Format Note: If you cannot easily read the text below, or you prefer to receive Secrecy News in another format, please reply to this email to let us know. SECRECY NEWS from the FAS Project on Government Secrecy Volume 2012, Issue No. 62 July 2, 2012 Secrecy News Blog: http://www.fas.org/blog/secrecy/ ** FINANCIAL COSTS OF CLASSIFICATION SOAR ** THE DNI AS SECURITY EXECUTIVE AGENT ** ROLE OF INTELLIGENCE COMMUNITY CONTRACTORS QUESTIONED ** SECOND THOUGHTS IN CONGRESS ABOUT DOMESTIC DRONES ** HYDROPOWER, HIGH SPEED RAIL, HAITI, AND MORE FROM CRS FINANCIAL COSTS OF CLASSIFICATION SOAR At a time when "leaks" are said to be running rampant, the government is spending more money than ever before to protect classified information. The estimated cost of securing classified information in government increased last year by at least 12% to a record high level of $11.36 billion. An additional $1.2 billion was spent to protect classified information held by industry contractors. These figures were reported to the President last week by the Information Security Oversight Office. http://www.fas.org/sgp/isoo/2011costs.pdf The ISOO report breaks down the expenditures into six categories (personnel security, physical security, etc.). But it does not provide any explanation for the rapidly escalating cost of secrecy. One factor in the rising costs may be the continued growth of the secrecy system. While some essential security costs are fixed and independent of classification activity, the failure to rein in classification and especially overclassification is a likely contributor to marginal cost growth. The ISOO report itself provides a stark illustration of the overclassification problem when it notes that the classification costs of several intelligence agencies -- CIA, DIA, ODNI, NGA, NRO and NSA -- are excluded from the new report because they are classified. "The cost estimates of these agencies are classified in accordance with Intelligence Community classification guidance and are included in a classified addendum to this report," the ISOO report states. But the classification of this information, which is almost certainly illegitimate, defies credulity for several reasons. First, the secret intelligence cost numbers are estimates, not actual expenditures. ("Requiring agencies to provide exact responses to the cost collection efforts would be cost prohibitive," ISOO said.) The potential intelligence value of such estimates to a hostile intelligence service is vanishingly small, particularly since their accuracy is variable and uncertain. Second, the disclosure of the cost estimates for non-intelligence agencies, which has had no adverse effect on the security programs of those agencies, is a strong indication that no damage can result from release of such information. If publication of the non-intelligence classification cost estimates had caused any kind of harm over the years, those estimates would not be published. But of course they haven't, and so they are. Thus, one is led to conclude that the classification of the intelligence agency classification cost estimates is not threat-driven, but instead is "culture"-based. The disclosure of the estimates would not cause identifiable damage to national security, which means this information has been classified in violation of executive order 13526. Unfortunately, there seems to be no one to tell the DNI that his classification policies are mistaken. Congress could perform critical oversight of classification policy, inquiring into the basis of particular classification decisions, but it almost never does so. If anything, congressional leaders favor more aggressive and unforgiving enforcement of existing classification policies. The Obama Administration's Fundamental Classification Guidance Review was supposed to challenge the habits of reflexive classification, but in this case at least it has not had the desired effect. If some rogue employee leaked a copy of the classification cost estimates for the intelligence agencies, he or she would be subject to new procedures announced by the Office of the Director of National Intelligence last week to combat unauthorized disclosures, including polygraph testing and inspector general investigations. http://www.fas.org/irp/news/2012/06/dni-leaks.pdf In the absence of leaks, the estimated cost of implementing the DNI's new anti-leak procedures will be classified and unavailable to the public. THE DNI AS SECURITY EXECUTIVE AGENT The anti-leak procedures announced last week by the Director of National Intelligence apply specifically to intelligence community employees. But the DNI is also responsible more broadly for security policies that affect almost everyone who holds a security clearance for access to classified information, whether or not it pertains to intelligence, as well as other government employees who are candidates for "sensitive positions." The DNI's role as "Security Executive Agent" was described in a March 2012 directive, according to which he is responsible for oversight of "investigations and determinations by any agency for eligibility for access to classified information and eligibility to hold a sensitive position." The DNI's authority extends to every individual who has or seeks access to classified information with only a handful of exceptions: the President, the Vice President, Members of Congress, Justices of the Supreme Court, and Federal judges appointed by the President. In this capacity, the DNI is responsible for developing standardized procedures for security questionnaires, financial disclosure forms, polygraph policies and practices, and foreign travel and foreign contact reporting requirements. See "Security Executive Agent Directive (SEAD) 1," effective 13 March 2012: http://www.fas.org/irp/dni/sead-1.pdf "SEAD 1 applies to all departments and agencies performing investigations or adjudications of persons proposed for eligibility to hold a sensitive position whether or not requiring access to classified information," said Charles B. Sowell of ODNI in congressional testimony last month. "The ODNI also led the interagency efforts to revise the National Security Adjudicative Guidelines" -- which are used to evaluate a person's loyalty, reliability and trustworthiness -- "which we expect to issue later this year," he said. http://www.fas.org/irp/congress/2012_hr/062112sowell.pdf ROLE OF INTELLIGENCE COMMUNITY CONTRACTORS QUESTIONED Persistent questions about the U.S. intelligence community's reliance on contractors to perform or support core mission functions were explored in a partially closed hearing of the Senate Homeland Security Committee last year. A redacted transcript of the classified session of the hearing was included in a hearing volume which was recently published. Among other things, "questions have been raised about whether some IC contracting firms hold undue influence within the IC because senior intelligence officials are often recruited from, and often return to, these firms," according to a background paper prepared for the hearing (citing author Tim Shorrock) and included in the appendix to the PDF version of the new hearing volume. "A 'revolving door' where employees move between public and private sector service increases the risk that decisions made by either contractor or government employees could be influenced by past professional relationships or potential future employment opportunities." "Some have also highlighted concerns about contractors who immediately return to their former IC agency [as private sector employees], but serve in the same capacity and at greater expense," the background paper stated (citing reporting by Julie Tate of the Washington Post). "In addition to clear conflicts of interest, the different incentives of corporations and their employees versus federal agencies and their employees create the need for robust oversight. For example, the need to make corporate profits could create an incentive to provide analysis or decision support services in a manner that is likely to increase future business opportunities." "Additionally, because contract employees owe a duty of loyalty to their employers rather than the U.S. government, they may have incentives to act in the interest of their employers rather than in the interests of the government where those interests differ," the background paper said. At first glance, the questions seemed more interesting than the answers that intelligence community officials were able to provide at the hearing, but it was remarkable to see those questions raised at all. The hearing was held not by the Senate Intelligence Committee, but by a subcommittee of the Senate Homeland Security and Governmental Affairs Committee chaired by retiring Senator Daniel Akaka (D-HI). See "Intelligence Community Contractors: Are We Striking the Right Balance," September 20, 2011: http://www.fas.org/irp/congress/2011_hr/contractors.html SECOND THOUGHTS IN CONGRESS ABOUT DOMESTIC DRONES Some members of Congress are having second thoughts about the future use of unmanned aerial systems in U.S. airspace, judging from a colloquy on the House floor last week. When Congress passed the FAA reauthorization bill, recalled Rep. Michael Burgess (R-TX), it included "this very simple language allowing for the expansion of unmanned aerial vehicles in the national airspace." "None of us really thought that was much of a problem, but our constituents are bringing it back to us," Rep. Burgess said. "They are concerned about privacy, and they're concerned about Federal agencies surveilling normal activities of commerce in which people may be engaged." Looking beyond privacy concerns, Rep. Burgess proposed an amendment to the Transportation Appropriations bill that would prohibit the use of armed drones within the United States. "If these drones are weaponized, you can--if you've been surveilled unfairly, you can go to court and perhaps seek a remedy. But if a bullet is fired from one of these platforms, you don't have any remedy if you're the recipient of that bullet," he said. "The amendment that I offer today is preemptive. As to my knowledge, no actual applications have been filed with the FAA to use armed drones in U.S. airspace. But I believe it is necessary, as there has been some discussion in the public media about the ability to arm unmanned aerial vehicles. I personally believe this is a road down which we should not travel," Rep. Burgess said. However, the amendment was rejected for procedural reasons. http://www.fas.org/irp/congress/2012_cr/drone-thud.html Similar legislation sponsored by Rep. Rush Holt (D-NJ) was approved last month as an amendment to the pending Homeland Security Appropriations bill. http://www.fas.org/irp/congress/2012_cr/dhs-uas.html HYDROPOWER, HIGH SPEED RAIL, HAITI, AND MORE FROM CRS New and updated reports from the Congressional Research Service that has Congress has not authorized CRS to release to the public include the following. Hydropower: Federal and Nonfederal Investment, June 26, 2012: http://www.fas.org/sgp/crs/misc/R42579.pdf The Development of High Speed Rail in the United States: Issues and Recent Events, June 28, 2012: http://www.fas.org/sgp/crs/misc/R42584.pdf Haiti Under President Martelly: Current Conditions and Congressional Concerns, June 6, 2012: http://www.fas.org/sgp/crs/row/R42559.pdf Federal Laws Relating to Cybersecurity: Discussion of Proposed Revisions, June 29, 2012: http://www.fas.org/sgp/crs/natsec/R42114.pdf U.S. Foreign Assistance to Latin America and the Caribbean: Recent Trends and FY2013 Appropriations, June 26, 2012: http://www.fas.org/sgp/crs/row/R42582.pdf China's Economic Conditions, June 26, 2012: http://www.fas.org/sgp/crs/row/RL33534.pdf Navy Shipboard Lasers for Surface, Air, and Missile Defense: Background and Issues for Congress, June 29, 2012: http://www.fas.org/sgp/crs/weapons/R41526.pdf Cluster Munitions: Background and Issues for Congress, June 27, 2012: http://www.fas.org/sgp/crs/weapons/RS22907.pdf _______________________________________________ Secrecy News is written by Steven Aftergood and published by the Federation of American Scientists. 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