6 November 1998
Source: Richard Lardner, Inside Washington Publishers

Inside the Pentagon, November 5, 1998, Vol. 14, No. 44


NSA faces personnel, funding predicaments

By Richard Lardner

Whomever President Clinton selects to succeed Air Force Lt. Gen. Kenneth Minihan as director of the National Security Agency will be faced with a number of immediate challenges, not the least of which is ensuring NSA has the proper mix of personnel to handle the super-secret agency's complex code-making and code-breaking duties, industry, congressional and administration officials said this week.

As with most problems, money -- lots of it -- looms as the answer to most of NSA's current dilemmas. Extra cash won't come easy, however, as other federal agencies are competing aggressively for a slice of the federal budget "surplus."

While NSA is a prime beneficiary of the $1.8 billion intelligence plus-up recently provided in the fiscal year 1999 supplemental spending bill, observers say that increase is merely a "stop-gap," not a long-term answer.

On top of personnel and funding questions, NSA's brain trust must convince a somewhat frustrated Congress the agency is heading in the right direction. While the Republican leadership on Capitol Hill is willing to boost the intelligence budget, including NSA's coffers, lawmakers said earlier this year they nonetheless believe major changes are needed in NSA's culture, budget and method of operations. Ultimately, Minihan's successor will have to be a remarkably creative manager and an accomplished politician -- a director able to lobby the White House and Capitol Hill for more funding while at the same time imposing the inventive management solutions needed to "right size" the workforce of the Ft Meade, MD-based agency.

"They need strong leadership, someone who's not willing to be marginalized," said a former NSA executive.

Mark Lowenthal, former staff director of the House Permanent Select Committee on Intelligence, noted that signals intelligence (SIGINT) and information security -- NSA's two main responsibilities -- are not inexpensive endeavors. "Investment is going to be a key issue," said Lowenthal, who now runs OSS/USA, an open-source intelligence firm in Arlington, VA. "If you don't have it, you start to have to make nasty choices."

A senior House aide agreed, noting NSA requires a "huge infusion" of money just to overhaul its SIGINT capabilities. Even with help from Congress, the agency still has difficult choices to make: "That's sort of the problem the NSA manager has," he said. "When do you kill old programs to free up money to invest in new ones? With NSA, it's always a problem to give up what you're doing to invest in the future."

A Senate staffer noted that NSA has "too many insatiable customers and not enough resources to do the job." Of all the available intelligence products, SIGINT is generally considered the most useful. The agency recognizes that its SIGINT infrastructure is aging and has undertaken an effort, the Unified Cryptologic Architecture, to make the necessary improvements. But, he said, "there's this inherent tug of war between meeting daily demands and coming up with the money to invest in the capabilities that will make [the agency] effective 10 to 15 years from now," he said.

In a mid-August e-mail to agency employees, Minihan announced he would be retiring in March. In the Aug. 14 message, first detailed last week by The Washington Times and obtained separately by Inside the Pentagon, Minihan acknowledges NSA's funding demands and says during his remaining months he will "continue to advocate the investment our modernization demands."

Lt. Gen. Claudia Kennedy, the Army's deputy chief of staff for intelligence, is said to be a leading candidate for the NSA post, although some observers question whether the Army leadership would want to see her go to an agency where she would have more responsibility but a far lower profile. (NSA directors traditionally eschew the spotlight.) A woman with three stars is a rarity for any service and the Army very much wants to maximize Kennedy's public relations value, a congressional source said.

Army Maj. Gen. Donald Kerrick, an intelligence officer who is deputy assistant to the president for national security affairs, is also thought to be a possible nominee.

Because Minihan has been at the NSA helm since February 1996, most observers don't expect an Air Force officer to be selected for the post. Navy candidates include Rear Adm. Lowell Jacoby, director of naval intelligence, and Rear Adm. Thomas Wilson, the Joint Staff's intelligence chief. Rear Adm. Larry Poe, director of the Naval Reserve Intelligence Command, is also well thought of on Capitol Hill and believed to be a contender.

These prospects notwithstanding, the list of serious nominees is fairly short, a situation some observers say is alarming considering the challenges ahead. Administration sources note Clinton is expected soon to select a replacement for Defense Intelligence Agency chief Lt. Gen. Patrick Hughes, a move that would drain the NSA candidate pool even further.

Minihan's message underscores some of the challenges ahead for NSA. "Looking back on the past two and one-half years, we have accomplished much together," he wrote. "As is our tradition, those successes remain known only to a few. We have also experienced the continuation of the largest drawdown in our history. At the same time, we have been confronted with a tidal wave of new technologies and transnational threats which some believed threatened our very existence."

Working under strict hiring caps brought about by cuts in the defense budget, NSA has been struggling in recent years to overhaul its workforce so that the agency can keep pace with rapidly changing technologies and evolving threats. Programs like Soft Landing and Breakthrough were implemented to not only save money by outsourcing agency support functions, but to create personnel openings that could be filled by young computer scientists and engineers (Inside the Pentagon, Aug. 27, p3).

But with the private sector offering bigger salaries and better benefits, attracting the fresh talent the agency needs to stay ahead of the technology curve has proven to be a vexing problem. The House intelligence committee has taken initial steps to deal with the brain drain issue, calling on NSA to develop proposals for significantly boosting the pay of key technical personnel (ITP, Sept. 24, p2).

"[NSA] has a bunch of people nearing the end of their [30- and 40-year] careers and their skill sets are being outpaced by technology," said Lowenthal. "But they don't want to retire early. . . . The agency needs young people with new skill sets."

Efforts like Soft Landing, he added, are "helpful but not central. . . . A massive infusion of new blood is what [NSA] needs."

Agency observers question whether NSA has expended too much emotional and political capital fighting a losing battle against the liberalization of encryption export rules. Concerned U.S. enemies using sophisticated U.S. crypto products will be able to evade NSA's SIGINT systems, the agency has sought, with mixed results, to block the overseas sale of high-quality commercial encryption. But has that opposition come at a price?

"Actually, it is my impression that Gen. Minihan came to the agency determined -- wisely -- not to get sucked down the drain of crypto policy, and that he was successful for at least the first half of his tenure," said Stewart Baker, former general counsel at NSA. "Crypto policy is a terrible drain on the time of top management, but considering the stakes for the agency, Gen. Minihan has no choice but to devote as much time as it takes.

"All that said," Baker continued, "crypto policy is the wave of the past, and the agency needs to be thinking harder and organizing more effectively for future intelligence activities. These are bound to be riskier in every way, so top management has got to have its hands on the wheel," said Baker, now a partner with the Washington, DC-based law firm of Steptoe & Johnson.

Congress appears to agree. In its fiscal year 1999 intelligence authorization report, the House Permanent Select Committee on Intelligence tore into the agency, demanding major changes in the way it operates. Failure to make the necessary adjustments, the committee threatened, could result in the agency actually getting fewer resources, not more.

"Most difficult of all, NSA must develop a new culture in which all team together on a new [cryptologic] architecture, rather than bubbling up disparate ideas and programs from across NSA and expending much of its energy on probable duplication," the committee stated. "This challenge cannot be minimized, because much of NSA's past strength has come from its localized creativity and quick reaction capability, which enabled it to rise when necessary to overcome the stultifying effect that the bureaucracy of such a large organization can have."

Despite the criticism, Lowenthal said if help is on the way for NSA it will come from Congress and not the administration, which he believes has not given the agency and other elements of the intelligence community adequate fiscal support. With the Republicans maintaining control of both the House and Senate in this week's mid-term elections, Lowenthal expects some of the funding problems to be fixed.

Still, NSA faces difficult choices. A congressional source used the analogy of an apple orchard to describe the agency's situation: The trees in the orchard may be quite old, he said, but they're still producing high-quality apples. That won't last for much longer, however. At what point does the farmer decide to cut the old trees down to make room for new trees, saplings that won't produce fruit for a number of years?

"NSA is in desperate need of a good manager," he said.

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