Mfr Nara- T6- Doj- Colgate Stephen- 5-19-04- 00165

MEMORANDUM

FOR THE RECORD

Event: Interview of Stephen Colgate, former Assistant Attorney General for Administration Type of event: Interview Date: May 19,2004 Special Access Issues: None Prepared by: Caroline Barnes Team Number: 6 Location: K St Participants: Christine Healey, Caroline Barnes Background. [Served as Assistant Attorney General for Administration (the Senior career official in the Dept) and Chief Information Officer from 1992 to April 2001. From 1990 to 1992 he was the Deputy Assistant Attorney Generalfor Personnel and Administration, and from 1987 to 1990 was Deputy Assistant Attorney General for Information and Administrative Services. He also served as Executive Officer in the Civil Rights Division and Assistant Director of the budget staff. He started at DOJ in 1977 and remained there until 2001 with the exception of two years spent at the Treasury Department as Director of Finance and at FEMA as a budget officer. He has a MPA in Public Finance from American University. According to a March 30,2001 news article, he left DOJ for the law firm of Piper Marbury Rudnick & Wolfe LLP to serve as "nationwide executive director. "] Colgate majored in Law Enforcement Administration at the University of Arizona and initially thought he wanted to be an FBI agent. He moved to Washington, DC and received his MA in Public Administration and Finance from American University in 1975. He then spent two years on Capitol Hill and joined the Department of Justice (DOJ) budget staff in 1977. He left DOJ to be a budget officer at the Federal Emergency Management Agency (FEMA) soon after it was formed and was in that position for one year working on continuity of government and presidential succession issues. He . returned to DOJ and served as the Assistant Director of the budget staff from 1982 to 1985, then became the Executive Director of the Civil Rights Division. He left DOJ to take an SES position at the Department of Treasury as its Director of Finance, and then returned to DOJ as the Director of its finance staff. In 1987 he was made Deputy Assistant Attorney General for Personnel and Administration. He said that he was in essence the Department's Chief Information Officer (CIO) as well but that position didn't exist at the time. In November 1992 when the Assistant Attorney General for Administration (his boss) retired, Attorney General Barr appointed him to that position.

It is the only position of its kind left in Government as it is not a political appointment. Colgate was the Department's Chief Financial Officer and, after the Clinger-Cohen Act was passed, was the CIO as well. Colgate stated that when Philip Heymann and Eric Holder were Deputy Attorney General, Colgate worked directly with AG Reno. When Jamie Gorelick was DAG, he worked primarily with her. Colgate was eligible to retire from DOJ on January 16, 2001, and he stayed on through the Office of Management and Budget's (OMB) final revisions to President Clinton's last budget (2002). On January 19,2001, Reno submitted her last budget document, which served as a placeholder and was amended by AG Ashcroft. Colgate said he is close friends with FBI Director Mueller who was at DOJ with Colgate under AG Barr. DOJ Budget Process. Colgate stated that the DOJ budget office was always managing three budgets simultaneously - closing one out, executing the current budget, and planning the next one. First, the President issues general policy and program guidance which often is largely ignored. Second, the AG issues policy guidance, and third, the individual (DOJ) agencies submit their budget requests, called "Spring Planning Estimates," to DOJ (after the agencies conduct discussions/negotiations about their needs, etc.). The DOJ/Justice Management Division would do an analysis of the SPEs in late Spring, early Summer and would hold hearings (non-adversarial) with the individual agencies to discuss. DOJ would then transmit its initial policy decisions to the agencies, the agencies could appeal, the AG would make a final decision, the agencies would recraft their budget requests accordingly, and the AG would transmit the budgets to OMB . in September/October. OMB would then hold hearings and transmit its preliminary views on the submissions around Thanksgiving. The AG would appeal and differences often would be resolved/sorted out at Colgate's level. If that was not possible, the AG would meet with the Director of OMB to discuss. The President would submit the final budget request to Congress at the end of January/beginning of February. Colgate said he did not remember AG Reno ever meeting with the President on the budget. He added that DOJ grew faster than any other USG agency, so the AG really wasn't in a position to argue too much with OMB's determinations. Reno, for example, was a "good soldier." She was arguing over rates of growth, after all. Colgate described the budget process as a "negotiating process" involving a good bit of "gamesmanship." The FBI and INS, for example, would ask for personnel increases in the first round of negotiations that they knew the system wouldn't support in order to get as high a final number as possible. Through its analysis of the special agent turnover rate and its knowledge of the number of agents it can put through Quantico every year, the FBI can determine with a fairly high level of accuracy how many agents they realistically can absorb each year. Colgate said that despite this the FBI often asked for new personnel even when it was under burning existing FTEs in certain areas. This led to a

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situation where the FBI's infrastructure couldn't keep up with its pace of hiring, and it had to institute a hiring freeze (around the time Louis Freeh came in as Director in early 1993). In fact, the FBI used the supplemental CT funding it received after the Oklahoma City bombing for infrastructure requirements such as upgrading its Strategic Information and Operations Center (SIOC) and building the new laboratory. DOJ "got in trouble with the Hill" for not using these funds to hire new CT agents. Also, it took the FBI much longer than the Hill expected to complete these projects, in part because it took a long time to get the contractors on board, and in part because the projects were poorly managed.

Determining the Counterterrorism Budget. Colgate stated that the Department's . definition of CT changed over time so it is hard to track the level of CT funding over time, especially before the FBI created its CT Division in 1999. The FBI's distinction between domestic and international terrorism further complicated things, and the "counterterrorism crosscut" was a difficult figure to arrive at. Critical Infrastructure Protection (CIP) was a new concept toward the end of Colgate's tenure, in keeping with the Washington game of "what's hot right now." CIP further complicated the CT definition. Creation of Counterterrorism Division and Investigative Services Division. The cold war was over, state sponsors of terrorism were not as active, Chinese intelligence activity was increasing, international radical fundamentalism was increasing, and the FBI's National Security Division was dominated by "relics of the cold war." It made sense to separate out CT from NSD. FCI agents were not used to producing arrests, and CT agents needed to utilize more of the criminal tools. Also, the whole Wen Ho Lee debacle had been very embarrassing, and FBI leadership wanted to get rid of Neil Gallagher (then the head of NSD) and put Dale Watson in to lead the CT effort. FBI Management of Infrastructure Projects. The FBI has a poor history with regard to managing large infrastructure proj ects. The proj ects were managed by FBI agents due to the Bureau's "agents can do anything" outlook, and these agents didn't have the skill set to effectively manage these kinds of projects. The FBI faced a credibility problem on Capitol Hill for two reasons: 1) Its utilization of the Oklahoma City supplemental for infrastructure projects that then took too long to complete, and 2) Freeh's resurrection of two other infrastructure proj ects, the Integrated Automated Fingerprint Identification System (IAFIS) and the National Crime Information Center (NCIC), which cost twice as much as they were intended to cost and took twice as long to complete. Freeh acknowledged that these two projects were "a mess." He had to ask for a great deal more funds and explain what the FBI had done with the funding they'd received initially. It looked to Congress like the FBI had "pissed it away." Freeh set up "red teams" to monitor the progress of these projects, involved DOJ and OMB, and met with AG Reno regularly to provide progress reports. Colgate chaired DOl's oversight group for these projects. Ultimately, IAFIS was delivered and is now working well.

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The FBI continued to suffer from its own past failures in this area. Freeh realized that he needed to get agents out of the top management positions on these projects. He knew that the FBI was "way behind" in the IT Infrastructure area. Colgate views as a great myth the vision of the FBI as the lead law enforcement agency in terms of its use of technology/infrastructure. In reality, the FBI lags behind all other federal law enforcement entities, even INS, in that area. For example, by the early 1990s, Assistant US Attorneys (AUSAs) across the country could communicate with each other and with DOJ Headquarters by email, and they had access to the Internet on their desktops and could reach outside clients that way. The FBI did not have this rudimentary capability. The FBI still used a telegraph system to communicate and had just started introducing Local Area Networks (LANs) and Wide Area Networks (WANs). Also, the information flow within the FBI was very hierarchical. Colgate referred to the introduction ofLANs and WANs as "glasnost" within the FBI. Colgate said that while Freeh did not have a computer workstation in his office and did not use a computer at work, he was an "absolute champion" in trying to modernize the Bureau in that area. What Colgate did fault Freeh for, which he faulted the entire FBI for, was its compulsion to develop these systems entirely within the FBI. These projects always had to be based on FBI ideas and FBI approaches and had to be unique to the FBI. Colgate described the FBI as "pig-headed" about this. The FBI wouldn't adopt anyone else's system (he mentioned DEA's "Firebird" system as an example of a system the FBI could have adopted and re-tooled). Also, Freeh always argued for the "grand design." He wanted the FBI system to have "all the bells and whistles." Given the state of the FBI's information infrastructure, it would have made more sense for the FBI to simply put in a functional email system rather than arguing to upgrade the entire system at once. When Colgate left DOJ in 2001, the FBI still couldn't transmit its FD-302s electronically from case agent to AUSA. Trilogy. The FBI divided this project in to stages to get out of what was a "disaster situation." They decided they would first modernize the systems, demonstrate success, and then add the tools. Freeh, to his credit, brought in Bob Dies of IBM and this got the project some "traction" on Capitol Hill. Dies broke the project into these manageable pieces. Colgate said that he himself was a "fan of Dies," but because Dies came from IBM and still owned a lot of IBM stock which he didn't want to sell (Colgate described doing so as "financial suicide"), he often had to recuse himself on certain issues and there was a certain ineffectiveness about him for that reason. Colgate said that Dies was not the first "outsider" with expertise in the IT area that Freeh brought into the FBI. He said that Carolyn Morris, head of the Technical Services Division in the 1980s, was a non-agent brought in from DOJ to. drive the NCIC project. She had a technical background and was "very good." However, Dies was the first "true outsider" in that he was from the private sector, had no US Government experience, and had a different approach (PC-centric vs. mainframe). Also, Dies was not into "turf issues." He would adopt an existing system if it met the FBI's needs.

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Trilogy started as a system to support the FBI, so the criticism that it doesn't support the Intelligence Community and information sharing isn't really fair. This is a different mission than the one it originally had. The FBI has to think incrementally. Trilogy may not solve all of its CT information sharing problems but it's still worth it to the FBI to complete the proj ect. The cost overruns and delays are frustrating. FBI as Insular. The FBI was very insular, to the extent that Colgate described the FBI as the fourth branch of Government. It was a cultural issue. Colgate said that he told Deputy Director Bob Bryant to tell Colgate when the FBI decided to join the Executive Branch. Colgate said he told Bryant he realized the FBI would never join DOl For example, all FBI employees were cleared and all its communications were classified. This limited the FBI's functionality. Most of what the FBI does is sensitive but not classified. Maybe the FBI should "wall off' its counterintelligence information, but not the rest. He thinks they used classification as a way to remain insular. They would refuse to give an AUSA access to the FBI's network because the AUSA wasn't cleared. Colgate saw this as "the ghost of Hoover." Also, the FBI and DEA couldn't query' each other's systems. Colgate acknowledged that other DOJ agencies have a similarly insular culture, but said that the FBI was "on steroids" in this regard. Impediments to Information Sharing. AG Reno recognized that the FBI wasn't where it needed to be in this area, nor were state and local law enforcement, and the Global Information Sharing Initiative was a stab at rationalizing this very stove-piped situation. There were terrible turf wars over what entity would get credit for the predicate of an investigation and over who would actually run the investigation. The FBI always wanted to be the "lead dog." The issue really comes down to the willingness of the different entities to make their information available to others. Colgate described four impediments to information sharing: 1) culture/mentality, 2) structural issues associated with handling classified information, 3) trust issues (Hanssen, FBI-CIA difficulties), and 4) a disparity between the caliber of folks at the FBI and those at the state and local level. Some at the state and local level have little relevant training and there was a fear on the part of the FBI that its information would be used for other than what it should have been used for. DOJ's new Global Information Sharing Initiative [just announced last week] is much like Reno's. There are still too many examples of the right hand not knowing what the left hand is doing. In the Wen Ho Lee case, for example, some FBI offices had information that others needed and never got. There was a constant recognition at DOJ that law enforcement didn't know what it knew. Reno's memos to Freeh in 2000 were evidence of that recognition. Freeh pointed to Trilogy as a fix for this. However, that project took so long to get approved and get going because Freeh was afraid to take things on in increments. He was afraid if he took that approach he'd only get a piece of the project approved and he wanted all of it. Mueller's Reforms. Colgate only knows what he's read in the news media about Mueller's reforms. He knows Mueller very well and feels that the nation is very

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fortunate to have Mueller in charge. Mueller is putting in 1000%. Colgate feels that the FBI needs "a generation to die off' for these reforms to truly take effect. The world of law enforcement is a high-testosterone environment, inhabited by a lot of ex-marines, and expressing doubt was not encouraged. Colgate often saw Freeh as an emperor with no clothes because his people didn't like to bring him bad news. He often heard the bad news from Reno rather than from his own people. Analysis. Colgate felt that DBA had moved more aggressively in this direction than the FBI did. The Bureau realized it needed to develop this expertise, but initially staffed these positions with a surplus of support personnel who didn't have the fundamental skills. These were often fingerprint examiners from the FBI's Criminal Justice Information Services (CJIS) Division who were out of jobs because of the automation of this field. The FBI didn't want to lay off these people. It was "ajoke." Colgate said he forced one Reduction in Force (RIF) of CJIS personnel and the FBI found it very painful. The FBI had the ideathat anyone could fill a support position; these positions were viewed as fungible. The FBI used to be inhabited by agents and clerks only. 1998 Strategic Plan. Reno made it clear to Freeh that CI and CT were the FBI's top priorities. Freeh always believed that any new mission required new resources. He wasn't willing to reprogram resources from lower priority mission areas. He was against doing that and got himself into a jam because of it. Freeh over-hired and the FBI underestimated the day-to-day operating costs necessary to support the personnel increases. Freeh didn't make the necessary tough choices. There were IAFIS cost overruns because the FBI didn't budget for annual routine operating costs, and the FBI was over-staffed in the support area because it wouldn't lay people off. All of this led Congress to conclude that the FBI wasn't managing what it had. Freeh had to freeze hiring as a result and had to pull funds from the infrastructure budget to pay for personnel. Deputy Director Bryant was thinking along the lines of giving the drug war to the DBA which made sense because Bryant's background was more in the national security area (he managed the Aldrich Ames investigation, etc.). Freeh was sensitive to Bryant's argument but didn't want to give up jurisdiction over anything. The US Secret Service was "always trying to hom in" on the FBI's national security mission, events management in particular. The ATF tried to encroach on the Waco situation. The DOJ/IG was getting into the public corruption area. Wby DOJ was Unsuccessful at Forcing Cbange at FBI. Colgate described DOJ as being like a battleship; it "doesn't tum quickly." The FBI is very insular. He said that during Hoover's time, the FBI was "cordoned off' inside the main Justice building. And it was still the case during Colgate's tenure that DOJ credentials didn't enable access to the FBI, while FBI credentials did enable access to DOJ. Colgate also stated that Reno's management style was such that she expected everyone to "play nicely." It took a lot for her to confront people on an issue. She believed that in the case of the FBI "it wasn't broken quickly" so it likely wouldn't be fixed quickly. She preferred more of an incremental approach. Finally, given all of the ongoing investigations of the Clinton

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white house during his tenure, which Colgate described as being "always a backdrop," Freeh was "bullet-proof." If the Administration had fired Freeh, Republicans would have argued that it was retaliation for the investigations. Colgate hastened to add that Freeh didn't deserve to be fired, but even ifhe had, Clinton couldn't have done it under the circumstances. Colgate asserted that the FBI should make criminal investigative decisions independently, but should not be completely independent of White House or DOJ direction. Freeh had a misconception on this point. The Executive Branch's ability to direct the FBI was impeded as a result. Reno used independent counsels a great deal which helped, but the White House was unwilling to assert its leadership given its situation. White House staffers were interviewed by the FBI "every time they turned around." Freeh thought William Webster did the best job of balancing in this situation. He was able to investigate the President's brother (Billy Carter), but at the same time took policy direction from the Executive Branch. Colgate said he butted heads with Freeh and thought he was a "lousy manager," but Freeh knew the FBI had to modernize and develop its analytical side. Freeh should have made more bold decisions, but in the context of the time the FBI did make progress. Freeh had to deal with several scandals that were not of his own making. He made a lot of significant improvements but wasn't willing to address the FBI's insular nature.

u.s. Federal

Law Enforcement. Colgate believes that to fragment federal law enforcement the way we have in the United States has been a mistake and that no one would intentionally design such a structure. He is pleased that Customs and INS are now under one roof at DHS, and he thinks that maybe one day we we'll have a border security agency. FBI Organization. To create an "MI-5" would be a "mistake." "You would lose decades." "Look at the DHS debacle." If the FBI had a strong analysis and information technology capabilities, it could see how seemingly unrelated events might come together in a criminal or a counterterrorism investigation. If the FBI is pulled apart, information sharing will be more difficult. Colgate said during his tenure at DOJ he supported merging the Drug Enforcement Agency (DEA) and the FBI, and thought that Vice President Gore supported it as well. However, AG Reno was against the idea, saying it would cost $100 million and take ten years due to the different cultures and structures, and we'd lose a lot in the war on drugs in the short term. He said if we propose a "service within a service" restructuring of the FBI, we should get the FBI out of the drug area. He's guessing that such a service will be the "compromise" that ultimately is arrived at for the FBI (i.e., a compromise between staying the course and creating an MI-5), and when pressed he said he supports such a reorganization. He said he liked the idea of agents being dedicated to national security for their entire careers much like the foreign service. Colgate thinks that Mueller would leave the FBI if an MIS were created. He said that creating a "service within a service" will be hard, because you don't want agents perceiving that one career track is preferable to the other. There

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will be retention, attraction, and morale issues. You cannot have one entity perceived as the "weak sister" of the other. Bureaucracies are very "turf conscious" so you will always have walls. It's human nature. You need a superstructure and governing mechanism to deal with these issues and preserve the ability to move resources. If the FBI is divided into two separate entities doing so becomes that much harder. FBI Counterterrorism. While Colgate was at DOJ, he saw CT as important. Dale Watson spent more time with AG Reno than anyone else at the FBI. Counterintelligence was going through a transition. The FBI felt proud of catching Aldrich Ames, but had a "black eye" with the Robert Hanssen espionage case. The Bureau reprogrammed resources (i.e., special agents) out of the CI area because the Cold War was over. International Radical Fundamentalism was new. Role of the DCI. Colgate believes the DCI's role has been too "figurative." He would give the DCI "real teeth" and would allow the DCI "a lot" more involvement in terms of setting priorities and further defining the difference between domestic and foreign terrorism. The DCI might have less influence over purely domestic or home-grown terrorism. He said we would have to be mindful of civil liberties issues, however, and mentioned the Church Commission. Colgate thought that with proper oversight and a DOJ role such a structure could be properly managed. It would be difficult, but it could be done. Security vs. Liberty. Colgate was the chair of the "Carnivore" review committee. He thought Carnivore (the FBI's internet wiretapping technology) was a "great tool." It was used only on lawful, approved intercept orders, but it was described in the news as "big brother." The report on Carnivore that the FBI commissioned of the lIT Research Institute (IITRI) recommended that the system have additional audit capability because it was capable of collecting information outside the wiretap parameters. Colgate thought this was a good idea. When electronic surveillance (ELSUR) first came into being in 1968, federal agents would actually "clip into" the line. They sometimes wouldn't realize right away that they actually were listening to the wrong person. There was no way to independently monitor who the federal agents were listening to, when, and for how long. With Carnivore, you could see how the surveillance really was being conducted. So American citizens had less privacy when ELSUR was first used than they did with Carnivore. Now, the whole discussion on this topic has changed. Now people want to know why Carnivore is not used more. Reno was criticized for increasing the number ofFISA orders and now it's a badge of honor. Three-quarters of the USA PATRIOT Act provisions were old proposals DOJ lawyers likely pulled off of the shelves and dusted off, and they wouldn't have passed but for 9/11. Now the pendulum is "swinging back."

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