Good morning, Mr. Chairman, Senator Leahy, and members of the Committee. I am pleased to appear before you today to update you on the current state of the FBI, as well as our plans for the near future. I would also like to thank the Committee for your continued oversight of the Bureau and your efforts to ensure our success as we pursue the shared goal of making America safer, while preserving our civil liberties.

As this Committee knows, much of the last year has been devoted to a national discussion about the tools that should be afforded to the men and women engaged in the fight against terrorism, both at home and abroad. I want to thank the Committee for your work in producing a balanced law reauthorizing the USA Patriot Act. Through your efforts, our agents will retain the tools necessary to wage an effective fight against terrorism, within a framework that ensures important safeguards for civil liberties and enhanced judicial and congressional oversight.

For the FBI, the primary tools used in our efforts to detect, disrupt, and prevent acts of terrorism continue to be those included in, or enhanced by, the USA Patriot Act and related laws, including: the court-authorized surveillance of international terrorists; the sharing of key intelligence information; and the collection of relevant documents pursuant to court orders or through National Security Letters.

Of course, as I have explained to this Committee before, we still believe that administrative subpoenas—such as those available in narcotics and health-care fraud cases—would be appropriate in the counterterrorism arena. Accordingly, it is my hope that the forthcoming review of the FBI's use of National Security Letters—which is being conducted by the Department of Justice Office of Inspector General (DOJ-OIG) pursuant to the reauthorized Patriot Act—will underscore the FBI's responsible use of such authorities.

As this Committee may recall, shortly after the Republican and Democratic National conventions in the summer of 2004, media reports stated that the FBI had questioned political demonstrators across the country in advance of the conventions, leading civil liberties groups to allege that the FBI was attempting to chill protestors from exercising their First Amendment rights. At the request of Congress, the DOJ-OIG conducted an investigation and, last week, released its final report on this matter.

The OIG did not substantiate the allegations and concluded that all interviews conducted by the FBI of potential convention protestors were conducted "for legitimate law enforcement purposes" and were conducted consistent with the Attorney General's guidelines. I am pleased, but not surprised, by the OIG's findings. The men and women of the FBI understand and appreciate the power entrusted to them and are vigilant in their efforts to protect the country while respecting civil liberties.

I would like to take the opportunity this morning to update you on three areas of ongoing interest to the Committee: our progress in establishing a vigorous intelligence service within the FBI; developments in our efforts to modernize the FBI's information technology program, especially the recent award of a contract to Lockheed Martin in connection with the Sentinel program; and the latest results of our efforts to reshape the FBI's human resources function.

National Security Branch

I last appeared before the Committee just one month after the President approved the recommendations of the Commission on the Intelligence Capabilities of the United States Regarding Weapons of Mass Destruction, commonly known as the WMD Commission. These included a recommendation regarding the establishment of an intelligence service within the FBI. I am pleased to report that FBI's National Security Branch (NSB) has been established to ensure the integration of the FBI's primary national security programs under the leadership of a single executive assistant director and to implement policies and initiatives designed to enhance the capability of the entire FBI to support its national security mission.

Although still relatively new, the NSB is making significant progress in integrating the missions, capabilities, and resources of the counterterrorism, counterintelligence, and Directorate of Intelligence programs. The FBI is currently working with the DOJ and the administration to ensure that the NSB meets the directives set forth by the President and is responsive to the Office of the Director of National Intelligence (ODNI).

While I am optimistic about the new NSB, I am aware that some harbor doubts about the FBI's ability to transform itself into a leading intelligence agency. Such critics often cite the mistaken belief that the intelligence mission and the law enforcement mission are inherently incompatible. They also contend that the FBI is reluctant to share information with its partner agencies.

I believe it is important to note that both the 9/11 Commission and the WMD Commission found that the intelligence and law enforcement functions should not be separated. They understood that intelligence developed in criminal investigations could be relevant to ongoing intelligence matters. In addition, many of the skills necessary to a successful criminal investigation are mirrored in the intelligence arena: the need to cultivate confidential informants and build rapport with cooperating witnesses, the ability to follow complex money trails, the ability to decipher the coded language of gang members or drug dealers, and the know-how to extract meaning from a collection of seemingly unrelated clues are all skills that can be—and are—applied to intelligence matters.

With regard to information sharing, we have doubled the number of intelligence analysts, and in every field office we have established Field Intelligence Groups, or FIGs—agents and analysts working together with one shared mission—to leverage intelligence to protect our nation. From January 2004 through January 2006, intelligence analyst staffing increased on the FIGs by 61 percent, from 617 to 995. This increase in analysts has helped to fuel our sharing of intelligence products. Since September 11, we have disseminated more than 20,000 intelligence reports, assessments, and bulletins to our partners.

While our national security efforts remain our top priority, we continue to fulfill our crime-fighting responsibilities as well. Public corruption is the top criminal priority for the FBI. Over the last two years, our investigations have led to the conviction of over 1,000 government employees involved in corrupt activities, to include 177 federal officials, 158 state officials, 360 local officials, and more than 365 police officers.

We also continue to focus on implementing the National Gang Strategy, along with ATF. This strategy is designed to identify the prolific and violent gangs in the United States and to aggressively investigate, disrupt, and dismantle their criminal enterprises through prosecution under appropriate laws.

Information Technology

When it comes to analyzing information, technology is crucial. As this Committee knows, on March 16, 2006, we announced the award of the contract for development of the Sentinel program to Lockheed Martin. Under the terms of the $305 million contract, Lockheed Martin and its industry partners will use proven, commercial off-the-shelf technologies to produce an integrated system that supports processing, storage, and management of the FBI's current paper-based records system. The program includes an incremental development and delivery of Sentinel capabilities, including $73 million for operations and maintenance activities.

Now that the contract has been awarded, we are moving forward with phase one of the development process. Each of the four phases will introduce new stand-alone capabilities and will be user-focused. As each phase is implemented, existing information will be transferred to new systems and old legacy systems will be retired.

I want to emphasize that the Sentinel program is not a reincarnation of the Virtual Case File. Not only will Sentinel provide greater capabilities, it will be deployed on an incremental basis over four years. And, to prevent any missteps, each phase of the Sentinel contracting process is being closely scrutinized by a team of FBI technical experts, the Government Accountability Office, the Office of Management and Budget, and the Department of Justice's Chief Information Office and Inspector General. Furthermore, at the urging of Congress, we have also engaged outside experts to help us review and assess the implementation of Sentinel.

Significantly, the FBI also has established contractual mechanisms to monitor contractor performance and has structured the program so that all, or portions, of the effort can be terminated upon identification of poor performance, including:

• A scheduled control and monitoring system that will identify variances in the contractor's schedule every two weeks.
• Imposition of the requirement on both the prime contractor and the Sentinel Program Management Office to use a certified Earned Value Management (EVM) system, as well as the requirement to report on EVM status on a monthly basis. Certification of these EVM systems includes independent validation and verification by an independent entity.
• And, establishment of an award fee structure tied to contract performance measurements.