General Hughes faced critical challenges in the area of terrorism in his first year as Director. In the wake of a terrorist bombing of US barracks at Khobar Towers on 25 June 1996 that left 24 dead and 500 wounded, DIA re-examined its counter-terrorism capability. Former DIA Director, Lieutenant General James Clapper, USAF (Ret), was selected as participant on the Khobar Towers Bomb Blast Assessment Team.
In March 1996, General Hughes produced the first of his "Purple Books" A Primer on the Future Threat, 1996-2010, which were extremely well received by policymakers, the Intelligence Community, and the warfighter. A product he conceived while he was the J-2, it provided DIA’s perspective of the future threat and was designed to stimulated discussion on the challenges facing US interests. It was published in three additional editions in 1997, 1998, and 1999.
To support DIA's primary mission of providing intelligence to the warfighter, the Agency emphasized the use of information technology (IT) and the development of military intelligence information systems. To that end, DIA led the initiative for a Joint Intelligence Virtual Architecture (JIVA), a computer-based operating architecture capable of providing a virtual, collaborative, and seamless connection between national, theater, and tactical elements. MASINT (Measurement and Signature Intelligence), defined as technically derived data other than imagery or SIGINT, also emerged as an important discipline in the area of intelligence collection.
The Defense HUMINT Service (DHS) became fully operational in September 1996 and proved highly effective particularly while deployed on operations in the Balkans. DIA also supported operations that included Kosovo, Iraq, Liberia, Rwanda and Korea as well as supporting counterdrug, counterterrorism and counter-proliferation efforts. NISTs were sent to Bosnia-Herzegovina, Hungary, Italy, and Saudi Arabia.
In October 1996, DIA celebrated its 35th anniversary of providing integrated and unified military intelligence to warfighters, policy makers, and force planners. DIA also received a fourth Joint Meritorious Unit Award and then Secretary of Defense, William Perry proclaimed 1 October as Defense Intelligence Day.
DIA started the year 1997 with the groundbreaking ceremony for the new Missile and Space Intelligence Command facility on 26 January at Redstone Arsenal, Alabama. Mission enlargement and operational support defined 1997 as DIA provided analysis and information around the clock to military operations in Albania, Bosnia, and Iraqi. Other crises existed in the Congo, the Republic of Congo, Burundi, and the Central African Republic.
In an historic event, the North Atlantic Treaty Organization took in three new members from the former Warsaw Pact military alliance in 1998: Hungary, Poland and the Czech Republic. Terrorists detonated bombs at the US Embassies in Kenya and Tanzania on 7 August 1998, killing more than 250 people, including twelve Americans. Islamic fundamentalists under the leadership of Osama bin Laden were suspected in the attack. In response, the US launched cruise missile strikes against "terrorist-related" bases in Afghanistan and Sudan on 20 August 1998. DESERT FOX was undertaken in December 1998, a seventy-hour air campaign in response to Iraq's barring of weapons inspectors.