LOOK WHO'S NOT TALKING--STILL

The Terrorist Threat Integration Center had an imposing name, and a tough mission to match it. Headquartered in a Virginia suburb of Washington, D.C., the agency was created two years ago by President Bush as a critical line of defense against terrorist enemies. After so much criticism about the failures of the nation's intelligence agencies to get along, TTIC was to be a showcase of the government's new dedication to intelligence sharing. The new agency's mission was to "fuse" the various strands of information collected by the government's 15 intelligence arms, including the FBI, CIA, NSA and Homeland Security. Instead of competing, officials from each agency would work together inside the new office.

At least, that's how it was supposed to work. But when members of a White House commission studying intelligence failures paid a visit to the threat center, they were dismayed by what they found. Far from a model of collegiality and collaboration, TTIC (which has since been renamed the National Counter-Terrorism Center), was more like a Tower of Babel. Though they sat side by side, agents and analysts from the different agencies were still playing by the old rules: trust your own, and be wary of the other guy. The commissioners found that there were no less than nine levels of classified information stored in the center's computers. Analysts from different agencies had different clearances, making it difficult for them to talk to one another. The agent from Homeland Security was especially irritated by the arrangement. When sensitive information came in to the office, he complained to the commissioners, the CIA and FBI agents sitting next to him would go off into a private, secure room and look at the material on separate computers. The Homeland Security man was frozen out. (A Homeland official says there have been major improvements.)

That's exactly the kind of "stovepiping" of information the 9/11 Commission blamed for the failure to detect the hijacking plot. This week the White House intelligence panel--headed by federal Judge Laurence Silberman and former Virginia governor Charles Robb--is expected to unveil its sobering report detailing how many of the same problems remain more than three years later.

The panel was created last year to examine how U.S. intelligence could have been so embarrassingly wrong about Saddam Hussein's nonexistent WMD arsenal. But the president gave it a broader mission to look at ongoing problems inside the intelligence community as a whole. Its report is the first major assessment of the intelligence community's post-9/11 efforts to reform itself. The report, one U.S. intelligence official told NEWSWEEK, is "tough" on all the agencies, and will highlight gaps in the U.S. government's knowledge of the nuclear programs in Iran and North Korea. "Everybody takes a hit," says an intelligence source.

The commission is expected to recommend fixes. Among them, NEWSWEEK has learned, is a provocative idea to collapse the Justice Department's various domestic-intelligence and national-security operations into one office, creating a streamlined national-security division. (Anticipating the report, Attorney General Alberto Gonzales is already considering the idea.)

FBI Director Robert Mueller has said his top priority is to reshape the bureau's culture, turning it into an agency dedicated to detecting and preventing terror attacks, instead of prosecuting crimes after they have been committed. To do that, he created a separate Intelligence Directorate, headed by Maureen Baginski, a veteran National Security Agency official. Its mission is to collect and make sense of the thousands of pieces of disparate bits of data that flow into the FBI's 56 field offices--where far too often they have languished. "In this era, the cost of not sharing information is simply too great," says a senior FBI official. "I don't want to play games."

But the Silberman-Robb commission found that the FBI's transformation is far from complete. In one case, NEWSWEEK has learned, the panel found that the FBI never told the CIA or Defense Department about information it had on an associate of accused "dirty bomb" plotter Jose Padilla.

The report also details ongoing problems with outdated computer systems that won't allow employees from different intel agencies to talk to each other. Mueller had launched a massive computer overhaul. The centerpiece was a $170 million project known as the Virtual Case File, which was supposed to allow agents to call up reports and interviews from field offices around the country. But the system, plagued with bugs, never worked and was recently junked. Meantime the existing systems are so outdated that an FBI agent still can't send a secure e-mail to his counterpart at the Department of Homeland Security.

But would he if he could? Homeland Security employees have long complained that their CIA and FBI colleagues show them little respect. Intelligence agents say there's a good reason: Homeland has been known to go public with terror alerts based on information that other agencies found to be sketchy.

The commission took an equally skeptical look at the way U.S. intelligence agencies operate overseas. They confirmed what others have said for years: that the CIA doesn't have enough covert agents on the ground. Instead, the agency relies heavily on electronic eavesdropping and on the generosity of so-called liaisons--friendly foreign intelligence services that often have agendas of their own. These relationships have worked well in chasing down Qaeda members and other terrorists, but have left the U.S. intelligence community blind to other critical threats. For example, the Pakistani government withheld information about AQ Khan, the notorious Pakistani dealer in nuclear weapons. The commission found that the United States needs to deploy more "NOCs," the supersecret Non-Official Cover operatives who steal secrets and recruit spies. This is especially important in hostile countries like Iran. The country's suspected nuclear program is a top concern in the White House. Yet the commission found U.S. intelligence on the country's nuclear capacity to be weak.

Intelligence failures leading up to the Iraq war figure prominently in the report. The president famously relied on the CIA's "slam dunk" case that Saddam had weapons of mass destruction. But the panel was struck by the discovery that intelligence analysts at the State Department and the Department of Energy were far more skeptical, and in the end more accurate, about Iraq's stockpiles.

The report is officially expected to land on the president's desk on Thursday. But it has already been widely circulated in the intel world. CIA Director Porter Goss has warned senior staff that the report "is not going to be nice," says an intelligence source, and it's hardly certain that the president will embrace the recommended reforms. After all, Bush just finished what he thought was a major intel overhaul when he named John Negroponte to the new post of national director of Intelligence. If the reforms are successful, intelligence offers around the government may finally begin to trust one another with information. If not, in a few years they'll be talking to the next group of commissioners who'll inevitably come knocking on the door.