by Tim Shorrock
The center’s terrorist database, for example, is maintained by The Analysis Corporation (TAC), an intelligence contractor in nearby Fairfax, Virginia, run by John O. Brennan, the former chief of staff of the CIA and the NCTC’s first director. TAC, in turn, has subcontracted the collection activities for the database to CACI International, the same company that provided contract interrogators to the U.S. military prison at Abu Ghraib in Iraq. In 2007, to strengthen its ties with the center, CACI hired retired Navy Vice Admiral Albert Calland, the NCTC’s former deputy director for strategic operational planning, as its executive vice president for security and intelligence integration.3 Far from displaying government resolve, the NCTC is a powerful symbol of American capitalism and a stark example of the way the United States organizes its national security infrastructure in the twenty-first century.
Over the past ten years, the private sector has become a major supplier of tools and brainpower to the Intelligence Community. The CIA, the NSA, and other agencies once renowned for their analysis of intelligence and for their technical prowess in covert operations, electronic surveillance, and overhead reconnaissance have outsourced many of their core tasks to private intelligence armies. As a result, spying has blossomed into a domestic market worth nearly $50 billion a year.
Tasks that are now outsourced include running spy networks out of embassies, intelligence analysis, signals intelligence (SIGINT) collection, covert operations, and the interrogation of enemy prisoners. Private companies analyze intelligence collected by satellites and low-flying unmanned aerial vehicles (UAVs), and write reports that are passed up the line to high-ranking officials and policy-makers in government. They supply and maintain software programs that are used to manipulate and visualize data. They provide collaboration tools to help individual agencies communicate with each other, and they supply security tools to protect classified computer networks from outside tampering. Throughout the Intelligence Community, contractors manage the work of other contractors and, in some cases, the work of government employees. They also draft budgets for government agencies and write Statements of Work that define the tasks that they and other contractors carry out for the government.
The bulk of this $50 billion market is serviced by one hundred companies, ranging in size from multibillion-dollar defense behemoths to small technology shops funded by venture capitalists that have yet to turn a profit. At one end of the scale is Lockheed Martin, whose $40 billion in revenue and 52, 000 cleared IT personnel make it the largest defense contractor and private intelligence force in the world. At the other is SpecTal of Reston, Virginia, a privately held company that employs three hundred specialists with top secret security clearances who perform intelligence missions in Afghanistan and Iraq. In between are dozens of firms, some well known (IBM) and some obscure (Scitor), who make up a business that has grown so large that even its champions aren’t afraid to borrow a weighted term from President Dwight Eisenhower to describe it. “Call it the Intelligence-Industrial Complex,” says retired Vice Admiral Herbert A. Browne, who served from 2002 to 2007 as executive director of the Armed Forces Communications and Electronics Association (AFCEA), the largest industry association in the intelligence business.
The analogy between the intelligence industry and the military-industrial complex famously described by President Eisenhower in 1961 is fitting. By 2006, according to the Office of the Director of National Intelligence, 70 percent, or almost three-quarters, of the intelligence budget was spent on contracts.4 That astounding figure, which I first reported in June 2007, means that the vast majority of the money spent by the Intelligence Community is not going into building an expert cadre within government but to creating a secret army of analysts and action officers inside the private sector.
From the contractors’ perspective, that shift represents the triumph of capitalist innovation and the coming of a new age in business-government cooperation. “The fact that we can have a professional intelligence organization outside of the government to support the government is no more offensive to me than the fact that we have 80 percent of our military communications traveling on commercial satellites or commercial fiber optics,” says Browne, who left the military in 2000 to work for the defense intelligence division of AT&T. “In fact, I find it very healthy for the nation.”5
But critics of the industry don’t see it that way, particularly in view of the intelligence debacles of the past six years. “Contracting has simply gone crazy,” says Eugene Fidell, the president of the National Institute for Military Justice, the nation’s largest organization of military lawyers. He is most troubled about the CIA’s and the Pentagon’s use of contractors to interrogate enemy prisoners. “That’s really playing with fire,” he says. “That kind of activity, which so closely entails the national interest and exposes the country to terrible opprobrium, is something that ought to be done only by people who are government employees.”6
There’s a lot of daylight between those two perspectives. But whatever one’s position on outsourcing, there is little doubt that spying for hire has become a way of life in twenty-first-century America.
Since 9/11, the Central Intelligence Agency has been spending 50 to 60 percent of its budget on for-profit contractors, or about $2.5 billion a year, and its number of contract employees now exceeds the agency’s full-time workforce of 17, 500. Outsourcing has also spread to human intelligence. At the CIA, contractors help staff overseas stations and provide disguises used by agents working undercover. Contractors make up more than half the workforce of the CIA’s National Clandestine Service (formerly the Directorate of Operations), which conducts covert operations and recruits spies abroad. According to Robert Baer, a former CIA officer who worked undercover in the Middle East for many years, a contractor stationed in Iraq even supervises where CIA agents go in Baghdad and who they meet. “It’s a completely different culture from the way the CIA used to be run, when a case officer determined where and when agents would go,” he told me. “Everyone I know in the CIA is leaving and going into contracting whether they’re retired or not.”7
The National Security Agency, once so secretive it was jokingly called No Such Agency, has become one of the largest users of contractors in the federal government. The agency began reaching out to the private sector in the late 1990s to help it cope with the massive amount of information it was scooping up from its global eavesdropping network, the largest and most powerful spying operation on earth. After the 9/11 terrorist attacks, the need for such information increased drastically. To feed the NSA’s insatiable demand for data and information technology, the industrial base of contractors seeking to do business with the agency grew from 144 companies in 2001 to more than 5, 400 in 2006. “Partnerships with industry,” NSA official Deborah Walker says, are now “vital to mission success.”8
Intelligence outsourcing has mushroomed at the Department of Defense, which controls more than 85 percent of the U.S. intelligence budget. On the battlefields of Iraq and Afghanistan, civilian intelligence specialists under contract to the NSA and the National Geospatial-Intelligence Agency operate signals intelligence and imagery equipment for Army and Marine units on the move against Iraqi insurgents and Islamic militias. NSA contractors also capture electronic signals emanating from enemy weapons, determine the exact type of weapons being fired, and relay that information to Air Force Airborne Warning and Control System (AWACS) aircraft flying overhead. At least 35 percent of the staff at the Defense Intelligence Agency (DIA), which provides intelligence to the Secretary of Defense and the Joint Chiefs of Staff, are employed by contractors. At the Counterintelligence Field Activity, a Pentagon agency that was criticized by Congress in 2005 for spying on American citizens, the figure is 70 percent.
With contractors deeply imbedded in the CIA, the NSA, and the Pentagon, substantial portions of the President’s Daily Brief, the most sensitive document in government, are based on the work of private sector analysts. It is well established that about 70 percent o
f the brief is drawn from telephone and e-mail intercepts provided by the NSA, which relies heavily on SAIC, CACI International, Northrop Grumman, and other companies for the analysis and interpretation of signals intelligence. The same is true for the Office of the Director of National Intelligence, which prepares the final draft of the president’s brief, and the DIA, which supplies much of the president’s intelligence about foreign military forces. This adds even more contracted intelligence to the presidential mix, and dilutes the significance of the DNI seal on the President’s Daily Brief. At best, that seal is misleading, says R. J. Hillhouse, an intelligence expert and the author of a popular blog on outsourcing. “For full disclosure, the PDB really should look more like NASCAR with corporate logos plastered all over it.”9
As they did in Abu Ghraib, private interrogators working at the U.S. military prison in Guantánamo Bay, Cuba, have led the questioning of enemy prisoners from the Middle East and South Asia. That puts contractors at the heart of one of the darkest chapters in the history of the war on terror: the CIA’s use of extreme measures to coerce suspected terrorists to confess to their crimes. At Guantánamo, according to New Yorker reporter Jane Mayer, the CIA hired a group of outside contractors who implemented “a regime of techniques” described acidly by a former adviser to the U.S. Intelligence Community as a Clockwork Orange type of approach. The contractors, Mayer learned, were retired military psychologists who had trained U.S. Special Forces soldiers in how to survive torture.10 (As of this writing, none of the actual companies has been identified.) Meanwhile, at the U.S. Army’s Intelligence Center in Fort Huachuca, Arizona, even the training of military interrogators has been turned over to corporations, which supply private instructors to lead classes in interrogation techniques for young Army recruits.
At the National Reconnaissance Office (NRO), the agency in charge of launching and maintaining the nation’s photoreconnaissance and eavesdropping satellites, almost the entire workforce is composed of contract employees working for companies. According to Donald M. Kerr, who directed the NRO from 2005 to 2007, “ninety-five percent of the resources over which we have stewardship in fact go out on a contract to our industrial base. It’s an important thing to recognize that we cannot function without this highly integrated industrial government team.”11 With an estimated $8 billion annual budget, the largest in the IC, contractors control about $7 billion worth of business at the NRO, giving the spy satellite industry the distinction of being the most privatized part of the Intelligence Community.
The CIA itself has even become part of the intelligence contracting industry by creating its own investment fund. In-Q-Tel, started under CIA director George Tenet in 1999, works with the CIA’s Directorate of Science and Technology to find companies that produce software and other products with intelligence applications, and then buys equity positions in these firms—many of which are managed by former intelligence officials. By 2007, In-Q-Tel had invested in more than ninety companies. Among them was a company called Keyhole Inc., which had created a three-dimensional computer map of the world that allowed users to zoom in and out of cities. It was later acquired by Google, and is now the key software for Google Earth, one of the most popular programs on the Internet and in the news business.
The intelligence contracting industry has grown so large that there are no fewer than three business associations representing intelligence contractors. The one with the closest ties to the government is the Intelligence and National Security Alliance (INSA), which primarily represents contractors working for the NSA and the CIA. From 2005 to 2007, its chairman was J. Michael McConnell, the former executive vice president of Booz Allen Hamilton, who left his company and INSA to become DNI—the government’s top intelligence officer and principal intelligence adviser to the president—in February 2007. The largest by membership is the Armed Forces Communications and Electronics Association, which claims to represent over one thousand companies involved in defense intelligence. The United States Geospatial Intelligence Foundation represents several hundred companies that provide software and networking services to the National Geospatial-Intelligence Agency, the newest member of the Intelligence Community.
Because intelligence budgets and most intelligence contracts are classified, quantifying how much outsourcing goes on in the IC has been difficult. In 2005, writing in Mother Jones magazine, I estimated that at least 50 percent of the intelligence budget was spent on outsourcing.12 That number, based on interviews with prominent intelligence experts in Washington, turned out to be a low estimate; but it came to be used widely in Congress and in subsequent articles about outsourcing by other journalists. As I researched this topic over the next two years, I stuck to the 50 percent figure because it seemed to accurately reflect what I was learning about contracting at the NSA, the CIA, and the rest of the Intelligence Community. But I still needed hard numbers to make my case that more than half of intelligence spending went to contractors. In 2006 it finally looked like I might get my wish.
That summer, the Office of the Director of National Intelligence ordered the first comprehensive survey of the IC’s use of contractors since 9/11. The survey was triggered by two factors: the growing demands from Congress for information about contractors; and a realization within the ODNI that its agencies had become a training camp for the private sector. The Intelligence Community increasingly “finds itself in competition with its contractors for our own employees,” the ODNI said in a 2006 report on human capital. “Confronted by arbitrary staffing ceilings and uncertain funding, components are left with no choice but to use contractors for work that may be borderline ‘inherently governmental’—only to find that to do that work, those same contractors recruit our own employees, already cleared and trained at government expense, and then ‘lease’ them back to us at considerably greater expense.”13
Under the survey ordered up as a result of those findings, sixteen agencies were asked to turn over their contracting records to the DNI. “We have to come to some conclusion about what our core intelligence mission is, and how many [full-time employees] it’s going to take to accomplish that mission,” Ronald Sanders, the DNI’s chief human capital officer, explained to the Los Angeles Times.14 The survey’s final report, dubbed the “IC Core Contractor Inventory,” was completed in the spring of 2007 and sent to the House and Senate committees with jurisdiction over intelligence budgets.
But when the time came to declassify its findings for the public, the ODNI and its member agencies got cold feet, and refused to release it on the grounds the information would help America’s enemies. “I can’t give you anything that would allow you to impute the size of the IC civilian work force,” Sanders announced.15 The ODNI later reiterated its concerns in a press release, saying that “the overall Intelligence Community budget and its components are classified to protect the national security interests of the United States.”16 Luckily, my search didn’t end there.
In May 2007, I obtained an unclassified PowerPoint presentation prepared by Terri Everett, the DNI’s senior procurement executive, for a Defense Intelligence Agency acquisition conference in Colorado.17 When I opened the slides, I was stunned to see a pie chart with the figures I’d been looking for: no less than 70 percent of the nation’s intelligence budget was being spent on contracts. Everett’s slides disclosed for the first time the true extent of intelligence outsourcing. They also included a series of bar graphs revealing that contracting had more than doubled between 1998 and 2006, the most recent year for the DNI statistics.18*
In 1998, the slides showed, U.S. intelligence agencies spent $18 billion on contracts; in 2001, the number had increased to nearly $22 billion. Over the next two years, as the Bush administration and Congress vastly increased the defense and intelligence budgets in response to 9/11, contract spending jumped by $20 billion, to $43.5 billion in 2003, where it stayed for the next three years. As one of Everett’s slides put it, “non-core functions” of intelligence that were done “in-house” during
the Cold War era were now being “outsourced” in the twenty-first century. Another slide declared simply: “We can’t spy…If we can’t buy.” By 2007, that had become, literally and figuratively, the new slogan of U.S. intelligence.
The findings were startling, even to veteran outside observers of the intelligence budget. The 70 percent figure “represents a transformation of the Cold War intelligence bureaucracy into something new and different that is literally dominated by contractor interests,” said Steven Aftergood, the director of the Project on Government Secrecy at the Federation of American Scientists.
That contractor-dominated bureaucracy now spends close to $60 billion a year, according to ODNI data and estimates from contractors and intelligence analysts. The money is divided among sixteen agencies, which fall into two categories of spending; the numbers that follow are estimates based on the 2007 intelligence budget.
The National Intelligence Program (NIP) receives about 80 percent of the total intelligence budget. It includes the intelligence activities of the National Reconnaissance Office ($8 billion); the National Security Agency ($8 billion); the National Geospatial-Intelligence Agency ($3 billion); the Central Intelligence Agency ($6 billion); the FBI ($1.5 billion); the Department of Homeland Security ($12 million); the State Department’s Bureau of Intelligence and Research ($60 million); and the Treasury Department ($60 million).
