.S. government adapts itself to these changes-and to dramatic changes still to come-it will fall out of step with the world of the 21st century. Nowhere will the risks of doing so be more manifest than in the realm of national security.

Mindful of the likely scale of change ahead, this Commission's sponsors urged it to be bold and comprehensive in its undertaking. That meant thinking out a quarter century, not just to the next election or to the next federal budget cycle. That meant searching out how government should work, undeterred by the institutional inertia that today determines how it does work. Not least, it meant conceiving national security not as narrowly defined, but as it ought to be defined-to include economics, technology, and education for a new age in which novel opportunities and challenges coexist uncertainly with familiar ones.

The fourteen Commissioners involved in this undertaking, one that engaged their energies for over two years, have worked hard and they have worked well.*2 Best of all, despite diverse experiences and views, they have transcended partisanship to work together in recognition of the seriousness of the task: nothing less than to assure the well-being of this Republic a quarter century hence.

This Commission has conducted its work in three phases. Phase I was dedicated to understanding how the world will likely evolve over the next 25 years. From that basis in prospective reality, Phase II devised a U.S. national security strategy to deal with that world. Phase III aims to reform government structures and processes to enable the U.S. government to implement that strategy, or, indeed, any strategy that would depart from the embedded routines of the last half-century.

Phase I concluded in September 1999 with the publication of New World Coming: American Security in the 21st Century.*3 Phase II produced the April 2000 publication, Seeking a National Strategy: A Concert for Preserving Security and Promoting Freedom. Phase III, presented in these pages, is entitled Road Map for National Security: Imperative for Change. This report summarizes enough of the Commission's Phase I and Phase II work to establish an intellectual basis for understanding this Phase III report, but it does not repeat the texts of prior phases in detail. For those seeking fuller background to this report, the Commission's earlier works should be consulted directly.*4

In Road Map for National Security, the Commission has endeavored to complete the logic of its three phases of work, moving from analysis to strategy to the redesign of the structures and processes of the U.S. national security system. For example, in Phase I the Commission stressed that mass-casualty terrorism directed against the U.S. homeland was of serious and growing concern. It therefore proposed in Phase II a strategy that prioritizes deterring, defending against, and responding effectively to such dangers. Thus, in Phase III, it recommends a new National Homeland Security Agency to consolidate and refine the missions of the nearly two dozen disparate departments and agencies that have a role in U.S. homeland security today.

That said, not every Phase I finding and not every Phase II proposal has generated a major Phase III recommendation. Not every aspect of U.S. national security organization needs an overhaul. Moreover, some challenges are best met, and some opportunities are best achieved, by crafting better policies, not by devising new organizational structures or processes. Where appropriate, this report notes those occasions and is not reluctant to suggest new policy directions.

Many of the recommendations made herein require legislation to come into being. Many others, however, require only Presidential order or departmental directive. These latter recommendations are not necessarily of lesser importance and can be implemented quickly.

The Commission anticipates that some of its recommendations will win wide support. Other recommendations may generate controversy and even opposition, as is to be expected when dealing with such serious and complex issues. We trust that the ensuing debate will ultimately yield the very best use of this Commission's work for the benefit of the American people.

Organizational reform is not a panacea. There is no perfect organizational design, no flawless managerial fix. The reason is that organizations are made up of people, and people invariably devise informal means of dealing with one another in accord with the accidents of personality and temperament. Even excellent organizational structure cannot make impetuous or mistaken leaders patient or wise, but poor organizational design can make good leaders less effective.

Sound organization is important. It can ensure that problems reach their proper level of decision quickly and efficiently and can balance the conflicting imperatives inherent in any national security decision-system-between senior involvement and expert input, between speed and the need to consider a variety of views, between tactical flexibility and strategic consistency. President Eisenhower summarized it best: "Organization cannot make a genius out of a dunce. But it can provide its head with the facts he needs, and help him avoid misinformed mistakes."

Most important, good organization helps assure accountability. At every level of organization, elected officials-and particularly the President as Commander-in-Chief-must be

able to ascertain quickly and surely who is in charge. But in a government that has expanded through serial incremental adjustment rather than according to an overall plan, finding those responsible to make things go right, or those responsible when things go wrong, can be a very formidable task. This, we may be sure, is not what the Founders had in mind.

This Commission has done its best to step up to the mandate of its Charter. It is now up to others to do their best to bring the benefits of this Commission's effort into the institutions of American government.

Charles G. Boyd, General, USAF (Ret.)
Executive Director

Executive Summary

After our examination of the new strategic environment of the next quarter century (Phase I) and of a strategy to address it (Phase II), this Commission concludes that significant changes must be made in the structures and processes of the U.S. national security apparatus. Our institutional base is in decline and must be rebuilt. Otherwise, the United States risks losing its global influence and critical leadership role.

We offer recommendations for organizational change in five key areas:

1 ensuring the security of the American homeland;

2 recapitalizing America's strengths in science and education;

3 redesigning key institutions of the Executive Branch;

4 overhauling the U.S. government personnel system; and

5 reorganizing Congress's role in national security affairs.

We have taken a broad view of national security. In the new era, sharp distinctions between "foreign" and "domestic" no longer apply. We do not equate national security with "defense." We do believe in the centrality of strategy, and of seizing opportunities as well as confronting dangers. If the structures and processes of the U.S. government stand still amid a world of change, the United States will lose its capacity to shape history, and will instead be shaped by it.

Securing the National Homeland

The combination of unconventional weapons proliferation with the persistence of international terrorism will end the relative invulnerability of the U.S. homeland to catastrophic attack. A direct attack against American citizens on American soil is likely over the next quarter century. The risk is not only death and destruction but also a demoralization that could undermine U.S. global leadership. In the face of this threat, our nation has no coherent or integrated governmental structures.

We therefore recommend the creation of a new independent National Homeland Security Agency (NHSA) with responsibility for planning, coordinating, and integrating various U.S. government activities involved in homeland security. NHSA would be built upon the Federal Emergency Management Agency, with the three organizations currently on the front line of border security-the Coast Guard, the Customs Service, and the Border Patrol- transferred to it. NHSA would not only protect American lives, but also assume responsibility for overseeing the protection of the nation's critical infrastructure, including information technology.

The NHSA Director would have Cabinet status and would be a statutory advisor to the National Security Council. The legal foundation for the National Homeland Security Agency would rest firmly within the array of Constitutional guarantees for civil liberties. The observance of these guarantees in the event of a national security emergency would be safeguarded by NHSA's interagency coordinating activities-which would include the Department of Justice-as well as by its conduct of advance exercises.

The potentially catastrophic nature of homeland attacks necessitates our being prepared to use the tremendous resources of the Department of Defense (DoD). Therefore, the department needs to pay far more attention to this mission in the future. We recommend that a new office of Assistant Secretary for Homeland Security be created to oversee the various DoD activities and ensure that the necessary resources are made available.

New priorities also need to be set for the U.S. armed forces in light of the threat to the homeland. We urge, in particular, that the National Guard be given homeland security as a primary mission, as the U.S. Constitution itself ordains. The National Guard should be reorganized, trained, and equipped to undertake that mission.

Finally, we recommend that Congress reorganize itself to accommodate this Executive Branch realignment, and that it also form a special select committee for homeland security to provide Congressional support and oversight in this critical area.

Recapitalizing America's Strengths in Science and Education

Americans are living off the economic and security benefits of the last three generations' investment in science and education, but we are now consuming capital. Our systems of basic scientific research and education are in serious crisis, while other countries are redoubling their efforts. In the next quarter century, we will likely see ourselves surpassed, and in relative decline, unless we make a conscious national commitment to maintain our edge.

We also face unprecedented opportunity. The world is entering an era of dramatic progress in bioscience and materials science as well as information technology and scientific instrumentation. Brought together and accelerated by nanoscience, these rapidly developing research fields will transform our understanding of the world and our capacity to manipulate it. The United States can remain the world's technological leader if it makes the commitment to do so. But the U.S. government has seriously underfunded basic scientific research in recent years. The quality of the U.S. education system, too, has fallen well behind those of scores of other nations. This has occurred at a time when vastly more Americans will have to understand and work competently with science and math on a daily basis.

In this Commission's view, the inadequacies of our systems of research and education pose a greater threat to U.S. national security over the next quarter century than any potential conventional war that we might imagine. American national leadership must understand these deficiencies as threats to national security. If we do not invest heavily and wisely in rebuilding these two core strengths, America will be incapable of maintaining its global position long into the 21st century.

We therefore recommend doubling the federal research and development budget by 2010, and instituting a more competitive environment for the allotment of those funds.

We recommend further that the role of the President's Science Advisor be elevated to oversee these and other critical tasks, such as the resuscitation of the national laboratory system and the institution of better inventory stewardship over the nation's science and technology assets.

We also recommend a new National Security Science and Technology Education Act to fund a comprehensive program to produce the needed numbers of science and engineering professionals as well as qualified teachers in science and math. This Act should provide loan forgiveness incentives to attract those who have graduated and scholarships for those still in school and should provide these incentives in exchange for a period of K-12 teaching in science and math, or of military or government service. Additional measures should provide resources to modernize laboratories in science education, and expand existing programs aimed at economically-depressed school districts.

Institutional Redesign

The dramatic changes in the world since the end of the Cold War of the last half- century have not been accompanied by any major institutional changes in the Executive Branch of the U.S. government. Serious deficiencies exist that only a significant organizational redesign can remedy. Most troublesome is the lack of an overarching strategic framework guiding U.S. national security policymaking and resource allocation. Clear goals and priorities are rarely set. Budgets are prepared and appropriated as they were during the Cold War.

The Department of State, in particular, is a crippled institution, starved for resources by Congress because of its inadequacies, and thereby weakened further. Only if the State Department's internal weaknesses are cured will it become an effective leader in the making and implementation of the nation's foreign policy. Only then can it credibly seek significant funding increases from Congress. The department suffers in particular from an ineffective organizational structure in which regional and functional policies do not serve integrated goals, and in which sound management, accountability, and leadership are lacking.

For this and other reasons, the power to determine national security policy has steadily migrated toward the National Security Council (NSC) staff. The staff now assumes policymaking roles that many observers have warned against. Yet the NSC staff's role as policy coordinator is more urgently needed than ever, given the imperative of integrating the many diverse strands of policymaking.

Meanwhile, the U.S. intelligence community is adjusting only slowly to the changed circumstances of the post-Cold War era. While the economic and political components of statecraft have assumed greater prominence, military imperatives still largely drive the analysis and collection of intelligence. Neither has America's overseas presence been properly adapted to the new economic, social, political, and security realities of the 21st century.

Finally, the Department of Defense needs to be overhauled. The growth in staff and staff activities has created mounting confusion and delay. The failure to outsource or privatize many defense support activities wastes huge sums of money. The programming and budgeting process is not guided by effective strategic planning. The weapons acquisition process is so hobbled by excessive laws, regulations, and oversight strictures that it can neither recognize nor seize opportunities for major innovation, and its procurement bureaucracy weakens a defense industry that is already in a state of financial crisis.

In light of such serious and interwoven deficiencies, the Commission's initial recommendation is that strategy should once again drive the design and implementation of U.S. national security policies. That means that the President should personally guide a top-down strategic planning process and that process should be linked to the allocation of resources throughout the government. When submitting his budgets for the various national security departments, the President should also present an overall national security budget, focused on the nation's most critical strategic goals. Homeland security, counter- terrorism, and science and technology should be included.

We recommend further that the President's National Security Advisor and NSC staff return to their traditional role of coordinating national security activities and resist the temptation to become policymakers or operators. The NSC Advisor should also keep a low public profile. Legislative, press communications, and speech-writing functions should reside in the White House staff, not separately in the NSC staff as they do today. The higher the profile of the National Security Advisor the greater will be the pressures from Congress to compel testimony and force Senate confirmation of the position.

To reflect how central economics has become in U.S. national security policy, we recommend that the Secretary of Treasury be named a statutory member of the National Security Council. Responsibility for international economic policy should return to the National Security Council. The President should abolish the National Economic Council, distributing its domestic economic policy responsibilities to the Domestic Policy Council.

Critical to the future success of U.S. national security policies is a fundamental restructuring of the State Department. Reform must ensure that responsibility and accountability are clearly established, regional and functional activities are closely integrated, foreign assistance programs are centrally planned and implemented, and strategic planning is emphasized and linked to the allocation of resources.

We recommend that this be accomplished through the creation of five Under Secretaries with responsibility for overseeing the regions of Africa, Asia, Europe, Inter- America, and Near East/South Asia, and a redefinition of the responsibilities of the Under Secretary for Global Affairs. The restructuring we propose would position the State Department to play a leadership role in the making and implementation of U.S. foreign policy, as well as to harness the department's organizational culture to the benefit of the U.S. government as a whole. Perhaps most important, the Secretary of State would be free to focus on the most important policies and negotiations, having delegated responsibility for integrating regional and functional issues to the Under Secretaries.

Accountability would be matched with responsibility in senior policymakers, who in serving the Secretary would be able to speak for the State Department both within the interagency process and before Congress. No longer would competing regional and functional perspectives immobilize the department. At the same time, functional perspectives, whether they be human rights, arms control, or the environment, will not disappear. The Under Secretaries would be clearly accountable to the Secretary of State, the President, and the Congress for ensuring that the appropriate priority was given to these concerns. Someone would actually be in charge.

We further recommend that the activities of the U.S. Agency for International Development be fully integrated into this new State Department organization. Development aid is not an end in itself, nor can it be successful if pursued independently of other U.S. programs and diplomatic activities. Only a coordinated diplomatic and assistance effort will advance the nation's goals abroad, whether they be economic growth, democracy, or human rights.

The Secretary of State should give greater emphasis to strategic planning in the State Department and link it directly to the allocation of resources through the establishment of a Strategic Planning, Assistance, and Budget Office. Rather than multiple Congressional appropriations, the State Department should also be funded in a single integrated Foreign Operations budget, which would include all foreign assistance programs and activities as well as the expenses for all related personnel and operations. Also, all U.S. Ambassadors, including the Permanent Representative to the United Nations, should report directly to the Secretary of State, and a major effort needs to be undertaken to "right-size" the U.S. overseas presence.

The Commission believes that the resulting improvements in the effectiveness and competency of the State Department and its overseas activities would provide the basis for the significant increase in resources necessary to carry out the nation's foreign policy in the 21st century.

As for the Department of Defense, resource issues are also very much at stake in reform efforts. The key to success will be direct, sustained involvement and commitment to defense reform on the part of the President, Secretary of Defense, and Congressional leadership. We urge first and foremost that the new Secretary of Defense reduce by ten to fifteen percent the staffs of the Office of the Secretary of Defense, the Joint Staff, the military services, and the regional commands. This would not only save money but also achieve the decision speed and encourage the decentralization necessary to succeed in the 21st century.

Just as critical, the Secretary of Defense should establish a ten-year goal of reducing infrastructure costs by 20-25 percent through steps to consolidate, restructure, outsource, and privatize as many DoD support agencies and activities as possible. Only through savings in infrastructure costs, which now take up nearly half of DoD's budget, will the department find the funds necessary for modernization and for combat personnel in the long-term.

The processes by which the Defense Department develops its programs and budgets as well as acquires its weapons also need fundamental reform. The most critical first step is for the Secretary of Defense to produce defense policy and planning guidance that defines specific goals and establishes relative priorities.

Together with the Congress, the Secretary of Defense should move the Quadrennial Defense Review (QDR) to the second year of a Presidential term. The current requirement, that it be done in an administration's first year, spites the purpose of the activity. Such a deadline does not allow the time or the means for an incoming administration to influence the QDR outcome, and therefore for it to gain a stake in its conclusions.

We recommend a second change in the QDR, as well; namely that the Secretary of Defense introduce a new process that requires the Services and defense agencies to compete for the allocation of some resources within the overall Defense budget. This, we believe, would give the Secretary a vehicle to identify low priority programs and begin the process of reallocating funds to more promising areas during subsequent budget cycles.

As for acquisition reform, the Commission is deeply concerned with the downward spiral that has emerged in recent decades in relations between the Pentagon as customer and the defense industrial base as supplier of the nation's major weapons systems. Many innovative high-tech firms are simply unable or unwilling to work with the Defense Department under the weight of its auditing, contracting, profitability, investment, and inspection regulations. These regulations also impair the Defense Department's ability to function with the speed it needs to keep abreast of today's rapid pace of technological innovation. Weapons development cycles average nine years in an environment where technology now changes every twelve to eighteen months in Silicon Valley-and the gap between private sector and defense industry innovation continues to widen.

In place of a specialized "defense industrial base," we believe that the nation needs a national industrial base for defense composed of a broad cross-section of commercial firms as well as the more traditional defense firms. "New economy" sectors must be attracted to work with the government on sound business and professional grounds; the more traditional defense suppliers, which fill important needs unavailable in the commercial sector, must be given incentives to innovate and operate efficiently. We therefore recommend these major steps:

1 Establish and employ a two-track acquisition system, one for major acquisitions and a "fast track" for a modest number of potential breakthrough systems, especially those in the area of command and control.
2 Return to the pattern of increased prototyping and testing of selected weapons and support systems to foster innovation. We should use testing procedures to gain knowledge and not to demonstrate a program's ability to survive budgetary scrutiny.
3 Implement two-year defense budgeting solely for the modernization element (R&D/procurement)of the Defense budget and expand the use of multi-year procurement.
4 Modernize auditing and oversight requirements (by rewriting relevant sections of U.S. Code, Title 10, and the Federal Acquisition Regulations) with a goal of reducing the number of auditors and inspectors in the acquisition system to a level commensurate with the budget they oversee.
Amidst the other process reforms for the Defense Department, the Commission recognizes the need to modernize current force planning methods. We conclude that the concept of two major, coincident wars is a remote possibility supported neither by the main thrust of national intelligence nor by this Commission's view of the likely future. It should be replaced by a planning process that accelerates the transformation of capabilities and forces better suited to, and thus likely to succeed in, the current security environment. The Secretary of Defense should direct the DoD to shift from the threat-based, force sizing process to one which measures requirements against recent operational activity trends, actual intelligence estimates of potential adversaries' capabilities, and national security objectives as defined in the new administration's national security strategy-once formulated.
The Commission furthermore recommends that the Secretary of Defense revise the current categories of Major Force Programs (MFPs) used in the Defense Program Review to correspond to the five military capabilities the Commission prescribed in its Phase II report- strategic nuclear forces, homeland security forces, conventional forces, expeditionary forces, and humanitarian and constabulary forces.

Ultimately, the transformation process will blur the distinction between expeditionary and conventional forces, as both types of capabilities will eventually possess the technological superiority, deployability, survivability, and lethality now called for in the expeditionary forces. For the near term, however, those we call expeditionary capabilities require the most emphasis. Consequently, we recommend that the Defense Department devote its highest priority to improving and further developing its expeditionary capabilities.
There is no more critical dimension of defense policy than to guarantee U.S. commercial and military access to outer space. The U.S. economy and military are vitally dependent on communications that rely on space. The clear imperative for the new era is a comprehensive national policy toward space and a coherent governmental machinery to carry it out. We therefore recommend the establishment of an Interagency Working Group on Space (IWGS).

The members of this interagency working group would include not only the relevant parts of the intelligence community and the State and Defense Departments, but also the National Aeronautics and Space Administration (NASA), the National Oceanic and Atmospheric Administration (NOAA), the Department of Commerce, and other Executive Branch agencies as necessary.

Meanwhile, the global presence and responsibilities of the United States have brought new requirements for protecting U.S. space and communications infrastructures, but no comprehensive national space architecture has been developed. We recommend that such responsibility be given to the new interagency space working group and that the existing National Security Space Architect be transferred from the Defense Department to the NSC staff to take the lead in this effort.

The Commission has concluded that the basic structure of the intelligence community does not require change. Our focus is on those steps that will enable the full implementation of recommendations found elsewhere within this report.

First in this regard, we recommend that the President order the setting of national intelligence priorities through National Security Council guidance to the Director of Central Intelligence.

Second, the intelligence community should emphasize the recruitment of human intelligence sources on terrorism as one of the intelligence community's highest priorities, and ensure that existing operational guidelines support this policy.

Third, the community should place new emphasis on collection and analysis of economic and science/technology security concerns, and incorporate more open source intelligence into its analytical products. To facilitate this effort, Congress should increase significantly the National Foreign Intelligence Program (NFIP) budget for collection and analysis.

The Human Requirements for National Security

As it enters the 21st century, the United States finds itself on the brink of an unprecedented crisis of competence in government. The declining orientation toward government service as a prestigious career is deeply troubling. Both civilian and military institutions face growing challenges, albeit of different forms and degrees, in recruiting and retaining America's most promising talent. This problem derives from multiple sources-ample private sector opportunities with good pay and fewer bureaucratic frustrations, rigid governmental personnel procedures, the absence of a single overarching threat like the Cold War to entice service, cynicism about the worthiness of government service, and perceptions of government as a plodding bureaucracy falling behind in a technological age of speed and accuracy.

These factors are adversely affecting recruitment and retention in the Civil and Foreign Services and particularly throughout the military, where deficiencies are both widening the gap between those who serve and the rest of American society and putting in jeopardy the leadership and professionalism necessary for an effective military. If we allow the human resources of government to continue to decay, none of the reforms proposed by this or any other national security commission will produce their intended results.

We recommend, first of all, a national campaign to reinvigorate and enhance the prestige of service to the nation. The key step in such a campaign must be to revive a positive attitude toward public service. This will require strong and consistent Presidential commitment, Congressional legislation, and innovative departmental actions throughout the federal government. It is the duty of all political leaders to repair the damage that has been done, in a high-profile and fully bipartisan manner.

From these changes in rhetoric, the campaign must undertake several actions. First, this Commission recommends the most urgent possible streamlining of the process by which we attract senior government officials. The ordeal that Presidential nominees are subjected to is now so great as to make it prohibitive for many individuals of talent and experience to accept public service. The confirmation process is characterized by vast amounts of paperwork and many delays. Conflict of interest and financial disclosure requirements have become a prohibitive obstacle to the recruitment of honest men and women to public service. Post-employment restrictions confront potential new recruits with the prospect of having to forsake not only income but work itself in the very fields in which they have demonstrated talent and found success. Meanwhile, a pervasive atmosphere of distrust and cynicism about government service is reinforced by the encrustation of complex rules based on the assumption that all officials, and especially those with experience in or contact with the private sector, are criminals waiting to be unmasked.

We therefore recommend the following:

1 That the President act to shorten and make more efficient the Presidential appointee process by confirming the national security team first, standardizing paperwork requirements, and reducing the number of nominees subject to full FBI background checks.
2 That the President reduce the number of Senate-confirmed and non-career SES positions by 25 percent to reduce the layering of senior positions in departments that has developed over time.
3 That the President and Congressional leaders instruct their top aides to report within 90 days of January 20, 2001 on specific steps to revise government ethics laws and regulations. This should entail a comprehensive review of regulations that might exceed statutory requirements and making blind trusts, discretionary waivers, and recusals more easily available as alternatives to complete divestiture of financial and business holdings of concern.
Beyond the appointments process, there are problems with government personnel systems specific to the Foreign Service, the Civil Service, and to the military services. But for all three, there is one step we urge: Expand the National Security Education Act of 1991 (NSEA) to include broad support for social sciences, humanities, and foreign languages in exchange for civilian government and military service.

This expanded Act is the complement to the National Security Science and Technology Education Act (NSSTEA) and would provide college scholarship and loan forgiveness benefits for government service. Recipients could fulfill this service in a variety of ways: in the active duty military; in National Guard or Reserve units; in national security departments of the Civil Service; or in the Foreign Service. The expanded NSEA thus would provide an important means of recruiting high-quality people into military and civilian government service.

An effective and motivated Foreign Service is critical to the success of the Commission's restructuring proposal for the State Department, yet 25 percent fewer people are now taking the entrance exam compared to the mid-1980s. Those who do enter complain of poor management and inadequate professional education. We therefore recommend that the Foreign Service system be improved by making leadership a core value of the State Department, revamping the examination process, and dramatically improving the level of on-going professional education.

The Civil Service faces a range of problems from the aging of the federal workforce to institutional challenges in bringing new workers into government service to critical gaps in recruiting and retaining information technology professionals. To address these problems, the Commission recommends eliminating recruitment hurdles, making the hiring process faster and easier, and designing professional education and retention programs worthy of full funding by Congress. Retaining talented information technology workers, too, will require greater incentives and the outsourcing of some IT support functions.

The national security component of the Civil Service calls for professionals with breadth of experience in the inter-agency process and with depth of knowledge about policy issues. To develop these, we recommend the establishment of a National Security Service Corps (NSSC) to broaden the experience base of senior departmental managers and develop leaders who seek integrative solutions to national security policy problems. Participating departments would include Defense, State, Treasury, Commerce, Justice, Energy, and the new National Homeland Security Agency-the departments essential to interagency policymaking on key national security issues. While participating departments would retain control over their personnel, an interagency advisory group would design and monitor the rotational assignments and professional education that will be key to the Corps' success.

With respect to military personnel, reform is needed in the recruitment, promotion, compensation and retirement systems. Otherwise, the military will continue to lose its most talented personnel, and the armed services will be left with a cadre unable to handle the technological and managerial tasks necessary for a world-class 21st century force.

Beyond the significant expansion of scholarships and debt relief programs recommended in both the modified National Security Education Act and the newly created National Security Science and Technology Education Act, we recommend substantial enhancements to the Montgomery GI Bill and strengthening recently passed and pending legislation that supports benefits-including transition, medical, and homeownership-for qualified veterans. The GI Bill should be restored as a pure entitlement, be transferable to dependents if desired by career service members, and should equal, at the very least, the median tuition cost of four-year U.S. colleges. The payments should be accelerated to coincide with school term periods and be indexed to keep pace with college cost increases. In addition, Title 38 authority for veterans benefits should be modified to restore and substantially improve medical, dental, and VA home ownership benefits for all who qualify, but especially for career and retired service members. Taken as a package, such changes will help bring the best people into the armed service and persuade quality personnel to serve longer in order to secure greater rewards for their service.

While these enhancements are critical they will not, by themselves, resolve the quality recruitment and retention problems of the Services. We therefore recommend significant modifications to military personnel legislation governing officer and enlisted career management, retirement, and compensation-giving Service Secretaries more authority and flexibility to adapt their personnel systems and career management to meet 21st century requirements. This should include flexible compensation and retirement plans, exemption from "up-or-out" mandates, and reform of personnel systems to facilitate fluid movement of personnel. If we do not decentralize and modernize the governing personnel legislation, no military reform or transformation is possible. We call for an Executive-Legislative working group to monitor, evaluate and share information about the testing and implementation of these recommendations. With bipartisan cooperation, our military will remain one of this nation's most treasured institutions and our safeguard in the changing world ahead.

The Role of Congress

While Congress has mandated many changes to a host of Executive departments and agencies over the years, it has not fundamentally reviewed its own role in national security policy. Moreover, it has not reformed its own structure since 1949. At present, for example, every major defense program must be voted upon no fewer than eighteen times each year by an array of committees and subcommittees. This represents a very poor use of time for busy members of the Executive and Legislative Branches.

To address these deficiencies, the Commission first recommends that the Congressional leadership conduct a thorough bicameral, bipartisan review of the Legislative Branch's relationship to national security and foreign policy. The House Speaker, Majority, and Minority leaders and the Senate Majority and Minority leaders must work with the President and his top aides to bring proposed reforms to this Congress by the beginning of its second session.

From that basis, Congressional and Executive Branch leaders must build programs to encourage members to acquire knowledge and experience in national security. These programs should include ongoing education, greater opportunities for serious overseas travel, more legislature-to-legislature exchanges, and greater participation in wargames.

Greater fluency in national security matters must be matched by structural reforms. A comprehensive review of the Congressional committee structure is needed to ensure that it reflects the complexity of 21st century security challenges and of U.S. national security priorities. Specifically we recommend merging appropriations subcommittees with their respective authorizing committees so that the new merged committees will authorize and appropriate within the same bill. This should decrease the bureaucracy of the budget process and allow more time to be devoted to the oversight of national security policy.

An effective Congressional role in national security also requires ongoing Executive- Legislative consultation and coordination. The Executive Branch must ensure a sustained effort in consultation and devote resources to it. For its part, Congress must make consultation a higher priority, in part by forming a permanent consultative group composed of the Congressional leadership and the Chairpersons and Ranking Members of the main committees involved in national security. This will form the basis for sustained dialogue and greater support in times of crisis.

The Commission notes, in conclusion, that some of its recommendations will save money, while others call for more expenditure. We have not tried to "balance the books" among our recommendations, nor have we held financial implications foremost in mind during our work. We consider any money that may be saved a second-order benefit. We consider the provision of additional resources to national security, where necessary, to be investments, not costs, in first-order national priorities.

Finally, we strongly urge the new President and the Congressional leadership to establish some mechanism to oversee the implementation of the recommendations proffered here. Once some mechanism is chosen, the President must ensure that responsibility for implementing the recommendations of this Commission be given explicitly to senior personnel in both the Executive and Legislative Branches of government. The press of daily obligations is such that unless such delegation is made, and those given responsibility for implementation are held accountable for their tasks, the necessary reforms will not occur. The stakes are high. We of this Commission believe that many thousands of American lives, U.S. leadership among the community of nations, and the fate of U.S. national security itself are at risk unless the President and the Congress join together to implement the recommendations set forth in this report.

Introduction: Imperative for Change

The U.S. Commission on National Security/ 21st Century was chartered to be the most comprehensive examination of the structures and processes of the U.S. national security apparatus since the core legislation governing it was passed in 1947. The Commission's Charter enjoins the Commissioners to "propose measures to adapt existing national security structures" to new circumstances, and if necessary, "to create new structures where none exist." The Commission is also charged with providing "cost and time estimates to complete these improvements," as appropriate, for what is to be, in sum, "an institutional road map for the early part of the 21st century."*5

Our Phase III report provides such a road map. But Phase III rests on the first two phases of the Commission's work: Phase I's examination of how the world may evolve over the next quarter century, and Phase II's strategy to deal effectively with that world on behalf of American interests and values.

In its Phase I effort, this Commission stressed that global trends in scientific- technological, economic, socio-political, and military-security domains-as they mutually interact over the next 25 years-will produce fundamental qualitative changes in the U.S. national security environment. We arrived at these fourteen conclusions:

· The United States will become increasingly vulnerable to hostile attack on the America homeland, and U.S. military superiority will not entirely protect us.

· Rapid advances in information and biotechnologies will create new vulnerabilities for U.S. security.

· New technologies will divide the world as well as draw it together.

· The national security of all advanced states will be increasingly affected by the vulnerabilities of the evolving global economic infrastructure.

· Energy supplies will continue to have major strategic significance.

· All borders will be more porous; some will bend and some will break.

· The sovereignty of states will come under pressure, but will endure as the main principle of international political organization.

· The fragmentation and failure of some states will occur, with destabilizing effects on entire regions.

· Foreign crises will be replete with atrocities and the deliberate terrorizing of civilian populations.

· Space will become a critical and competitive military environment.

· The essence of war will not change.

· U.S. intelligence will face more challenging adversaries, and even excellent intelligence will not prevent all surprises.

· The United States will be called upon frequently to intervene militarily in a time of uncertain alliances, and with the prospect of fewer forward-deployed forces.

· The emerging security environment in the next quarter century will require different U.S. military and other national capabilities.
The Commission's stress on communicating the scale and pace of change has been borne out by extraordinary developments in science and technology in just the eighteen-month period since the Phase I report appeared. The mapping of the human genome was completed. A functioning quantum computing device was invented. Organic and inorganic material was mated at the molecular level for the first time. Basic mechanisms of the aging process have been understood at the genetic level. Any one of these developments would have qualified as a "breakthrough of the decade" a quarter century ago, but they all happened within the past year and a half.

This suggests the possible advent of a period of change the scale of which will often astound us. The key factor driving change in America's national security environment over the next 25 years will be the acceleration of scientific discovery and its technological applications, and the uneven human social and psychological capacity to harness them. Synergistic developments in information technology, materials science, biotechnology, and nanotechnology will almost certainly transform human tools more dramatically and rapidly than at any time in human history.

While it is easy to underestimate the social implications of change on such a scale, the need for human intellectual and social adaptation imposes limits to the pace of change. These limits are healthy, for they allow and encourage the application of the human moral sense to choices of major import. We will surely have our hands full with such choices over the next quarter century. In that time we may witness the development of a capacity to guide or control evolution by manipulating human DNA. The ability to join organic and inorganic material forms suggests, that humans may co-evolve literally with their own machines. Such prospects are both sobering and contentious. Some look to the future with great hope for the prospect of curing disease, repairing broken bodies, ending poverty, and preserving the biosphere. But others worry that curiosity and vanity will outrun the human moral sense, thus turning hope into disaster. The truth is that we do not know where the rapidly expanding domain of scientific-technological innovation will bring us. Nor do we know the extent to which we can summon the collective moral fortitude to control its outcome.

What we do know is that some societies, and some people within societies, will be at the forefront of future scientific- technological developments and others will be marginal to them. This means more polarization between those with wealth and power and those without-both among and within societies. It suggests, as well, that many engrained social patterns will become unstable, for scientific-technological innovation has profound, if generally unintended, effects on economic organization, social values, and political life.

In the Internet age, for example, information technologies may be used to empower communities and advance freedoms, but they can also empower political movements led by charismatic leaders with irrational premises. Such men and women in the 21st century will be less bound than those of the 20th by the limits of the state, and less obliged to gain large industrial capabilities in order to wreck havoc. For example, a few people with as little as $50,000 investment may manage to produce and spread a genetically-altered pathogen with the potential to kill millions of people in a matter of months. Clearly, the threshold for small groups or even individuals to inflict massive damage on those they take to be their enemies is falling dramatically.

As for political life, it is clear that the rapidity of change is already overwhelming many states in what used to be called the Third World. Overlaid on the enduring plagues of corruption and sheer bad government is a new pattern: information technology has widened the awareness of democracy and market-driven prosperity, and has led to increasing symbolic and material demands on government. These demands often exceed existing organizational capacities to meet them. One result is that many national armies do not respond to government control. Another is that mercenaries, criminals, terrorists, and drug cartel operators roam widely and freely. Meanwhile, non-governmental organizations (NGOs) along with global financial institutions sometimes function as proxy service and regulatory bureaucracies to do for states that which they cannot do for themselves-further diminishing governmental control and political accountability.

As a result of the growing porosity of borders, and of the widening scope of functional economic integration, significant political developments can no longer be managed solely through the vehicle of bilateral diplomatic relations. A seemingly internal crisis in Sierra Leone, carefully observed, implicates most of West Africa. A problem involving drug cultivation and political rebellion in Colombia cannot be addressed without involving Panama, Venezuela, Bolivia, Ecuador, Peru, Brazil, and Mexico. Financial problems in Thailand tumble willy-nilly onto Russia, Brazil, Japan, Indonesia, Malaysia, and the United States.

Demography is another major driver of global political change. Population growth tends to moderate with increased literacy, urbanization, and especially changes in traditional values that attend the movement of women into the workplace. Thanks to these trends, the world's rate of population increase is slowing somewhat, but the absolute increases over the next quarter century will be enormous and coping with them will be a major challenge throughout much of the world. In some countries, however, the problem will be too few births. In Japan and Germany, for example, social security and private pension systems may face enormous strain because too few young workers will be available to support retirees living ever-longer lives. The use of foreign workers may be the only recourse for such societies, but that raises other political and social difficulties.

Yet another driver of change may be sustained economic growth in particular parts of the world. Asia may well be the most economically dynamic region on earth by 2025. Much depends on China's ability to reform further the structure of its economy and on India's ability to unleash its vast economic potential. But if these two very large countries achieve sustained economic growth-and if the economies of Japan, Korea, Taiwan, Indonesia, Malaysia, the Philippines, Thailand, and Vietnam also grow-the focus of world power will shift away from the dominant Western centers of the past five centuries. While America is itself increasingly diverse, it still shares more philosophically and historically with Europe than with Asia. The challenge for the United States, then, may rest not only in a geostrategic shift, but in a shift in the cultural fabric of international politics itself.

In Phase II the Commission moved from describing objective conditions to prescribing a strategy for dealing with them. Subtitled A Concert for Preserving Security and Promoting Freedom, the Commission stressed that America cannot secure and advance its own interests in isolation. The nations of the world must work together-and the United States must learn to work with others in new ways-if the more cooperative order emerging from the Cold War epoch is to be sustained and strengthened.

Nonetheless, this Commission takes as its premise that America must play a special international role well into the future. By dint of its power and its wealth, its interests and its values, the United States has a responsibility to itself and to others to reinforce international order. Only the United States can provide the ballast of global stability, and usually the United States is the only country in a position to organize collective responses to common challenges.

We believe that American strategy must compose a balance between two key aims. The first is to reap the benefits of a more integrated world in order to expand freedom, security, and prosperity for Americans and for others. But second, American strategy must also strive to dampen the forces of global instability so that those benefits can endure and spread.

On the positive side, this means that the United States should pursue, within the limits of what is prudent and realistic, the worldwide expansion of material abundance and the eradication of poverty. It should also promote political pluralism, freedom of thought and speech, and individual liberty. Not only do such aims inhere in American principles, they are practical goals, as well. There are no guarantees against violence and evil in the world. We believe, nonetheless, that the expansion of human rights and basic material well-being constitutes a sturdy bulwark against them. On the negative side, these goals require concerted protection against four related dangers: the proliferation of weapons of mass destruction; international terrorism; major interstate aggression; and the collapse of states into internal violence, with the associated regional destabilization that often accompanies it.

These goals compose the lodestone of a U.S. strategy to expand freedom and maintain underlying stability, but, as we have said, the United States cannot achieve them by itself. American leadership must be prepared to act unilaterally if necessary, not least because the will to act alone is sometimes required to gain the cooperation of others. But U.S. policy should join its efforts with allies and multilateral institutions wherever possible; the United States is wise to strengthen its partners and in turn will derive strength from them.

The United States, therefore, as the prime keeper of the international security commons, must speak and act in ways that lead others, by dint of their own interests, to ally with American goals. If it is too arrogant and self-possessed, American behavior will invariably stimulate the rise of opposing coalitions. The United States will thereby drive away many of its partners and weaken those that remain. Tone matters.

To carry out this strategy and achieve these goals, the Commission defined six key objectives for U.S. foreign and national security policy:
First, the preeminent objective is "to defend the United States and ensure that it is safe from the dangers of a new era." The combination of unconventional weapons proliferation with the persistence of international terrorism will end the relative invulnerability of the U.S. homeland to catastrophic attack. To deter attack against the homeland in the 21st century, the United States requires a new triad of prevention, protection, and response. Failure to prevent mass-casualty attacks against the American homeland would jeopardize not only American lives but U.S. foreign policy writ large. It would undermine support for U.S. international leadership and for many of our personal freedoms, as well. Indeed, the abrupt undermining of U.S. power and prestige is the worst thing that could happen to the structure of global peace in the next quarter century, and nothing is more likely to produce it than devastating attacks on American soil.

Achieving this goal, and the nation's other critical national security goals, also requires the U.S. government, as a second key objective, to "maintain America's social cohesion, economic competitiveness, technological ingenuity, and military strength." That means a larger investment in and better management of science and technology in government and in society, and a substantially better educational system, particularly for the teaching of science and mathematics.

The United States must also take better advantage of the opportunities that the present period of relative international stability and American power enable. A third key objective, therefore, is "to assist the integration of key major powers, especially China, Russia, and India, into the mainstream of the emerging international system." Moreover, since globalization's opportunities are rooted in economic and political progress, the Commission's fourth key U.S. objective is "to promote, with others, the dynamism of the new global economy and improve the effectiveness of international institutions and international law."

A fifth key objective also follows, which is "to adapt U.S. alliances and other regional mechanisms to a new era in which America's partners seek greater autonomy and responsibility." A sixth and final key objective inheres in an effort "to help the international community tame the disintegrative forces spawned by an era of change." While the prospect of major war is low, much of the planet will experience conflict and violence. Unless the United States, in concert with others, can find a way to limit that conflict and violence, it will not be able to construct a foreign policy agenda focussed on opportunities.

Achieving all of these objectives will require a basic shift in orientation: to focus on preventing rather than simply responding to dangers and crises. The United States must redirect its energies, adjust its diplomacy, and redesign its military capabilities to ward off cross-border aggression, assist states before they fail, and avert systemic international financial crises. To succeed over the long run with a preventive focus, the United States needs to institutionalize its efforts to grasp the opportunities the international environment now offers.

An opportunity-based strategy also has the merit of being more economical than a reactive one. Preventing a financial crisis, even if it involves well-timed bailouts, is cheaper than recuperating from stock market crashes and regional recessions. Preventing a violent conflict costs less than responsive peacekeeping operations and nation-building activities. And certainly, preventing mass-casualty attacks on the American homeland will be far less expensive than recovering from them.

These six objectives, and the Commission's strategy itself, rest on a premise so basic that it often goes unstated: democracy conduces generally to domestic and international peace, and peace conduces to, or at least allows, democratic politics. While this premise is not a "law," and while scholars continue to study and debate these matters, we believe they are strong tendencies, and that they can be strengthened further by a consistent and determined national policy. We know, that a world characterized by the spread of genuine democracy would not be flawless, nor signal "the end of history." But it is the best of all possible worlds that we can conceive, and that we can achieve.

In Phase I, this Commission presented four "Worlds in Prospect," agglomerations of basic trends that, we believed, might describe the world in 2025. The Democratic Peace was one. Nationalism and Protectionism was a second, Division and Mayhem a third, and Globalism Triumphant the fourth. We, and presumably most observers, see the Democratic Peace as a positive future, Nationalism and Protectionism as a step in the wrong direction, Division and Mayhem as full-fledged tragedy. But the Globalism Triumphant scenario divides opinion, partly because it is the hardest to envision, and partly because it functions as a template for the projection of conflicting political views.

Some observers, for example, believe that the end of the nation-state is upon us, and that this is a good thing, for, in this view, nationalism is the root of racism and militarism. The eclipse of the national territorial state is at any rate, some argue, an inevitable development given the very nature of an increasingly integrated world.

We demur. To the extent that a more integrated world economically is the best way to raise people out of poverty and disease, we applaud it. We also recognize the need for unprecedented international cooperation on a range of transnational problems. But the state is the only venue discovered so far in which democratic principles and processes can play out reliably, and not all forms of nationalism have been or need be illiberal. We therefore affirm the value of American sovereignty as well as the political and cultural diversity ensured by the present state system. Within that system the United States must live by and be ready to share its political values-but it must remember that those values include tolerance for those who hold different views.

A broader and deeper Democratic Peace is, and ought to be, America's aspiration, but there are obstacles to achieving it. Indeed, despite the likely progress ahead on many fronts, the United States may face not only episodic problems but also genuine crises. If the United States mismanages its current global position, it could generate resentments and jealousies that leave us more isolated than isolationist. Major wars involving weapons of mass destruction are possible, and the general security environment may deteriorate faster than the United States, even with allied aid, can redress it. Environmental, economic, and political unraveling in much of the world could occur on a scale so large as to make current levels of prosperity unsustainable, let alone expandable. Certain technologies-biotechnology, for example-may also undermine social and political stability among and within advanced countries, including the United States. Indeed, all these crises may occur, and each could reinforce and deepen the others.

The challenge for the United States is to seize the new century's many opportunities and avoid its many dangers. The problem is that the current structures and processes of U.S. national security policymaking are incapable of such management. That is because, just below the enormous power and prestige of the United States today is a neglected and, in some cases, a decaying institutional base.

The U.S. government is not well organized, for example, to ensure homeland security. No adequate coordination mechanism exists among federal, state, and local government efforts, as well as those of dozens of agencies at the federal level. If present trends continue in elementary and secondary school science and mathematics education, to take another example, the United States may lose its lead in many, if not most, major areas of critical scientific-technological competence within 25 years. We are also losing, and are finding ourselves unable to replace, the most critical asset we have: talented and dedicated personnel throughout government.

Strategic planning is absent in the U.S. government and its budget processes are so inflexible that few resources are available for preventive policies or for responding to crises, nor can resources be reallocated efficiently to reflect changes in policy priorities. The economic component of U.S. national security policy is poorly integrated with the military and diplomatic components. The State Department is demoralized and dysfunctional. The Defense Department appears incapable of generating a strategic posture very different from that of the Cold War, and its weapons acquisition process is slow, inefficient, and burdened by excess regulation. National policy in the increasingly critical environment of space is adrift, and the intelligence community is only slowly reorienting itself to a world of more diffuse and differently shaped threats. The Executive Branch, with the aid of the Congress, needs to initiate change in many areas by taking bold new steps, and by speeding up positive change where it is languishing.

The very mention of changing the engrained routines and structures of government is usually enough to evoke cynicism even in a born optimist. But the American case is surprisingly positive, especially in relatively recent times. The reorganizations occasioned by World War II were vast and innovative, and the 1947 National Security Act was bold in advancing and institutionalizing them. Major revisions of the 1947 Act were passed subsequently by Congress in 1949, 1953, and 1958. Major internal Defense Department reforms were promulgated as well, one in 1961 and another, the Department of Defense Reorganization Act (Goldwater-Nichols) in 1986. The essence of the American genius is that we know better than most societies how to reinvent ourselves to meet the times. This Commission, we believe, is true to that estimable tradition.

Despite this relatively good record, resistance will arise to changing U.S. national security structures and processes, both within agencies of government and in the Congress. What is needed, therefore, is for the new administration, together with the new Congress, to exert real leadership. Our comprehensive recommendations to guide that leadership follow.

First, we must prepare ourselves better to defend the national homeland. We take this up in Section I, Securing the National Homeland. We put this first because it addresses the most dangerous and the most novel threat to American national security in the years ahead.

Second, we must rebuild our strengths in the generation and management of science and technology and in education. We have made Recapitalizing America's Strengths in Science and Education the second section of this report despite the fact that science management and education issues are rarely ranked as paramount national security priorities. We do so to emphasize their crucial and growing importance.

Third, we must ensure coherence and effectiveness in the institutions of the Executive Branch of government. Section III, Institutional Redesign, proposes change throughout the national security apparatus.

Fourth, we must ensure the highest caliber human capital in public service. U.S. national security depends on the quality of the people, both civilian and military, serving within the ranks of government. If we are unsuccessful in meeting the crisis of competence before us, none of the other reforms proposed in this report will succeed. Section IV, The Human Requirements for National Security, examines government personnel issues in detail.

Fifth, the Congress is part of the problem before us, and therefore must become part of the solution. Not only must the Congress support the Executive Branch reforms promulgated here, but it must bring its own organization in line with the 21st century. Section V, The Role of Congress, examines this critical facet of government reform.

Each section of this report carries an introduction explaining why the subject is important, identifies the major problems requiring solution, and then states this Commission's recommendations. All major recommendations are in bold-face type.*6
Related but subordinate recommendations are italicized and in bold-face type in the text.

As appropriate throughout the report, we outline what Congressional, Presidential, and Executive department actions would be required to implement the Commission's recommendations. Also as appropriate, we provide general guidance as to the budgetary implications of our recommendations but, lest details of such consideration confuse and complicate the text, will provide suggested implementation plans for selected areas in a separately issued addendum. A last word urges the President to devise an implementing mechanism for the recommendations put forth here.
Finally, we observe that some of our recommendations will save money, while others call for more expenditure. We have not tried to "balance the books" among our recommendations, nor have we held financial implications foremost in mind during our work. Wherever money may be saved, we consider it a second-order benefit. Provision of additional resources to national security, where necessary, are investments, not costs, and a first-order national priority.

I. Securing the National Homeland

One of this Commission's most important conclusions in its Phase I report was that attacks against American citizens on American soil, possibly causing heavy casualties, are likely over the next quarter century.*7 This is because both the technical means for such attacks, and the array of actors who might use such means, are proliferating despite the best efforts of American diplomacy.

These attacks may involve weapons of mass destruction and weapons of mass disruption. As porous as U.S. physical borders are in an age of burgeoning trade and travel, its "cyber borders" are even more porous-and the critical infrastructure upon which so much of the U.S. economy depends can now be targeted by non-state and state actors alike. America's present global predominance does not render it immune from these dangers. To the contrary, U.S. preeminence makes the American homeland more appealing as a target, while America's openness and freedoms make it more vulnerable.

Notwithstanding a growing consensus on the seriousness of the threat to the homeland posed by weapons of mass destruction and disruption, the U.S. government has not adopted homeland security as a primary national security mission. Its structures and strategies are fragmented and inadequate. The President must therefore both develop a comprehensive strategy and propose new organizational structures to prevent and protect against attacks on the homeland, and to respond to such attacks if prevention and protection should fail.

Any reorganization must be mindful of the scale of the scenarios we envision and the enormity of their consequences. We need orders-of-magnitude improvements in planning, coordination, and exercise. The government must also be prepared to use effectively-albeit with all proper safeguards-the extensive resources of the Department of Defense. This will necessitate new priorities for the U.S. armed forces and particularly, in our view, for the National Guard.

The United States, however, is very poorly organized to design and implement any comprehensive strategy to protect the homeland. The assets and organizations that now exist for homeland security are scattered across more than two dozen departments and agencies, and all fifty states. The Executive Branch, with the full participation of Congress, needs to realign, refine, and rationalize these assets into a coherent whole, or even the best strategy will lack an adequate vehicle for implementation.

This Commission believes that the security of the American homeland from the threats of the new century should be the primary national security mission of the U.S. government. While the Executive Branch must take the lead in dealing with the many policy and structural issues involved, Congress is a partner of critical importance in this effort. It must find ways to address homeland security issues that bridge current gaps in organization, oversight, and authority, and that resolve conflicting claims to jurisdiction within both the Senate and the House of Representatives and also between them.

Congress is crucial, as well, for guaranteeing that homeland security is achieved within a framework of law that protects the civil liberties and privacy of American citizens. We are confident that the U.S. government can enhance national security without compromising established Constitutional principles. But in order to guarantee this, we must plan ahead. In a major attack involving contagious biological agents, for example, citizen cooperation with government authorities will depend on public confidence that those authorities can manage the emergency. If that confidence is lacking, panic and disorder could lead to insistent demands for the temporary suspension of some civil liberties. That is why preparing for the worst is essential to protecting individual freedoms during a national crisis. Legislative guidance for planning among federal agencies and state and local authorities must take particular cognizance of the role of the Defense Department. Its subordination to civil authority needs to be clearly defined in advance. In short, advances in technology have created new dimensions to our nation's economic and physical security. While some new threats can be met with traditional responses, others cannot. More needs to be done in three areas to prevent the territory and infrastructure of the United States from becoming easy and tempting targets: in strategy, in organizational realignment, and in Executive-Legislative cooperation. We take these areas in turn.

A. THE STRATEGIC FRAMEWORK

A homeland security strategy to minimize the threat of intimidation and loss of life is an essential support for an international leadership role for the United States. Homeland security is not peripheral to U.S. national security strategy but central to it. At this point, national leaders have not agreed on a clear strategy for homeland security, a condition this Commission finds dangerous and intolerable. We therefore recommend the following:

· 1: The President should develop a comprehensive strategy to heighten America's ability to prevent and protect against all forms of attacks on the homeland, and to respond to such attacks if prevention and protection fail.

In our view, the President should:

· Give new priority in his overall national security strategy to homeland security, and make it a central concern for incoming officials in all Executive Branch departments, particularly the intelligence and law enforcement communities;

· Calmly prepare the American people for prospective threats, and increase their awareness of what federal and state governments are doing to prevent attacks and to protect them if prevention fails;

· Put in place new government organizations and processes, eliminating where possible staff duplication and mission overlap; and

· Encourage Congress to establish new mechanisms to facilitate closer cooperation between the Executive and Legislative Branches of government on this vital issue.

We believe that homeland security can best be assured through a strategy of layered defense that focuses first on prevention, second on protection, and third on response.

Prevention: Preventing a potential attack comes first. Since the occurrence of even one event that causes catastrophic loss of life would represent an unacceptable failure of policy, U.S. strategy should therefore act as far forward as possible to prevent attacks on the homeland. This strategy has at its disposal three essential instruments.

Most broadly, the first instrument is U.S. diplomacy. U.S. foreign policy should strive to shape an international system in which just grievances can be addressed without violence. Diplomatic efforts to develop friendly and trusting relations with foreign governments and their people can significantly multiply America's chances of gaining early warning of potential attack and of doing something about impending threats. Intelligence-sharing with foreign governments is crucial to help identify individuals and groups who might be considering attacks on the United States or its allies. Cooperative foreign law enforcement agencies can detain, arrest, and prosecute terrorists on their own soil. Diplomatic success in resolving overseas conflicts that spawn terrorist activities will help in the long run.

Meanwhile, verifiable arms control and nonproliferation must remain a top priority. These policies can help persuade states and terrorists to abjure weapons of mass destruction and to prevent the export of fissile materials and dangerous dual-use technologies. But such measures cannot by themselves prevent proliferation. So other measures are needed, including the possibility of punitive measures and defenses. The United States should take a lead role in strengthening multilateral organizations such as the International Atomic Energy Agency.

In addition, increased vigilance against international crime syndicates is also important because many terrorist organizations gain resources and other assets through criminal activity that they then use to mount terrorist operations. Dealing with international organized crime requires not only better cooperation with other countries, but also among agencies of the federal government. While progress has been made on this front in recent years, more remains to be done.*8 The second instrument of homeland security consists of the U.S. diplomatic, intelligence, and military presence overseas. Knowing the who, where, and how of a potential physical or cyber attack is the key to stopping a strike before it can be delivered. Diplomatic, intelligence, and military agencies overseas, as well as law enforcement agencies working abroad, are America's primary eyes and ears on the ground. But increased public-private efforts to enhance security processes within the international transportation and logistics networks that bring people and goods to America are also of critical and growing importance.

Vigilant systems of border security and surveillance are a third instrument that can prevent those agents of attack who are not detected and stopped overseas from actually entering the United States. Agencies such as the U.S. Customs Service and U.S. Coast Guard have a critical prevention role to play. Terrorists and criminals are finding that the difficulty of policing the rising daily volume and velocities of people and goods that cross U.S. borders makes it easier for them to smuggle weapons and contraband, and to move their operatives into and out of the United States. Improving the capacity of border control agencies to identify and intercept potential threats without creating barriers to efficient trade and travel requires a sub-strategy also with three elements.

First is the development of new transportation security procedures and practices designed to reduce the risk that importers, exporters, freight forwarders, and transportation carriers will serve as unwitting conduits for criminal or terrorist activities. Second is bolstering the intelligence gathering, data management, and information sharing capabilities of border control agencies to improve their ability to target high-risk goods and people for inspection. Third is strengthening the capabilities of border control agencies to arrest terrorists or interdict dangerous shipments before they arrive on U.S. soil.

These three measures, which place a premium on public-private partnerships, will pay for themselves in short order. They will allow for the more efficient allocation of limited enforcement resources along U.S. borders. There will be fewer disruptive inspections at ports of entry for legitimate businesses and travelers. They will lead to reduced theft and insurance costs, as well. Most important, the underlying philosophy of this approach is one that balances prudence, on the one hand, with American values of openness and free trade on the other. *9 To shield America from the world out of fear of terrorism is, in large part, to do the terrorists' work for them. To continue business as usual, however, is irresponsible.

The same may be said for our growing cyber problems. Protecting our nation's critical infrastructure depends on greater public awareness and improvements in our tools to detect and diagnose intrusions. This will require better information sharing among all federal, state, and local governments as well as with private sector owners and operators. The federal government has these specific tasks:

· To serve as a model for the private sector by improving its own security practices;

· To address known government security problems on a system-wide basis

· To identify and map network interdependencies so that harmful cascading effects among systems can be prevented;

· To sponsor vulnerability assessments within both the federal government and the private sector; and

· To design and carry out simulations and exercises that test information system security across the nation's entire infrastructure.

Preventing attacks on the American homeland also requires that the United States maintain long-range strike capabilities. The United States must bolster deterrence by making clear its determination to use military force in a preemptive fashion if necessary. Even the most hostile state sponsors of terrorism, or terrorists themselves, will think twice about harming Americans and American allies and interests if they fear direct and severe U.S. attack after-or before-the fact. Such capabilities should be available for preemption as well as for retaliation, and will therefore strengthen deterrence.

Protection: The Defense Department undertakes many different activities that serve to protect the American homeland, and these should be integrated into an overall surveillance system, buttressed with additional resources. A ballistic missile defense system would be a useful addition and should be developed to the extent technically feasible, fiscally prudent, and politically sustainable. Defenses should also be pursued against cruise missiles and other sophisticated atmospheric weapon technologies as they become more widely deployed. While both active duty and reserve forces are involved in these activities, the Commission believes that more can and should be done by the National Guard, as is discussed in more detail below. Protecting the nation's critical infrastructure and providing cyber-security must also include:

· Advanced indication, warning, and attack assessments;

· A warning system that includes voluntary, immediate private-sector reporting of potential attacks to enable other private-sector targets (and the U.S. government) better to take protective action; and

· Advanced systems for halting attacks, establishing backups, and restoring service.

Response: Managing the consequences of a catastrophic attack on the U.S. homeland would be a complex and difficult process. The first priority should be to build up and augment state and local response capabilities. Adequate equipment must be available to first responders in local communities. Procedures and guidelines need to be defined and disseminated and then practiced through simulations and exercises. Interoperable, robust, and redundant communications capabilities are a must in recovering from any disaster. Continuity of government and critical services must be ensured as well. Demonstrating effective responses to natural and manmade disasters will also help to build mutual confidence and relationships among those with roles in dealing with a major terrorist attack.

All of this puts a premium on making sure that the disparate organizations involved with homeland security-on various levels of government and in the private sector-can work together effectively. We are frankly skeptical that the U.S. government, as it exists today, can respond effectively to the scale of danger and damage that may come upon us during the next quarter century. This leads us, then, to our second task: that of organizational realignment.

B. ORGANIZATIONAL REALIGNMENT

Responsibility for homeland security resides at all levels of the U.S. government- local, state, and federal. Within the federal government, almost every agency and department is involved in some aspect of homeland security. None have been organized to focus on the scale of the contemporary threat to the homeland, however. This Commission urges an organizational realignment that:

· Designates a single person, accountable to the President, to be responsible for coordinating and overseeing various U.S. government activities related to homeland security;

· Consolidates certain homeland security activities to improve their effectiveness and coherence;

· Establishes planning mechanisms so as clearly to define specific responses to specific types of threats; and

· Ensures that the appropriate resources and capabilities are available. Therefore, this Commission strongly recommends the following:

· 2: The President should propose, and Congress should agree, to create a National Homeland Security Agency (NHSA) with responsibility for planning, coordinating, and integrating various U.S. government activities involved in homeland security. They should use the Federal Emergency Management Agency (FEMA) as a key building block in this effort.

Given the multiplicity of agencies and activities involved in these homeland security tasks, someone needs to be responsible and accountable to the President not only to coordinate the making of policy, but also to oversee its implementation. This argues against assigning the role to a senior person on the National Security Council (NSC) staff and for the creation of a separate agency. This agency would give priority to overall planning while relying primarily on others to carry out those plans. To give this agency sufficient stature within the government, its director would be a member of the Cabinet and a statutory advisor to the National Security Council. The position would require Senate confirmation.

Notwithstanding NHSA's responsibilities, the National Security Council would still play a strategic role in planning and coordinating all homeland security activities. This would include those of NHSA as well as those that remain separate, whether they involve other NSC members or other agencies, such as the Centers for Disease Control within the Department of Health and Human Services.

We propose building the National Homeland Security Agency upon the capabilities of the Federal Emergency Management Agency (FEMA), an existing federal agency that has performed well in recent years, especially in responding to natural disasters. NHSA would be legislatively chartered to provide a focal point for all natural and manmade crisis and emergency planning scenarios. It would retain and strengthen FEMA's ten existing regional offices as a core element of its organizational structure.

While FEMA is the necessary core of the National Homeland Security Agency, it is not sufficient to do what NHSA needs to do. In particular, patrolling U.S. borders, and policing the flows of peoples and goods through the hundreds of ports of entry, must receive higher priority. These activities need to be better integrated, but efforts toward that end are hindered by the fact that the three organizations on the front line of border security are spread across three different U.S. Cabinet departments. The Coast Guard works under the Secretary of Transportation, the Customs Service is located in the Department of the Treasury, and the Immigration and Naturalization Service oversees the Border Patrol in the Department of Justice. In each case, the border defense agency is far from the mainstream of its parent department's agenda and consequently receives limited attention from the department's senior officials. We therefore recommend the following:

3: The President should propose to Congress the transfer of the Customs Service, the Border Patrol, and Coast Guard to the National Homeland Security Agency, while preserving them as distinct entities.

Bringing these organizations together under one agency will create important synergies. Their individual capabilities will be molded into a stronger and more effective system, and this realignment will help ensure that sufficient resources are devoted to tasks crucial to both public safety and U.S. trade and economic interests. Consolidating overhead, training programs, and maintenance of the aircraft, boats, and helicopters that these three agencies employ will save money, and further efficiencies could be realized with regard to other resources such as information technology, communications equipment, and dedicated sensors. Bringing these separate, but complementary, activities together will also facilitate more effective Executive and Legislative oversight, and help rationalize the process of budget preparation, analysis, and presentation.

Steps must be also taken to strengthen these three individual organizations themselves. The Customs Service, the Border Patrol, and the Coast Guard are all on the verge of being overwhelmed by the mismatch between their growing duties and their mostly static resources.

The Customs Service, for example, is charged with preventing contraband from entering the United States. It is also responsible for preventing terrorists from using the commercial or private transportation venues of international trade for smuggling explosives or weapons of mass destruction into or out of the United States. The Customs Service, however, retains only a modest air, land, and marine interdiction force, and its investigative component, supported by its own intelligence branch, is similarly modest. The high volume of conveyances, cargo, and passengers arriving in the United States each year already overwhelms the Customs Service's capabilities. Over $8.8 billion worth of goods, over 1.3 million people, over 340,000 vehicles, and over 58,000 shipments are processed daily at entry points. Of this volume, Customs can inspect only one to two percent of all inbound shipments. The volume of U.S. international trade, measured in terms of dollars and containers, has doubled since 1995, and it may well double again between now and 2005.

Therefore, this Commission believes that an improved computer information capability and tracking system-as well as upgraded equipment that can detect both conventional and nuclear explosives, and chemical and biological agents-would be a wise short-term investment with important long-term benefits. It would also raise the risk for criminals seeking to target or exploit importers and cargo carriers for illicit gains.*10

The Border Patrol is the uniformed arm of the Immigration and Naturalization Service. Its mission is the detection and prevention of illegal entry into the United States. It works primarily between ports of entry and patrols the borders by various means. There has been a debate for many years about whether the dual functions of the Immigration and Naturalization Service-border control and enforcement on the one side, and immigration facilitation on the other-should be joined under the same roof. The U.S. Commission on Immigration Reform concluded that they should not be joined.*11

We agree: the Border Patrol should become part of the NHSA. The U.S. Coast Guard is a highly disciplined force with multiple missions and a natural role to play in homeland security. It performs maritime search and rescue missions, manages vessel traffic, enforces U.S. environmental and fishery laws, and interdicts and searches vessels suspected of carrying illegal aliens, drugs, and other contraband. In a time of war, it also works with the Navy to protect U.S. ports from attack.

Indeed, in many respects, the Coast Guard is a model homeland security agency given its unique blend of law enforcement, regulatory, and military authorities that allow it to operate within, across, and beyond U.S. borders. It accomplishes its many missions by routinely working with numerous local, regional, national, and international agencies, and by forging and maintaining constructive relationships with a diverse group of private, non-governmental, and public marine-related organizations. As the fifth armed service, in peace and war, it has national defense missions that include port security, overseeing the defense of coastal waters, and supporting and integrating its forces with those of the Navy and the other services.

The case for preserving and enhancing the Coast Guard's multi-mission capabilities is compelling. But its crucial role in protecting national interests close to home has not been adequately appreciated, and this has resulted in serious and growing readiness concerns. U.S. Coast Guard ships and aircraft are aging and technologically obsolete; indeed, the Coast Guard cutter fleet is older than 39 of the world's 41 major naval fleets. As a result, the Coast Guard fleet generates excessive operating and maintenance costs, and lacks essential capabilities in speed, sensors, and interoperability. To fulfill all of its missions, the Coast Guard requires updated platforms with the staying power, in hazardous weather, to remain offshore and fully operational throughout U.S. maritime economic zones.*12

The Commission recommends strongly that Congress recapitalize the Customs Service, the Border Patrol, and the Coast Guard so that they can confidently perform key homeland security roles.

HSA's planning, coordinating, and overseeing activities would be undertaken Nthrough three staff Directorates. The Directorate of Prevention would oversee and coordinate the various border security activities. A Directorate of Critical Infrastructure Protection (CIP) would be created to handle the growing cyber threat. FEMA's emergency preparedness and response activities would be strengthened in a third directorate to cover both natural and manmade disasters. A Science and Technology office would advise the NHSA Director on research and development efforts and priorities for all three directorates. Relatively small permanent staffs would man the directorates. NHSA will employ FEMA's principle of working effectively with state and local governments, as well as with other federal organizations, stressing interagency coordination. Much of NHSA's daily work will take place directly supporting state officials in its regional offices around the country. Its organizational infrastructure will not be heavily centered in the Washington, DC area. NHSA would also house a National Crisis Action Center (NCAC), which would become the nation's focal point for monitoring emergencies and for coordinating federal support in a crisis to state and local governments, as well as to the private sector. We envision the center to be an interagency operation, directed by a two-star National Guard general, with full-time representation from the other federal agencies involved in homeland security (See Figure 1).

Figure 1: National Homeland Security Agency NHSA will require a particularly close working relationship with the Department of Defense. It will need also to create and maintain strong mechanisms for the sharing of information and intelligence with U.S. domestic and international intelligence entities. We suggest that NHSA have liaison officers in the counter-terrorism centers of both the FBI and the CIA. Additionally, the sharing of information with business and industry on threats to critical infrastructures will require further expansion.

HSA will also assume responsibility for overseeing the protection of the nation's Ncritical infrastructure. Considerable progress has been made in implementing the recommendations of the President's Commission on Critical Infrastructure Protection (PCCIP) and Presidential Decision Directive 63 (PDD-63). But more needs to be done, for the United States has real and growing problems in this area.

U.S. dependence on increasingly sophisticated and more concentrated critical infrastructures has increased dramatically over the past decade. Electrical utilities, water and sewage systems, transportation networks, and communications and energy systems now depend on computers to provide safe, efficient, and reliable service. The banking and finance sector, too, keeps track of millions of transactions through increasingly robust computer capabilities.

The overwhelming majority of these computer systems are privately owned, and many operate at or very near capacity with little or no provision for manual back-ups in an emergency.

Moreover, the computerized information networks that link systems together are themselves vulnerable to unwanted intrusion and disruption. An attack on any one of several highly interdependent networks can cause collateral damage to other networks and the systems they connect. Some forms of disruption will lead merely to nuisance and economic loss, but other forms will jeopardize lives. One need only note the dependence of hospitals, air-traffic control systems, and the food processing industry on computer controls to appreciate the point.

The bulk of unclassified military communications, too, relies on systems almost entirely owned and operated by the private sector. Yet little has been done to assure the security and reliability of those communications in crisis. Current efforts to prevent attacks, protect against their most damaging effects, and prepare for prompt response are uneven at best, and this is dangerous because a determined adversary is most likely to employ a weapon of mass destruction during a homeland security or foreign policy crisis.

As noted above, a Directorate for Critical Infrastructure Protection would be an integral part of the National Homeland Security Agency. This directorate would have two vital responsibilities. First would be to oversee the physical assets and information networks that make up the U.S. critical infrastructure. It should ensure the maintenance of a nucleus of cyber security expertise within the government, as well. There is now an alarming shortage of government cyber security experts due in large part to the financial attraction of private-sector employment that the government cannot match under present personnel procedures.*13 The director's second responsibility, would be as the Critical Information Technology, Assurance, and Security Office (CITASO). This office would coordinate efforts to address the nation's vulnerability to electronic or physical attacks on critical infrastructure.

Several critical activities that are currently spread among various government agencies should be brought together for this purpose. These include:

· Information Sharing and Analysis Centers (ISACs), which are government-sponsored committees of private-sector participants who work to share information, plans, and procedures for information security in their fields;

· The Critical Infrastructure Assurance Office (CIAO), currently housed in the Commerce Department, which develops outreach and awareness programs with the private sector;

· The National Infrastructure Protection Center (NIPC), currently housed in the FBI, which gathers information and provides warnings of cyber attacks; and

· The Institute for Information Infrastructure Protection (I3P), which is designed to coordinate and support research and development projects on cyber security.

In partnership with the private sector where most cyber assets are developed and owned, the Critical Infrastructure Protection Directorate would be responsible for enhancing information sharing on cyber and physical security, tracking vulnerabilities and proposing improved risk management policies, and delineating the roles of various government agencies in preventing, defending, and recovering from attacks. To do this, the government needs to institutionalize better its private-sector liaison across the board-with the owners and operators of critical infrastructures, hardware and software developers, server/service providers, manufacturers/producers, and applied technology developers.

The Critical Infrastructure Protection Directorate's work with the private sector must include a strong advocacy of greater government and corporate investment in information assurance and security. The CITASO would be the focal point for coordinating with the Federal Communications Commission (FCC) in helping to establish cyber policy, standards, and enforcement mechanisms. Working closely with the Office of Management and Budget (OMB) and its Chief Information Officer Council (CIO Council), the CITASO needs to speak for those interests in government councils.*14 The CITASO must also provide incentives for private-sector participation in Information Sharing and Analysis Centers to share information on threats, vulnerabilities, and individual incidents, to identify interdependencies, and to map the potential cascading effects of outages in various sectors.

The directorate also needs to help coordinate cyber security issues internationally. At present, the FCC handles international cyber issues for the U.S. government through the International Telecommunications Union. As this is one of many related international issues, it would be unwise to remove this responsibility from the FCC. Nevertheless, the CIP Directorate should work closely with the FCC on cyber issues in international bodies.
The mission of the NHSA must include some specific planning and operational tasks to be staffed through the Directorate for Emergency Preparedness and Response.

These include:

· Setting training and equipment standards, providing resource grants, and encouraging intelligence and information sharing among state emergency management officials, local first responders, the Defense Department, and the FBI;

· Integrating the various activities of the Defense Department, the National Guard, and other federal agencies into the Federal Response Plan; and

· Pulling together private sector activities, including those of the medical community, on recovery, consequence management, and planning for continuity of services.

Working with state officials, the emergency management community, and the law enforcement community, the job of NHSA's third directorate will be to rationalize and refine the nation's incident response system. The current distinction between crisis management and consequence management is neither sustainable nor wise. The duplicative command arrangements that have been fostered by this division are prone to confusion and delay. NHSA should develop and manage a single response system for national incidents, in close coordination with the Department of Justice (DoJ) and the FBI. This would require that the current policy, which specifies initial DoJ control in terrorist incidents on U.S. territory, be amended once Congress creates NHSA. We believe that this arrangement would in no way contradict or diminish the FBI's traditional role with respect to law enforcement.

Finally, but perhaps most critically, the Emergency Preparedness and Response Directorate will need to assume a major resource and budget role. With the help of the Office of Management and Budget, the directorate's first task will be to figure out what is being spent on homeland security in the various departments and agencies. Only with such an overview can the nation identify the shortfalls between capabilities and requirements. Such a mission budget should be included in the President's overall budget submission to Congress. The Emergency Preparedness and Response Directorate will also maintain federal asset databases and encourage and support up-to-date state and local databases.

EMA has adapted well to new circumstances over the past few years and has gained a Fwell-deserved reputation for responsiveness to both natural and manmade disasters. While taking on homeland security responsibilities, the proposed NHSA would strengthen FEMA's ability to respond to such disasters. It would streamline the federal apparatus and provide greater support to the state and local officials who, as the nation's first responders, possess enormous expertise. To the greatest extent possible, federal programs should build upon the expertise and existing programs of state emergency preparedness systems and help promote regional compacts to share resources and capabilities.

To help simplify federal support mechanisms, we recommend transferring the National Domestic Preparedness Office (NDPO), currently housed at the FBI, to the National Homeland Security Agency. The Commission believes that this transfer to FEMA should be done at first opportunity, even before NHSA is up and running. The NDPO would be tasked with organizing the training of local responders and providing local and state authorities with equipment for detection, protection, and decontamination in a WMD emergency. NHSA would develop the policies, requirements, and priorities as part of its planning tasks as well as oversee the various federal, state, and local training and exercise programs. In this way, a single staff would provide federal assistance for any emergency, whether it is caused by flood, earthquake, hurricane, disease, or terrorist bomb.

A WMD incident on American soil is likely to overwhelm local fire and rescue squads, medical facilities, and government services. Attacks may contaminate water, food, and air; large- scale evacuations may be necessary and casualties could be extensive. Since getting prompt help to those who need it would be a complex and massive operation requiring federal support, such operations must be extensively planned in advance. Responsibilities need to be assigned and procedures put in place for these responsibilities to evolve if the situation worsens. As we envision it, state officials will take the initial lead in responding to a crisis. NHSA will normally use its Regional Directors to coordinate federal assistance, while the National Crisis Action Center will monitor ongoing operations and requirements. Should a crisis overwhelm local assets, state officials will turn to NHSA for additional federal assistance. In major crises, upon the recommendation of the civilian Director of NHSA, the President will designate a senior figure-a Federal Coordinating Officer-to assume direction of all federal activities on the scene. If the situation warrants, a state governor can ask that active military forces reinforce National Guard units already on the scene. Once the President federalizes National Guard forces, or if he decides to use Reserve forces, the Joint Forces Command will assume responsibility for all military operations, acting through designated task force commanders. At the same time, the Secretary of Defense would appoint a Defense Coordinating Officer to provide civilian oversight and ensure prompt civil support. This person would work for the Federal Coordinating Officer. This response mechanism is displayed in Figure 2.

Figure 2: Emergency Response Mechanisms

To be capable of carrying out its responsibilities under extreme circumstances, NHSA will need to undertake robust exercise programs and regular training to gain experience and to establish effective command and control procedures. It will be essential to update regularly the Federal Response Plan. It will be especially critical for NHSA officials to undertake detailed planning and exercises for the full range of potential contingencies, including ones that require the substantial involvement of military assets in support.

HSA will provide the overarching structure for homeland security, but other Ngovernment agencies will retain specific homeland security tasks. We take the necessary obligations of the major ones in turn.

Intelligence Community. Good intelligence is the key to preventing attacks on the homeland and homeland security should become one of the intelligence community's most important missions.*15 Better human intelligence must supplement technical intelligence, especially on terrorist groups covertly supported by states. As noted above, fuller cooperation and more extensive information-sharing with friendly governments will also improve the chances that would-be perpetrators will be detained, arrested, and prosecuted before they ever reach U.S. borders.

The intelligence community also needs to embrace cyber threats as a legitimate mission and to incorporate intelligence gathering on potential strategic threats from abroad into its activities.

To advance these ends, we offer the following recommendation:

· 4: The President should ensure that the National Intelligence Council include homeland security and asymmetric threats as an area of analysis; assign that portfolio to a National Intelligence Officer; and produce National Intelligence Estimates on these threats.

Department of State. U.S. embassies overseas are the American people's first line of defense. U.S. Ambassadors must make homeland security a top priority for all embassy staff, and Ambassadors need the requisite authority to ensure that information is shared in a way that maximizes advance warning overseas of direct threats to the United States.

Ambassadors should also ensure that the gathering of information, and particularly from open sources, takes full advantage of all U.S. government resources abroad, including State Department diplomats, consular officers, military officers, and representatives of the various other departments and agencies. The State Department should also strengthen its efforts to acquire information from Americans living or travelling abroad in private capacities.

The State Department has made good progress in its overseas efforts to reduce terrorism, but we now need to extend this effort into the Information Age. Working with NHSA's CIP Directorate, the State Department should expand cooperation on critical infrastructure protection with other states and international organizations. Private sector initiatives, particularly in the banking community, provide examples of international cooperation on legal issues, standards, and practices. Working with the CIP Directorate and the FCC, the State Department should also encourage other nations to criminalize hacking and electronic intrusions and to help track hackers, computer virus proliferators, and cyber terrorists.

Department of Defense. The Defense Department, which has placed its highest priority on preparing for major theater war, should pay far more attention to the homeland security mission. Organizationally, DoD responses are widely dispersed. An Assistant to the Secretary of Defense for Civil Support has responsibility for WMD incidents, while the Department of the Army's Director of Military Support is responsible for non-WMD contingencies. Such an arrangement does not provide clear lines of authority and responsibility or ensure political accountability. The Commission therefore recommends the following:

· 5: The President should propose to Congress the establishment of an Assistant Secretary of Defense for Homeland Security within the Office of the Secretary of Defense, reporting directly to the Secretary.

A new Assistant Secretary of Defense for Homeland Security would provide policy oversight for the various DoD activities in the homeland security mission and insure that mechanisms are in place for coordinating military support in major emergencies. He or she would work to integrate homeland security into Defense Department planning, and ensure that adequate resources are forthcoming. This Assistant Secretary would also represent the Secretary in the NSC interagency process on homeland security issues.

Along similar lines and for similar reasons, we also recommend that the Defense Department broaden and strengthen the existing Joint Forces Command/Joint Task Force- Civil Support (JTF-CS) to coordinate military planning, doctrine, and command and control for military support for all hazards and disasters.

This task force should be directed by a senior National Guard general with additional headquarters personnel. JTF-CS should contain several rapid reaction task forces, composed largely of rapidly mobilizable National Guard units. The task force should have command and control capabilities for multiple incidents. Joint Forces Command should work with the Assistant Secretary of Defense for Homeland Security to ensure the provision of adequate resources and appropriate force allocations, training, and equipment for civil support.

On the prevention side, maintaining strong nuclear and conventional forces is as high a priority for homeland security as it is for other missions. Shaping a peaceful international environment and deterring hostile military actors remain sound military goals. But deterrent forces may have little effect on non-state groups secretly supported by states, or individuals with grievances real or imagined. In cases of clear and imminent danger, the military must be able to take preemptive action overseas in circumstances where local authorities are unable or unwilling to act. For this purpose, the United States needs to be prepared to use its rapid, long-range precision strike capabilities. A decision to act would obviously rest in civilian hands, and would depend on intelligence information and assessments of diplomatic consequences. But even if a decision to strike preemptively is never taken or needed, the capability should be available nonetheless, for knowledge of it can contribute to deterrence.

We also suggest that the Defense Department broaden its mission of protecting air, sea, and land approaches to the United States, consistent with emerging threats such as the potential proliferation of cruise missiles. The department should examine alternative means of monitoring approaches to the territorial United States. Modern information technology and sophisticated sensors can help monitor the high volumes of traffic to and from the United States. Given the volume of legitimate activities near and on the border, even modern information technology and remote sensors cannot filter the good from the bad as a matter of routine. It is neither wise nor possible to create a surveillance umbrella over the United States. But Defense Department assets can be used to support detection, monitoring, and even interception operations when intelligence indicates a specific threat.

Finally, a better division of labor and understanding of responsibilities is essential in dealing with the connectivity and interdependence of U.S. critical infrastructure systems. This includes addressing the nature of a national transportation network or cyber emergency and the Defense Department's role in prevention, detection, or protection of the national critical infrastructure. The department's sealift and airlift plans are premised on largely unquestioned assumptions that domestic transportation systems will be fully available to support mobilization requirements. The department also is paying insufficient attention to the vulnerability of its information networks. Currently, the department's computer network defense task force (JTF- Computer Network Defense) is underfunded and understaffed for the task of managing an actual strategic information warfare attack. It should be given the resources and capability to carry out its current mission and is a logical source of advice to the proposed NHSA Critical Information Technology, Assurance, and Security Office.

National Guard. The National Guard, whose origins are to be found in the state militias authorized by the U.S. Constitution, should play a central role in the response component of a layered defense strategy for homeland security. We therefore recommend the following:

· 6: The Secretary of Defense, at the President's direction, should make homeland security a primary mission of the National Guard, and the Guard should be reorganized, properly trained, and adequately equipped to undertake that mission.
At present, the Army National Guard is primarily organized and equipped to conduct sustained combat overseas. In this the Guard fulfills a strategic reserve role, augmenting the active military during overseas contingencies. At the same time, the Guard carries out many state- level missions for disaster and humanitarian relief, as well as consequence management. For these, it relies upon the discipline, equipment, and leadership of its combat forces. The National Guard should redistribute resources currently allocated predominantly to preparing for conventional wars overseas to provide greater support to civil authorities in preparing for and responding to disasters, especially emergencies involving weapons of mass destruction.

Such a redistribution should flow from a detailed assessment of force requirements for both theater war and homeland security contingencies. The Department of Defense should conduct such an assessment, with the participation of the state governors and the NHSA Director. In setting requirements, the department should minimize having forces with dual missions or relying on active forces detailed for major theater war. This is because the United States will need to maintain a heightened deterrent and defensive posture against homeland attacks during regional contingencies abroad. The most likely timing of a major terrorist incident will be while the United States is involved in a conflict overseas.*16

The National Guard is designated as the primary Department of Defense agency for disaster relief. In many cases, the National Guard will respond as a state asset under the control of state governors. While it is appropriate for the National Guard to play the lead military role in managing the consequences of a WMD attack, its capabilities to do so are uneven and in some cases its forces are not adequately structured or equipped. Twenty-two WMD Civil Support Teams, made up of trained and equipped full-time National Guard personnel, will be ready to deploy rapidly, assist local first responders, provide technical advice, and pave the way for additional military help. These teams fill a vital need, but more effort is required.

This Commission recommends that the National Guard be reorganized to fulfill its historic and Constitutional mission of homeland security. It should provide a mobilization base with strong local ties and support. It is already "forward deployed" to achieve this mission and should: · Participate in and initiate, where necessary, state, local, and regional planning for responding to a WMD incident;

· Train and help organize local first responders;

· Maintain up-to-date inventories of military resources and equipment available in the area on short notice;

· Plan for rapid inter-state support and reinforcement; and

· Develop an overseas capability for international humanitarian assistance and disaster relief.

In this way, the National Guard will become a critical asset for homeland security. Medical Community. The medical community has critical roles to play in homeland security. Catastrophic acts of terrorism or violence could cause casualties far beyond any imagined heretofore. Most of the American medical system is privately owned and now operates at close to capacity. An incident involving WMD will quickly overwhelm the capacities of local hospitals and emergency management professionals.

In response, the National Security Council, FEMA, and the Department of Health and Human Services have already begun a reassessment of their programs. Research to develop better diagnostic equipment and immune-enhancing drugs is underway, and resources to reinvigorate U.S. epidemiological surveillance capacity have been allocated. Programs to amass and regionally distribute inventories of antibiotics and vaccines have started, and arrangements for mass production of selected pharmaceuticals have been made. The Centers for Disease Control has rapid-response investigative units prepared to deploy and respond to incidents. These programs will enhance the capacities of the medical community, but the momentum and resources for this effort must be extended. We recommend that the NHSA Directorate for Emergency Preparedness and Response assess local and federal medical resources to deal with a WMD emergency. It should then specify those medical programs needed to deal with a major national emergency beyond the means of the private sector, and Congress should fund those needs.

C. EXECUTIVE-LEGISLATIVE COOPERATION

Solving the homeland security challenge is not just an Executive Branch problem.

Congress can and should be an active participant in the development of homeland security programs, as well. Its hearings can help develop the best ideas and solutions. Individual members should develop expertise in homeland security policy and its implementation so that they can fill in policy gaps and provide needed oversight and advice in times of crisis. Most important, using its power of the purse, Congress should help to ensure that government agencies have sufficient resources and that their programs are coordinated, efficient, and effective.

Congress has already taken important steps. A bipartisan Congressional initiative produced the U.S. effort to deal with the possibility that weapons of mass destruction could "leak" out of a disintegrating Soviet Union.*17 It was also a Congressional initiative that established the Domestic Preparedness Program and launched a 120-city program to enhance the capability of federal, state, and local first responders to react effectively in a WMD emergency.*18 Members of Congress from both parties have pushed the Executive Branch to identify and manage the problem more effectively. Congress has also proposed and funded studies and commissions on various aspects of the homeland security problem.*19 But it must do more.

A sound homeland security strategy requires the overhaul of much of the legislative framework for preparedness, response, and national defense programs. Congress designed many of the authorities that support national security and emergency preparedness programs principally for a Cold War environment. The new threat environment-from biological and terrorist attacks to cyber attacks on critical systems-poses vastly different challenges. We therefore recommend that Congress refurbish the legal foundation for homeland security in response to the new threat environment.
In particular, Congress should amend, as necessary, key legislative authorities such as the Defense Production Act of 1950 and the Communications Act of 1934, which facilitate homeland security functions and activities.*20 Congress should also encourage the sharing of threat, vulnerability, and incident data between the public and private sectors-including federal agencies, state governments, first responders, and industry.*21 In addition, Congress should monitor and support current efforts to update the international legal framework for communications security issues.*22

Beyond that, Congress has some organizational work of its own to do. As things stand today, so many federal agencies are involved with homeland security that it is exceedingly difficult to present federal programs and their resource requirements to the Congress in a coherent way. It is largely because the budget is broken up into so many pieces, for example, that counter- terrorism and information security issues involve nearly two dozen Congressional committees and subcommittees. The creation of the National Security Homeland Agency will redress this problem to some extent, but because of its growing urgency and complexity, homeland security will still require a stronger working relationship between the Executive and Legislative Branches. Congress should therefore find ways to address homeland security issues that bridge current jurisdictional boundaries and that create more innovative oversight mechanisms.

There are several ways of achieving this. The Senate's Arms Control Observer Group and its more recent NATO Enlargement Group were two successful examples of more informal Executive-Legislative cooperation on key multi-dimensional issues. Specifically, in the near term, this Commission recommends the following:

· 7: Congress should establish a special body to deal with homeland security issues, as has been done effectively with intelligence oversight. Members should be chosen for their expertise in foreign policy, defense, intelligence, law enforcement, and appropriations. This body should also include members of all relevant Congressional committees as well as ex-officio members from the leadership of both Houses of Congress.

This body should develop a comprehensive understanding of the problem of homeland security, exchange information and viewpoints with the Executive Branch on effective policies and plans, and work with standing committees to develop integrated legislative responses and guidance. Meetings would often be held in closed session so that Members could have access to interagency deliberations and diverging viewpoints, as well as to classified assessments. Such a body would have neither a legislative nor an oversight mandate, and it would not eclipse the authority of any standing committee.

At the same time, Congress needs to systematically review and restructure its committee system, as will be proposed in recommendation 48. A single, select committee in each house of Congress should be given authorization, appropriations, and oversight responsibility for all homeland security activities. When established, these committees would replace the function of the oversight body described in recommendation 7.

In sum, the federal government must address the challenge of homeland security with greater urgency. The United States is not immune to threats posed by weapons of mass destruction or disruption, but neither is it entirely defenseless against them. Much has been done to prevent and defend against such attacks, but these efforts must be incorporated into the nation's overall security strategy, and clear direction must be provided to all departments and agencies. Non-traditional national security agencies that now have greater relevance than they did in the past must be reinvigorated. Accountability, authority, and responsibility must be more closely aligned within government agencies. An Executive-Legislative consensus is required, as well, to convert strategy and resources into programs and capabilities, and to do so in a way that preserves fundamental freedoms and individual rights.

Most of all, however, the government must reorganize itself for the challenges of this new era, and make the necessary investments to allow an improved organizational structure to work. Through the Commission's proposal for a National Homeland Security Agency, the U.S. government will be able to improve the planning and coordination of federal support to state and local agencies, to rationalize the allocation of resources, to enhance readiness in order to prevent attacks, and to facilitate recovery if prevention fails. Most important, this proposal integrates the problem of homeland security within a broader framework of U.S. national security strategy writ large. In this respect, it differs significantly from issue-specific approaches to the problem, which tend to isolate homeland security away from the larger strategic perspective of which it must be a part. We are mindful that erecting the operational side of this strategy will take time to achieve. Meanwhile, the threat grows ever more serious. That is all the more reason to start right away on implementing the recommendations put forth here.

Continued in Part 2

Appendix & Footnotes

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