The call came after dinner on a Monday night, as the general was watching the TV news at home. There was a computer problem back at the agency. A software failure had knocked out the network.

"Give me a sense," the general commanded the duty officer over the secure phone line. "What are we talking about?"

"The whole system is down," the duty officer said. A result of overloading. Plus, the network had become so tangled that no one really seemed to know how it worked. There was no wiring diagram anyone could consult.

It was January 24, 2000. Lt. Gen. Michael V. Hayden was still new on the job -- just finishing his 10th month as director of the National Security Agency -- but he did not need a duty officer to explain the implications of his computer problem. The agency's constellation of spy satellites and its giant listening stations on five continents were still vacuuming communications out of the ether. Their vast electronic "take" -- intercepted telephone calls, e-mails, faxes and radio signals -- still poured into memory buffers capable of storing 5 trillion pages of data at agency headquarters at Fort Meade. But once in house, the data froze. Nobody could access it, nobody could analyze it.

The NSA -- the largest and most powerful spy agency in the world -- was brain-dead.

Hayden called George J. Tenet on a secure phone and broke the news to the director of central intelligence. The nation's two top spymasters knew there was nothing they could do but get out of the way and let the technicians try to figure out what was wrong. The keepers of the nation's secrets now had another one to keep -- a secret Saddam Hussein or Osama bin Laden or some other enemy of the state could have surely used to great advantage.

The next morning, the only consolation Hayden had was the snow: A blizzard had blasted Washington and shut down the federal government, giving his gathering army of computer engineers and techies some time -- without the workforce around -- to bring the agency out of its coma. Hayden's despair deepened as two full days passed without progress. The mathematicians and linguists reported back for duty Thursday morning, only to find a handwritten message taped to doors and computer terminals: "Our network is experiencing intermittent difficulties. Consult your supervisor before you log on."

The crash had now become a security crisis. By noon, at a hastily called "town meeting," Hayden walked onto the stage of the agency's Friedman Auditorium and told thousands of employees -- in person and on closed-circuit television -- what had happened.

"We are the keeper of the nation's secrets," he said at the end of his grim presentation. "If word of this gets out, we significantly increase the likelihood that Americans will get hurt. Those who would intend our nation and our citizens harm will be emboldened. So this is not the back half of a sentence tonight that begins, 'Honey, you won't believe what happened to me at work.' This is secret. It does not leave the building."

Could all 30,000 employees live by the code of secrecy they'd grown up with?

To Hayden, a career intelligence officer who had served in the first Bush White House and had run the Air Force's cyberwar center, the computer crash seemed the perfect metaphor for an agency desperately in need of new technology. But the reality, he would quickly see, was actually worse. Antiquated computers were the least of the NSA's problems.

By virtue of its magnitude and complexity, the NSA invites superlatives and outsize comparisons. Its collections systems scoop up enough data every three hours to fill the Library of Congress. It employs the world's largest collection of linguists and mathematicians and owns the world's largest array of supercomputers. To power the supercomputers, it uses as much electricity as the city of Annapolis. To cool them, it maintains 8,000 tons of chilled water capacity. One of its most powerful computers generates so much heat it operates while immersed in a nonconducting liquid called Flourinert.

But beyond the gee-whiz factor lies an agency in need of reinvention.

Heir to America's World War II code-breaking heroics, the agency was created in secret by President Harry Truman in 1952. Signals intelligence -- SIGINT, in spy parlance -- has long been considered even more valuable than human intelligence or satellite imagery, because the quantity and quality of the potential take is so much greater. The NSA was intended to be the world's premier SIGINT agency, encoding American secret communications while stealing and decoding other nations'. Soon after its founding, the agency started growing into a juggernaut that would put listening posts around the globe, spy ships and submarines out to sea, and reconnaissance planes and satellites in the heavens.

The NSA rose to dominance in what were, in telecommunications terms, simpler times. Radio signals and microwaves were ripe for the taking as they bounced off the ionosphere or traveled straight out into space; to intercept them, one simply needed to get in their path. And the NSA did this better than anyone else, using everything from portable receivers that picked up vibrations off windowpanes to geosynchronous satellites 22,000 miles above Earth.

It was the NSA that first reported the presence of Soviet offensive missiles in Cuba in 1962. It was the NSA that first warned of the Tet offensive -- five days before the attacks commenced across South Vietnam in January 1968. All told, the NSA broke the codes of 40 nations during the Cold War and, through an operation code-named Gamma Guppy, intercepted personal conversations of Soviet Premier Leonid Brezhnev. In 1986, President Ronald Reagan went so far as to bomb Col. Moammar Gaddafi's Tripoli headquarters after NSA intercepts revealed Libya's role in a terrorist attack on a Berlin discotheque that had killed two U.S. servicemen and a Turkish woman.

Making and breaking codes requires absolute secrecy, and the NSA took secrecy to extremes. Most Americans had never even heard of the agency for decades after it was established. In 1975, a Senate select committee headed by Sen. Frank Church revealed that the NSA had far exceeded the foreign intelligence mission envisioned by Truman and had been spying domestically on the likes of Jane Fonda, Joan Baez, Benjamin Spock and the Rev. Martin Luther King Jr.

The revelations led to laws and regulations that strictly prohibit the NSA from spying on U.S. soil -- laws and regulations, agency officials say, they now strictly follow. But the agency's cult of secrecy proved far more resilient. Even after the Church committee's revelations, it was a standing joke at Fort Meade that NSA stood for No Such Agency or Never Say Anything. In 1982, when author James Bamford was writing his groundbreaking first book about the agency, The Puzzle Palace, the Reagan administration threatened to prosecute him for espionage if he did not return sensitive documents he had obtained through the Freedom of Information Act. The administration ultimately backed down, but its treatment of Bamford was a sign of how secretive and arrogant the NSA had become. (By contrast, Hayden cooperated with Bamford on his second book about the NSA, Body of Secrets, which was published in May.)

The agency's high opinion of itself was backed up by its success throughout the Cold War, success that rested on three pillars: massive budgets, superior technology and the luxury of having a single main adversary -- the Soviet Union -- that enjoyed neither of those first two advantages.

Now, all those pillars have crumbled.

The NSA is still one of the largest employers in the state of Maryland, but it lost 30 percent of its budget and an equivalent slice of its workforce during the 1990s. And instead of one backward adversary, the agency found itself trying to deploy against elusive terrorist groups, drug cartels and rogue states, in addition to a full slate of traditional targets ranging from Russia to China to India to Pakistan. In 1980, the NSA focused about 60 percent of its budget on the Soviet Union. By 1993, less than 15 percent was fixed on Russia.

But if the end of the Cold War was hard on the NSA, the onset of the digital age was harder. More and more communications were moving through hard-to-tap fiber-optic cable. More and more were encoded with powerful new encryption software that was proving virtually impossible to break. By the late 1990s, NSA officials had given up a futile effort to limit the spread of encryption software, but they were left fearful of how their agency's capabilities could wither if, say, Microsoft started building powerful encryption algorithms into its operating systems.

More immediately, the NSA had to confront the exploding volume of global communications. In the 1950s, there were 5,000 computers in the world and not a single fax machine or cell phone. Today, there are more than 100 million hosts on the Internet serving hundreds of millions of networked computers, not to mention 650 million cell phones in use worldwide. And with broadband fiber-

optic cable being laid around the world at the rate of hundreds of miles an hour (virtually the speed of sound), the speed for moving digital data down these slender pipes more than doubles annually -- faster even than computing power, which doubles every year and a half.

With more and more digital data moving across the Internet and bouncing off communications satellites, SIGINT has become more important than ever. Yet the interceptible data stream has threatened to drown the NSA's analysts in a roiling sea of 1s and 0s.

In this new context, private industry suddenly controls the technology that the NSA needs to keep pace. But the NSA has been isolated from the dynamism of the market by its own cult of secrecy. The agency has fallen farther and farther behind, unable to sort through a torrent of information streaming back into Fort Meade's computers and, to some extent, incapable of replacing its Cold War troops trained in radio intercepts and Russian with Internet engineers and Arabic speakers.

In 1999, the House Permanent Select Committee on Intelligence declared that the NSA was "in serious trouble," desperately short of capital and leadership. Civil libertarians, Internet privacy activists and encryption entrepreneurs -- not to mention the European Parliament and thousands, perhaps millions, of ordinary Europeans -- question the continuing need for such an agency, describing the NSA as an "extreme threat to the privacy of people all over the world," in the words of an American Civil Liberties Union Web site.

But the U.S. government considers SIGINT so essential that one senior intelligence official recently called the NSA's possible demise the greatest single threat to U.S. national security. So, three years ago, when the House and Senate intelligence committees began sounding the alarm, the director of central intelligence began an all-out search for somebody to fill the NSA's leadership void. George Tenet turned to a man who lacked the innate spookiness normally associated with this spookiest of agencies. A small man with a crew cut and a bald pate. A man with a scholarly interest in history. A man who would show no fear of either the public or the agency he would have to overhaul.

Michael Hayden, 56, grew up in an era when the backbone of America's industrial might comprised steel mills and factories, in a neighborhood on Pittsburgh's North Side where men carried lunch buckets to work and proudly traced their ancestors to County Galway.

His father, Harry Hayden Sr., was a welder at Allis-Chalmers, a plant that made giant electrical transformers. Harry worked the 3:30-to-midnight shift, leaving his wife, Sadie, to raise their three children almost by herself. But he remembers how, when he would awake before dawn and walk to the bathroom, the light would always be on in Michael's room at 5:30 in the morning. The boy was studying.

Michael was a standout student, and an athlete as well. "We never had to talk about Michael," says Harry, now 81. "Everybody else was."

As early as grade school, Michael showed a talent for impressing talent spotters. His football coach at the St. Peter's parochial school says Hayden clearly had "the smarts" to play quarterback -- no small judgment, coming as it does from Dan Rooney, son of the founding owner of the Pittsburgh Steelers and now the franchise's president. In time, however, Hayden distinguished himself most in the classroom, graduating near the top of his class at North Catholic High School and at Duquesne University, where he majored in history.

One day, he surprised his father by coming home from college and announcing that he had signed up for Air Force ROTC. It was 1967, when a lot of young men were burning their draft cards to protest the Vietnam War. "He wanted to travel, and I guess there wasn't a better way to do it," Harry says. Still, after graduating, Michael married his college sweetheart, a Chicagoan named Jeanine Carrier. She typed and proofread his master's thesis in American history at Duquesne while he drove a cab, worked as a night bellman at the Duquesne Club and coached St. Peter's to a football title.

Then he started his service in the Air Force, as an analyst and briefer at the headquarters of the Strategic Air Command at Offutt Air Force Base in Nebraska. Harry Hayden Jr. figures his older brother joined the service because he had read everything he could about American history and wanted to start participating.

A decade into his Air Force career, Michael held the rank of major and was chief of intelligence for a fighter wing at Osan Air Base in South Korea. The director of operations, Col. Chuck Link, a fighter pilot, detected the same leadership qualities Dan Rooney had recognized years earlier. So did Hayden's men. Gene Tighe, a young intelligence officer, remembers Hayden more as a mentor than a commanding officer. "He thought it was a great thing to be out and about and getting this opportunity overseas," Tighe recalls. "He wanted us to see the temples, the rice paddies, go shopping in Hong Kong. He took a vested interest in making you feel important."

After Osan, Hayden spent six months studying at the Armed Forces Staff College in Norfolk and 18 months learning Bulgarian before he became an Air Force attache to Sofia.

Two years later, he came home without a new assignment, but Link quickly recruited him to a job on a prestigious policy and planning staff inside Air Force headquarters at the Pentagon. Soon Link's boss, Gen. Chuck Boyd, the Air Force's director of plans, took notice of Hayden's ability to think conceptually and put his thoughts down on paper.

"He's got the soul of a historian, he really does," Boyd says. "He thinks things are explainable on the basis of how things have been. It's a scholarly bent, combined with an exceptional sensitivity to human behavior."

One day in the summer of 1989, Boyd told Hayden to go down to the National Security Council and see two men, an Air Force general and an arms-control expert. Hayden took the Metro across the river and reported to an office on the third floor of the Old Executive Office Building. Only then did he realize that he'd been sent to a job interview.

He spent the next two years as the NSC's director for defense policy and arms control, where he wrote national security adviser Brent Scowcroft's annual policy document on strategy, then two more years at the Pentagon running a policy staff for the secretary of the Air Force. In 1993, Boyd, then commander of the U.S. European Command in Stuttgart, Germany, asked Hayden to head its intelligence directorate as the United States was becoming directly involved in the Balkans. From his attache days in Bulgaria, Hayden probably knew the region as well as anyone in the U.S. military.

On June 2, 1995, Hayden walked into the U.S. Embassy in Belgrade to learn that an American F-16 piloted by Air Force Capt. Scott O'Grady had been shot down over Bosnia. The news marked a turning point in Hayden's thinking as a soldier.

Serb Gen. Rathko Mladic had been saying publicly that he would deny Serb airspace to NATO. Operations officers at the European Command had dismissed the threat, but Hayden was familiar with Mladic and did not see him making idle threats. As an intelligence officer, he had informed the operational commanders of Mladic's statements and relayed his impression that the general was not to be trifled with. But he didn't believe it was his place to voice further objections -- until after O'Grady was shot down.

"Maybe I [should] have picked up the phone and told the air commander, 'Every time I see that orbit on your morning slides, I get nervous,' " Hayden says. "But I didn't."

The incident forced Hayden to see the obsolescence of the military's traditional hierarchy, in which intelligence was seen merely as a support function. Increasingly, Hayden realized, intelligence was becoming so essential to make use of and counter sophisticated weaponry that it had become as much of a weapon in its own right as any bomb or missile. "It was a kind of redefinition of self, as a professional," he says. "It's not about intelligence successes or failures; it's just successes or failures."

Hayden's next assignment, as commander of the Air Intelligence Agency at Kelly Air Force Base in San Antonio, gave him plenty of opportunity to further hone his thinking. Kelly is where the Air Force works on its plans for cyberwar -- attacks designed to take down adversaries' computer networks. Hayden next served as deputy chief of staff for the United Nations Command and U.S. Forces Korea. To those inculcated in military culture, this move sent a message. He crossed the divide between the bookish world of intelligence into the front-line world of operations. In the words of one senior intelligence official, "Here you've got an intel weenie who the four-star operator recognized as something special."

Late in 1998, he was leading a military delegation negotiating with a group of North Korean generals at Panmunjom, where talks at that high a level had not taken place in seven years. He was in Seoul when Tenet, searching for a new NSA director, summoned him for an interview. They met at the Wye Plantation on Maryland's Eastern Shore, where Tenet was attending Arab-Israeli peace talks hosted by the Clinton administration. After a relaxed interview in which Tenet asked Hayden about his views on life and change, Hayden flew back to Korea with a clear signal from Tenet that the NSA job was his. Given the job's normal three-year term and his lack of SIGINT expertise, Hayden knew he'd been handed the most challenging assignment of his career. Still, he returned to Seoul in a celebratory mood. He took his wife to the movie theater at Yongsan Army Garrison, which was playing a new movie starring Will Smith, "Enemy of the State."

The film opens with a scene in which a rogue NSA official (played by Jon Voigt) assassinates an influential congressman (Jason Robards) who refuses to back a bill expanding the agency's power to spy on Americans. From there, the movie portrays the NSA as a lawless band of high-tech assassins who try their best to kill a Washington lawyer (Smith) who just happens to witness another NSA assassination on streets around Dupont Circle.

As Hayden watched, surrounded by GIs whooping it up in the theater, he sank lower and lower in his chair.

In real life, the NSA's image problems were a bit more complicated.

In 1997, the European Parliament had commissioned a report on Echelon, a global communications system. That report had concluded that the NSA was capable of intercepting every fax, phone call and e-mail in Europe. The conclusion was wrong -- Echelon is actually a relatively small system through which the NSA and its electronic spy partners in the United Kingdom, Canada, Australia and New Zealand divide responsibility for processing intercepted satellite communications -- but it did not matter. The European Parliament's anxieties flared into a controversy that wouldn't go away, fueled by the lawmakers' suspicions that the NSA was stealing European companies' secrets and passing them on to their American competitors, a practice NSA officials say they do not engage in.

Beyond industrial espionage, the Europeans also worried about individual privacy, because the U.S. laws and regulations that keep the NSA from spying on Americans provide no similar protections for foreigners. By 1999, this controversy had attracted the attention of civil libertarians in the United States who were concerned about possible NSA spying against Americans on the Internet, which the agency is prohibited by law from doing.

While all this was brewing, the agency's boosters on Capitol Hill were becoming alarmed that the NSA was in serious trouble because of new communications technologies -- fiber-optic cables that couldn't be tapped, encryption software that couldn't be broken and cell phone traffic too voluminous to be processed.

Hayden was keenly aware of the irony: He was inheriting an agency that was simultaneously being accused of omnipotence and incompetence. And then, almost as soon as he arrived at Fort Meade, Hayden discovered another wrinkle: The NSA director didn't really run the agency. The agency, Hayden soon came to understand, had been diffused into five directorates that ran as fiefdoms unto themselves. The bureaucratic overlap was staggering, and no one had a picture of the whole. There were 68 different e-mail systems at Fort Meade, and 452 internal review boards of one sort or another.

It wasn't as though the bureaucracy was actively trying to sabotage him -- "that would have required them to unify," Hayden says. Rather, he couldn't get the senior leadership to agree on anything, "from whether or not we should invest $2 billion in a new collection system to whether we should serve grilled cheese" to visiting delegations.

Early in his tenure, Hayden began plotting an internal coup, naming two review teams -- one made up of NSA insiders, the other private-sector experts -- to tell him what was wrong with the agency. The results were startling.

The insiders' report blasted Hayden's predecessors and the NSA's senior civilian managers, saying the agency "has been in a leadership crisis for the better part of a decade . . . the legacy of exceptional service to the nation that is NSA is in great peril. We have run out of time."

The outsiders cited the agency's "reluctance" to move from "legacy targets to newer targets" and said that NSA had already become "deaf" to concerns from its customers -- military commanders, White House policymakers and the CIA. "Right now, when stakeholders tell NSA that 'NSA doesn't get it,' the agency simply repeats itself and talks louder," their report said.

But Hayden remained cautious, painfully aware that he was no expert in signals intelligence. He thought he saw what needed to be done but didn't feel sure, especially when many of his senior managers who were SIGINT experts were reluctant to move.

Then the computers crashed in January 2000, confirming his worst fears about the agency's antiquated technology and its leaden bureaucracy.

With the snow outside headquarters still being cleared, Hayden strode off the stage in Friedman Auditorium. His challenge -- This does not leave the building -- was still ringing in everyone's ears. In a room off the agency's operations center, he called all of the agency's top technicians and engineers together and told them just how serious the meltdown had become. Tenet was still giving them plenty of room to fashion a solution, Hayden said, but pressure was building "downtown."

Hayden has no trouble remembering the day's events. That Thursday happened to be his 32nd wedding anniversary. That night, with the system showing some signs of life, he took Jeanine to an inn west of Frederick called Stone Manor for dinner. On the drive home, Robert Stevens, the NSA's deputy director for technology, called to say that he needed to talk to Hayden "secure." Hayden called him back on a secure line as soon as he got home.

The system had been dysfunctional for more than 72 hours. It was back up to about 25 percent capacity, Stevens said, but he didn't think the techies were on the right path. He wanted permission to take the entire system down and start all over again.

By then, a team of NSA engineers and contractors had pinpointed an outdated routing protocol as the cause of the failure. With the system completely shut down, they began installing a massive hardware and software upgrade. And by Friday morning, the system was coming back to life, node by node. Deeply relieved, Tenet drove over to Fort Meade that night and personally shook the hands of dozens of disheveled, unshaven techies, many of whom hadn't been home since Monday.

Hayden, feeling much better about life the following afternoon, went cross-country skiing with his wife on the Fort Meade gold course. Soon, he noticed that he was being shadowed by an NSA patrol car. Trudging through the snow, an officer asked Hayden to take off his skis and come with him back to the operations center. George Tenet needed to talk to him -- ABC News had the story.

Tenet told Hayden to talk to the reporter, John McWethy, on the record so he would get the story right. Hayden said fine. He knew McWethy, and knew where he was based -- the Pentagon. The leak had come from there, not Fort Meade. "You held the line," Hayden later told his own people. "You kept it secret while it had to be secret."

But with Hayden's relief came a realization about the larger task ahead: The price he would pay for moving too cautiously would greatly exceed whatever he would pay for being too bold.

He would be bold.

Hayden's internal coup began with an innocuous act: He hired a chief financial officer. Without one, he had no way of making strategic decisions based on how much money was being spent across the entire agency on line items like research and development, information technology and security. So Hayden hired Beverly L. Wright, a Wellesley College graduate with an MBA from the Harvard Business School and a solid reputation as CFO at the old Baltimore investment bank of Alex. Brown.

For an agency that had always promoted its own and promised lifetime employment, hiring from the outside was a radical act.

Then Hayden did it again, hiring a former GTE telecommunications executive named Harold C. Smith to take control of the agency's information technology. In doing so, he wanted to extend a powerful metaphor he'd drawn from his experience in the Air Force. He had come to see the service as the military expression of the American aviation industry and American culture -- its dynamism, its risk taking, its proud individualism. He believed that the NSA had to become the intelligence expression of American technology and American culture. It needed to embrace the innovative, flexible, entrepreneurial spirit that had come to define the digital age. "We can no longer provide to America what we need to do so isolated from America," he says. "To end the isolation, America needs to know us better."

And so, as his housecleaning began, Hayden also launched an openness campaign, appearing in April 2000 at a rare public session of the House Permanent Select Committee on Intelligence. With the European Parliament continuing its Echelon investigation and the American Civil Liberties Union voicing similar concerns, Hayden told the committee that NSA employees took great care "to make sure that we are always on the correct side of the Fourth Amendment."

"Let me put a fine point on this," Hayden testified. "If, as we are speaking here this afternoon, Osama bin Laden is walking across the bridge from Niagara Falls, Ontario, to Niagara Falls, New York, as he gets to the New York side, he is an American person. And my agency must respect his rights against unreasonable search and seizure."

Rep. Heather Wilson (R-N.M.) pressed Hayden on this point. "Does NSA spy on the lawful activities of Americans?" she asked.

"No. The answer is we do not," Hayden said.

"Do you inadvertently collect information on U.S. citizens?" asked Rep. Tim Roemer (D-Ind.).

Yes, Hayden replied. But, he said, "if it is not necessary to understand the foreign intelligence value of the information collected, it is not reported, it is destroyed. And it is destroyed as quickly as we can do that."

Back at Fort Meade, Hayden's grand plan for rebuilding the agency for the digital age was slowed by his inability to pick a deputy. He had departed from tradition again, appointing a search committee instead of simply anointing one of the bureaucracy's nominees. He was intrigued by the notion of picking an outsider, even though retired Adm. Bobby Ray Inman, a legendary past NSA director whom Hayden frequently called for advice, strongly objected. "What I thought he couldn't do was go to somebody who didn't know the business," Inman recalls. "The learning curve is too long, and you'd get waited out."

Ultimately, Hayden resolved the conflict by picking an insider who had worked as an outsider.

William B. Black had spent 38 years running some of the agency's spookiest operations before retiring in 1997 and going to work for Science Applications International Corp. He was, by training, yet another Russian linguist. But Black had served a tour as chief of an elite unit focused on Russian communications. More important, he had run the Special Collection Service, the joint NSA-CIA operation that works out of foreign embassies and fuses the talents of human spies and ultra-high-tech eavesdroppers to get very close to particularly difficult targets. Most telling was Black's final NSA assignment: special assistant to the director for information warfare. In that role, he had established the government's preeminent cyberwarfare unit -- and alienated so many NSA bureaucrats by poaching on their cherished turf that resignation was his only viable option.

Hayden liked Black's expertise and his reputation as an iconoclast. In July 2000, he invited Black to his house for dinner. Over couscous and roasted vegetables the director had prepared himself, Hayden made it clear that he wanted a deputy who could help change the system, not end-run it. Black's one-word answer -- "Exactly" -- convinced Hayden that he had his deputy.

With Black onboard, Hayden was ready to move. Last October, he rolled out his reorganization plan, wresting control of the agency from its own bureaucracy. All the NSA's support services would be centralized under Hayden's chief of staff. And where there were five overlapping directorates, Hayden would have just two: one for information security (the agency's codemakers) and another for signals intelligence (its codebreakers).

Now, he hoped, senior managers could focus on going after bytes.

A decade ago, a single NSA collection system could field a million inputs per half-hour. Automated filtering systems would winnow that to 10 messages that needed review by analysts. With today's explosion in communications traffic, multiply a million inputs per half-hour by a 1,000, or 10,000, and 10 messages needing review becomes 10,000 or 100,000. Cutting-edge fiber-optic systems now move data at 2.5 to 20 gigabits per second. The latest Intelsat satellites can process the equivalent of 90,000 simultaneous telephone calls. A single OC3 line on the Internet transmits 155 million bits per second -- the equivalent of 18,000 books a minute.

From an operational standpoint, the NSA's Cold War vacuum-cleaner approach is no longer tenable -- there's just too much to be collected, and it's too hard to process. The only way for the NSA to remain relevant in this environment is to target the individuals and organizations whose communications are most valuable -- and targeting now is more complicated than programming a target's telephone number into a computer. To succeed in the digital age, NSA analysts must understand how a target communicates, what its Internet protocol addresses are, and how its traffic is routed around the world.

And with so many conceivable targets in the world, the only way to zero in on the most important ones is to ask White House officials, Pentagon commanders and CIA officers to identify the targets they're interested in. The days when NSA officials sent the White House whatever interested them are over.

Now, SIGINT requires the agility to move from system to system and adapt to new technologies. If that can be done, the potential for electronic spying is enormous. Sophisticated Internet surveillance techniques now make it possible to acquire data "in motion" across the network -- and data "at rest" in computer databases, the new frontier.

"The world has never been more wired together than it is today," says Stewart Baker, who served as the NSA's general counsel from 1992 to 1994. "It's the golden age of espionage. Stealing secrets is going to get even easier for people who employ technologically advanced tools and are willing to work aggressively at it."

Even so, the challenges are formidable. The NSA is known to be hard at work trying to gain access to fiber-optic cables. How it is doing is not publicly known. One means would be tapping undersea cables or placing interception pods over "repeaters" that periodically boost fiber-optic signals. But even if the lines can be tapped, transmitting the torrent of intercepted data from the depths of the ocean to Fort Meade in anything close to real time would be far harder still, possibly requiring the NSA to lay its own fiber-optic lines from the tap to some sort of relay station.

The most recent European Parliament report on Echelon concluded that such links would be far too costly. The report also said that new laser regenerators used to amplify fiber-optic signals cannot be tapped the way repeaters can, meaning that "the use of submarines for the routine surveillance of international telephone traffic can be ruled out."

(The Navy's decision to spend $1 billion to retrofit its premier spy submarine, the USS Jimmy Carter, would suggest American policymakers believe otherwise.)

Another challenge facing Hayden's NSA is to decode communications encrypted with powerful -- and widely available -- software. When Hayden became director, the deputy he inherited told Congress that the encryption software would make the job of decoding encrypted messages "difficult, if not impossible," even with the world's largest collection of supercomputers.

One alternative is to steal 1s and 0s before they are encrypted, or after they are decrypted. This requires classic espionage -- as practiced by the Special Collection Service, the top-secret joint CIA-NSA operation. In the Cold War, American spies recruited Soviet code clerks. Now the targets of choice -- the people paid to sell out their governments or organizations -- are systems administrators and other techies capable of providing encryption keys or planting electronic "trapdoors" in computer systems that can be accessed from computers on the other side of the world.

The irony amid all this new technology is that human beings -- old-fashioned spies -- are suddenly as important as ever.

With his organization laid out and his mission clarified, Hayden began updating his human resources last December. He freed up enough slots and cajoled additional funds from Congress to hire 600 people this year -- three times what the agency had been hiring annually. Sixty senior managers accepted early retirement incentives, giving him enough headroom to reach down a generation in selecting new managers. Maureen A. Baginski, a member of the insiders team that produced the scathing management assessment for Hayden back in 1999, headed the class.

She would run the newly created directorate of signals intelligence. Now, an operations officer targeting a terrorist cell could team with an engineer who could help him figure out how the cell's communications were routed around the world. And though Baginski, too, is a former Russian linguist, she clearly understood the challenges ahead. "You could literally stare for 25 years at the Soviet land mass and never have this kind of volume problem," she says. "They were slow, so it was okay if we were slow. Today, it's volume, it's velocity and it's variety."

Her management style, too, is more current -- more attuned to the idea of empowering the people beneath her. When a U.S. Navy EP-3 reconnaissance aircraft -- an NSA asset -- crash-landed on China's Hainan Island this spring after colliding with a Chinese fighter jet, an operations officer called Baginski at home late on a Saturday night, told her what had happened and said, "You will want to come in."

Baginski replied: "No, I will not want to come in." Her reasoning was that the agency already had a person charged with running an emergency response operation. "Why should I do it in a crisis if someone else does it every day?" Baginski said.

As Baginski was settling in, Hayden was busy looking outside the NSA for new people to work for her -- and soon found the agency swamped. In February, the home of No Such Agency and Never Say Anything held a job fair to recruit computer scientists, mathematicians, linguists and analysts to become new spooks. Seventeen hundred people registered in advance -- and hundreds of walk-ins dressed in dark business attire showed up and waited in a line that snaked through the parking lot. Hayden's openness initiative was paying dividends.

Soon, he advertised in the outside world to fill eight other top jobs, including chief information officer, chief of legislative affairs, deputy associate director for research and chief of SIGINT systems engineering. All of the jobs paid between $109,000 and $125,000, well below salaries for commensurate jobs in the private sector. But, as Black is fond of saying, "patriotism still works on occasion."

By the end of March, the NSA began its first major push to involve the private sector in development of new SIGINT technology with an initiative it called Trailblazer. A total of three contracts, worth about $10 million apiece, were awarded to corporate consortia led by Booz Allen & Hamilton Inc., Lockheed Martin Corp. and TRW's systems and information technology group.

Skeptics wonder whether it will all be enough, given the speed with which technology is moving. They also question whether there is enough top technical talent still left at the NSA to manage complex relationships with contractors so that the contracts result in real gains instead of white elephants. The Federal Aviation Administration, after all, hired IBM in the late 1980s to design a new air traffic control system -- and ended up abandoning the project at a cost of $500 million.

But analysts on Capitol Hill and other close observers in the private sector say Hayden, Black, Baginski and company appear to be getting their message across that the NSA must take risks if it is ever to "own the virtual," as one industry analyst put it.

James Adams, a British journalist turned Internet security executive who serves on a panel of outside advisers created by Hayden, says the agency's workforce breaks down into three distinct camps: 25 percent are enthusiastic about Hayden's program, 25 percent are threatened and dead set against it, and 50 percent are sitting on the fence waiting to see who wins.

Sometime this summer, Hayden plans to publish reduction-in-force procedures to deal with the naysayers, if need be. He will keep offering retirement incentives, preferring the carrot to the stick, but now accepts that layoffs may be necessary.

They would be the first in the agency's history.

With all the changes, Hayden may be making enemies among his agency's old guard, but he's also building a powerful constituency elsewhere. "We went deaf for 72 hours because of an antiquated system that should have been upgraded years ago," says Tim Sample, staff director of the House Permanent Select Committee on Intelligence. "When you're at that point in an organization, it takes a monumental effort over a sustained period to get back up to speed. They needed a leader -- and that's what they got."

Sample's boss, Rep. Porter J. Goss (R-Fla.), the committee's chairman, recently floated the idea of promoting Hayden to a four-star general and extending his three-year tour, now less than a year from completion.

Tenet has gone even further. "My personal view is, Mike Hayden must stay out there for five years -- he has got to have time on target," Tenet says. "He's thinking out of the box. He's engaged. He's not afraid of opening up the NSA. He's not afraid of the American public. And he knows what has to be done."

Hayden is willing to stay on, if that's what Tenet and Defense Secretary Donald Rumsfeld desire. There is, he knows, much work still to be done. His personal focus this summer -- now that the computers seem to be working again -- is people. Specifically, promotions. Six months ago, Hayden got rid of all regulations requiring employees to spend two years at one pay grade before they get promoted to the next. Now he's trying to make sure that the agency's hidebound promotions panels start taking advantage of that freedom. If the right people don't advance, Hayden believes, nothing else really matters.

He says he feels more and more confident about the course he's charted. But there's a certain fatigue in his voice. "I feel tired," Hayden allows. "But I see points of light more frequently."

Vernon Loeb covers intelligence and defense for The Post. He will be fielding questions and comments about this article at 1 p.m. Monday on