The FBI has been accused of failing over several years to respond to the steadily growing threat of terrorism.
Janet Reno: "The right hand didn't know what the left hand was doing"
The bureau is heavily criticised in the preliminary report of the commission investigating the 11 September 2001 attacks on New York and Washington.
The panel says the FBI was hamstrung by poor intelligence, a failure to share information and insufficient resources.
It also notes that Attorney General John Ashcroft rejected an appeal for more funding a day before the attacks.
The 10-member National Commission on Terrorist Attacks Upon the United States released its report as two days of hearings from current and former officials at the FBI and Justice Department - including Mr Ashcroft - began.
"On September 11, the FBI was limited in several areas critical to an effective, preventive counter-terrorism strategy," the report says.
"Those working counter-terrorism matters did so despite limited intelligence collection and strategic analysis capabilities, a limited capacity to share information both internally and externally, insufficient training, an overly complex legal regime and inadequate resources."
It adds that 66% of the FBI's intelligence analysts were not qualified to do their job.
On the day of the attacks, about 1,300 agents - just 6% of the FBI's total personnel - worked on counter-terrorism, the report notes.
'Fell out of his chair'
The report says that on 9 May 2001, Mr Ashcroft told a federal
hearing that the Department of Justice's highest priority was to "protect
citizens from terrorist attacks".
It continues: "On May 10, 2001, the department issued guidance for developing
the fiscal year 2003 budget that made reducing the incidence of gun
violence and reducing the trafficking of illegal drugs priority
Attorney General John Ashcroft gave a robust defence of the administration
The report says Dale Watson, the first head of the FBI counter-terrorism division, "told us that he
almost fell out of his chair when he saw the memo, because it made
no mention of counter-terrorism".
The FBI had requested increased finance for improved technology for its anti-terrorist
investigations, according to the report.
"Acting FBI director Thomas Pickard told us he made an appeal to
Attorney General Ashcroft for further counter-terrorism enhancements
not included in this budget proposal. On September 10 (2001), the attorney
general rejected that appeal."
The attacks killed nearly 3,000 people in New York, Washington and Pennsylvania.
Giving his evidence, Mr Ashcroft expressed sorrow for the victims and anger at Osama Bin Laden, head of the al-Qaeda network accused of carrying out the attacks.
He went on to say that the attacks surprised the Bush administration because of decisions taken during the Clinton presidency that meant the US government had "blinded itself to its enemies" for nearly a decade.
Mr Ashcroft said that the national security apparatus in place on the day of the attacks was "destined to fail" because of the legal and budgetary constraints placed on it.
Since then, Mr Ashcroft said, systems had been put in place to protect the US and allow its intelligence, military and law enforcement agencies to hunt down America's enemies.
Mr Ashcroft told the commission that when the Bush administration took office, he had discovered there was no plan to kill Bin Laden - only one to capture him.
The attorney general said he had advised finding and killing Bin Laden, and he was supported by National Security Adviser Condaleezza Rice. But he said restrictions were placed on such a plan by US law, which - prior to the attacks and the passing of controversial national security legislation - imposed draconian barriers between the various intelligence agencies.
The first to face questioning as the 10-member panel began public hearings on Tuesday was the former FBI director, Louis Freeh, who resigned in June 2001.
He acknowledged that FBI counter-terrorism operations had been severely under funded and understaffed.
Mr Freeh said requests in the three years to 2003 for 1,895 more staff - including Arabic linguists - produced an increase of 76, as terrorism was not then a national priority.
The fundamental problem, he said, was that until the 11 September attacks, the US was not at war and the FBI did not have the resources or legal authority needed to take on al-Qaeda.
"We had a very effective programme... given the resources that we
had," he told the hearing.
Louis Freeh said the FBI's hands were tied
"We need to keep in perspective however what was the reality
before September 11 and what was reality thereafter.
"At the end of the day, the FBI as a part of the Department of
Justice has to obey the law - whatever that law is, it's one that
protects us, it protects our constitution, it also protects our
Mr Freeh said he had redirected
resources to meet specific emergency needs, but
congressional limits prevented permanent shifts into counter-terrorism.
Giving evidence, Ms Reno contradicted this, saying she
had told Mr Freeh: "If we need to reprogramme, let's do it."
Ms Reno told the hearing that the FBI had faced huge challenges in
learning how to use all the information it collected on
intelligence and criminal matters.
"The FBI didn't know
what it had. The right hand didn't know what the left hand
was doing," she said.
President George W Bush has been accused by a former White House
counter-terrorism chief, Richard Clarke, of not paying enough
attention to the al-Qaeda threat after he took office in January
Mr Bush and his National Security Adviser, Condoleezza Rice, insist there was no evidence that pointed to a time and
place of the strikes.