Spies for Hire

by Tim Shorrock

  McConnell is the first contractor ever to be named to lead the Intelligence Community. Never, in the sixty years since the creation of the CIA and the national security state in 1947, has someone gone directly from a top position with industry into the most senior leadership position in the nation’s spy system. A transition of this sort would have been notable in any era; but at a time when 70 percent of the U.S. intelligence budget was being spent on contracts, it was highly significant. Moreover, McConnell didn’t come from just any company: during the ten years prior to his appointment, he had worked for Booz Allen Hamilton, one of the nation’s premier intelligence contractors.

  As executive vice president, McConnell had managed Booz Allen’s extensive assignments in military intelligence and consulted with a wide range of clients, including U.S. Unified Combatant Commands and the directors of the three national collection agencies: the NSA, the National Geospatial-Intelligence Agency, and the National Reconnaissance Office. Even the Office of the DNI, which had steadfastly refused to say how extensive contracting had become by the time of McConnell’s appointment, was forced to concede that Booz Allen was a “huge” supplier of intelligence contracting.2

  McConnell, a tall, bookish man from South Carolina who speaks with a slight Southern drawl, briefly alluded to his private sector experience after being sworn in as DNI in a ceremony at Bolling Air Force Base on February 20, 2007. “My work over the past ten years after leaving government has allowed me to stay focused on the national security and intelligence communities as a strategist and as a consultant,” he said. “Therefore, in many respects, I never left.”3 But that was a vast understatement: under McConnell’s watch, Booz Allen, as we’ll see in this chapter, was directly involved in the most sensitive initiatives taken by U.S. intelligence and the Pentagon during the war on terror.

  McConnell, in other words, was not a mere consultant: he and his company were high-ranking players in a community where power was shared, almost equally, between the private sector and the agents of the state. By appointing McConnell to run the Intelligence Community, Bush and Cheney sent a powerful signal to the rest of the government, particularly the Department of Defense, that private corporations were now the de facto managers of the nation’s intelligence system. McConnell’s actions since taking the post only deepened that perception. His firm, and the company he would keep, are the natural starting places for our study of the privatization of U.S. intelligence.

  Booz Allen Hamilton was founded in 1914 in Chicago by three businessmen who gave the firm its name. In 1940, after more than three decades as a consultant to the top-ranking companies in America’s manufacturing economy, it started working for the U.S. military. According to a corporate history posted on its Web site, Booz Allen was hired that year by the Navy and Army “to help prepare the nation for war, and later for peace,” and during World War II, it used “leading-edge management principles to help the US government run its war effort.” In 1947, Booz Allen got its first Air Force contract, which led to millions of dollars in consulting work in electronic intelligence and for major aircraft manufacturers. Over the next fifty years, the company would be involved in every aspect of national security, from the military to the highest reaches of national intelligence. By 2006, the privately held company had a global staff of 18, 000 and annual revenues of $3.7 billion.* Work for U.S. government agencies now accounts for more than 50 percent of its business.4

  Throughout the period of the Cold War, Booz Allen was involved in U.S. government efforts to win “hearts and minds” in developing countries where anti-colonial movements threatened U.S. economic and political interests. In 1953, Booz Allen was hired by the U.S. Agency for International Development (AID) to study and reorganize land ownership records in the Philippines. The study was carried out just after the CIA, under the direction of Edward Lansdale, a CIA case officer who had served in the Philippines during World War II, led a campaign for the Philippine government to defeat the Huks, a revolutionary movement that drew its strength from landless peasants.* Long after this brutal campaign, the Philippines remained an important focus for Booz Allen. In 1984, under a contract with the CIA, Booz Allen was paying academics to gather information about the New People’s Army, the armed wing of the Maoist Communist Party of the Philippines.5

  Later, the company brought its social network analysis—the mapping and measuring of relationships between people, social organizations, and governments—to Central America. Just before U.S. forces were dispatched to Haiti during a period of intense social unrest in 1994, the Pentagon’s Atlantic Command commissioned Booz Allen to devise a computer model of Haitian society. The model, according to an extensive report published in The Nation magazine, sought to identify Haitian organizations that might oppose the U.S. invasion. It was seen by human rights groups as part of a U.S. “divide-and-conquer strategy” designed to weaken grassroots leftist groups and shore up “moderate” forces that welcomed a long-term U.S. presence.6 During the first Gulf War, Booz Allen developed a similar “Power Relationship Matrix” on Iraqi society for the U.S. Central Command.

  Booz Allen’s engagement with Iraq dates back to the 1950s, and involves one of the most colorful characters in the history of U.S. intelligence—Miles Copeland. Copeland was a trumpet player and jazz musician who was recruited into the Office of Strategic Services (OSS), the precursor to the CIA, in 1941. After World War II, Copeland joined the CIA and was assigned to the Middle East, where he spent much of his career as a CIA operative in Syria (where he was the CIA station chief), Egypt, Lebanon, Iran, and Iraq. For much of that time, according to his own and other accounts, Copeland was employed by Booz Allen Hamilton, where he worked under “nonofficial cover” for the CIA. (Booz Allen could not locate any records on Copeland and informed me that “his tenure is too old for us to confirm.”)

  One of Copeland’s first jobs in the Middle East was to install a pro-American colonel as the leader of Syria.7 A few years later, he reorganized parts of the Egyptian government on behalf of Egyptian President Gamal Abdel Nasser. During the 1950s, as Nasser’s status rose throughout the Arab world, Copeland was “loaned” to Nasser by the CIA to organize the Egyptian secret intelligence service, the Mukhabarat. He “soon became Nasser’s closest western adviser,” according to a biography of Copeland posted on the Web site of his son and namesake, who is a well-known entertainment executive.8 While working for Booz Allen, the senior Copeland was also involved in the CIA-engineered 1953 overthrow of the Mossadegh government in Iran and helped the CIA bring Saddam Hussein and the Baath Party to power in Iraq in 1963.

  Copeland is also credited with organizing some of the first war games in the U.S. Intelligence Community. As head of a five-man political action unit in Washington, he ran a “games room” where international problems, particularly those concerning the Middle East, could be played out. War games remain one of Booz Allen’s specialties; former CIA director James Woolsey, Booz Allen’s expert on protecting critical infrastructure from terrorist attacks, has run several such scenarios for Booz Allen’s corporate clients and the Department of Homeland Security.*

  Booz Allen describes itself as “the one firm that helps government and commercial clients solve their toughest problems with services in strategy, operations, organization and change, and information technology.” The largest part of its business is supporting U.S. national security clients, including the Intelligence Community and the Department of Defense.9 That work increased substantially after McConnell was hired to manage the company’s military intelligence business in 1996. Since then, its contracts with the U.S. government have risen dramatically, from $626, 000 in 2000 to $1.6 billion in 2006. Most of the latter figure, $932 million, was with the Department of Defense, where Booz Allen’s major customers included the NSA, the Army, the Air Force, the Defense Logistics Agency, and the National Guard. In 2006, it was one of seven firms awarded a ten-year contract to bid on up to $20 billion worth of work in command, control, communications, compu
ters, intelligence, surveillance, and reconnaisance—a mouthful of a term usually referred to as C4ISR—for the Army’s Communications and Electronics Command, which is based in Fort Monmouth, New Jersey. “From Army Transformation, to current operations, to the Global War on Terror—we will provide results that endure for our Army clients,” Booz Allen vice president Gary Mather boasted in a press release.10

  But it is in intelligence that Booz Allen has made its mark. In 2002, Information Week reported that Booz Allen had more than one thousand former intelligence officers on its staff.11 Four years later, I asked the company if it could confirm that number or provide a more accurate one, and received an answer from spokesman George Farrar by e-mail: “It is certainly possible, but as a privately held corporation we consider that information to be proprietary and do not disclose.” Buried deep on the company’s Web site, however, I found an explanation of a Booz Allen IT contract with the Defense Intelligence Agency, which carries out intelligence for the Joint Chiefs of Staff and the Office of the Secretary of Defense. It stated that the Booz Allen team “employs more than 10, 000 TS/SCI cleared personnel.” TS/SCI stands for Top Secret/Sensitive Compartmented Information, the highest possible security rating in the IC. This would make Booz Allen one of the largest employers of cleared personnel in the United States. Booz Allen has “the biggest chunk of recent former CIA people of any of the corporations” involved in contracting, says John Gannon, the former director of the CIA’s National Intelligence Council, who is now a senior executive with BAE Systems, a major competitor with Booz Allen.12

  Booz Allen’s executive ranks are filled with people with decades of experience in the Intelligence Community. Keith Hall, one of the company’s three hundred vice presidents (who are the primary owners of the privately held company),13 is emblematic of this trend. He began his career as a U.S. Army intelligence officer, and later served as a professional staffer of the Senate Select Committee on Intelligence. In the early 1990s, he was hired by the CIA, where he managed budgets and policy development for Director of Central Intelligence Robert Gates; during that time, as we will see, he played an instrumental role in creating the National Imagery and Mapping Agency, which was later renamed the National Geospatial-Intelligence Agency. He then moved to the Pentagon, where he was deputy assistant secretary of defense for intelligence and security.

  During the Clinton administration, Hall was named assistant secretary of the Air Force for space programs and, simultaneously, director of the NRO, the agency that manages the nation’s military satellite program. Since 2002, when he left the government, he has led a “strategic intelligence initiative” at Booz Allen that integrates the company’s extensive contracting activities for the NRO and the NGA. One of his most important tasks involved chairing the 2005 homeland security study group mentioned earlier, which recommended to the government a major expansion of information and data sharing between U.S. spy agencies and the FBI and domestic law enforcement. Without such a plan, Hall wrote, the “ultimate effect” would be “missed opportunities to collect, exploit and disseminate domestic information critical to fighting the war on terrorism, preparing for, responding to, and recovering from disasters natural and man-made.”14 That report later formed the basis of a plan, put in place at the DNI by McConnell in 2007, to allow the NGA to share classified imagery with the FBI and other domestic agencies.

  Woolsey, the former director of the CIA, was another key hire from the Intelligence Community. In 2002, he was brought in as a vice president in Booz Allen’s Global Strategic Security service, where his job is to work with the CEOs of major corporations to integrate security into their strategic business planning. (Woolsey’s team, the company notes, includes “former leaders of the nation’s highest security and intelligence agencies, as well as experts in cyber-security, global-supply chain management and wargame-scenario planning.”15)

  Woolsey also provides an important link to the foreign policy apparatus of the George W. Bush administration. He is one of the chief ideologists of the neoconservative movement behind Bush’s aggressive military and national security policies, and is famous in Washington for his fanatical devotion to the cause of regime change in Iraq and his outspoken views on the war on terror, which he describes in apocalyptic terms as “World War IV.” His political views brought important dividends to Booz Allen: from 2001 to 2006, he was a key member of Donald Rumsfeld’s Defense Policy Board. Shortly after the 9/11 attacks, he was dispatched by Paul Wolfowitz, then Rumsfeld’s deputy, to Europe to find a connection between Saddam Hussein and the events of 9/11. He also served for five years on an advisory group that met monthly with former CIA director George Tenet to discuss policy issues. Through Woolsey, Booz Allen had a ringside seat on the war on terror and the invasion of Iraq, which created enormous contracting opportunities for the consulting firm and its many corporate clients.*

  Perhaps the most representative of Booz Allen’s intelligence elite is Joan Dempsey, a career U.S. intelligence official who was hired in 2005 as a Booz Allen vice president. Dempsey, a steely-looking blonde, rose up the ranks to become one of the few women in the top tier of the Intelligence Community. Over the years, she slowly worked her way up the intelligence chain of command at the Pentagon, from Naval Intelligence to the Defense Intelligence Agency. In 1997, she was appointed deputy assistant secretary of defense for intelligence and security in the Clinton administration, the highest civilian intelligence position in the Department of Defense at the time. There, she had responsibility over the NSA, the NGA, and the NRO, the three national collection agencies controlled by the Pentagon, as well as the DoD’s tactical command, control, communications, and intelligence (C3I) efforts.

  In 1998, Dempsey was chosen by CIA director George Tenet as his deputy director of community management, where her primary job was to protect the pet technical projects of the national intelligence agencies from congressional budget-cutters. In 1999, she won the everlasting support of those agencies—and their growing armies of contractors—when she led negotiations with the Republican-led Congress that added $1.2 billion to the intelligence budget—one of the largest single-year increases in the history of the National Foreign Intelligence Program. Five years later, in recognition of this feat, Dempsey was given the William O. Baker Award for meritorious intelligence service by the Security Affairs Support Association (SASA), which from 1979 to 2005 represented the largest prime contractors at the NSA and the CIA. Her remarks at that ceremony, which were published in SASA’s in-house publication, Colloquy, underscored the close ties between contractors and the Intelligence Community and serve as a kind of leitmotif for the outsourcing phenomenon in intelligence.

  In her acceptance speech, Dempsey paid effusive praise to the corporations she had known over the years, many of whom had purchased tables for the event: General Dynamics, Essex Corporation, Oracle Corporation, Computer Sciences Corporation, AT&T Government Solutions, ManTech International, and Lockheed Martin.16 She thanked her “Pentagon friends” from L-3 Communications Inc., the nation’s sixth largest defense contractor, with whom she had worked “on my favorite program of all time, the U-2” spy plane. She spoke of her pride in working with the Boeing Company on the Future Imagery Architecture, an expensive project by the NRO and the NGA to build and operate the next generation of imagery satellites.* At the CIA, Dempsey said, she had “benefited enormously” from her work with Booz Allen Hamilton and SAIC.

  Then she went slightly off-script: “I like to call Booz Allen the Shadow IC,” she said, because it has “more former secretaries of this and directors of that” than the entire government. That must have caused some chuckles at the lead table, where Woolsey was sitting. But Dempsey got the last laugh. Fifteen months later, she joined the “Shadow IC” herself as a vice president. In her job at Booz Allen, she “provides strategy consulting services to the US government, including the national security and civil sectors, as well as commercial industry,” according to company spokesman George Farrar. Then,
in January 2007, Dempsey’s joke came full circle when McConnell, her boss at Booz Allen, succeeded John Negroponte as director of national intelligence. In the space of a few years, Booz Allen had been transformed from a “shadow” IC into the real thing.

  It was most intriguing, then, to hear what Dempsey is actually doing in her new job. In the spring of 2006, just a few months after she joined the consulting firm, Dempsey was invited to speak to a seminar on intelligence reform at Harvard University.17 Asked to describe her role at the company, Dempsey disclosed that her office at Booz Allen was evaluating the entire decision-making process within the intelligence community. After going to her fellow Booz Allen vice presidents “who control the money and got investment dollars to do this,” said Dempsey, she began “studying the implications of the many decisions that are being made on a daily basis right now all over the intelligence community and the departments in which pieces of the community reside, to include the DNI’s staff. No one has thought through the implications of those decisions in a strategic or aggregate sense for the future.” The problem, she explained, is that the DNI’s staff is “putting out dictates daily on things that it wants the community to do.” Booz Allen is aiding that process by “trying to forecast what they mean for the intelligence community of the future—what it’s going to look like, how it’s going to operate—along a trend line.”

  It was a remarkable circumstance: Booz Allen was conducting a study for the director of national intelligence, a position that was about to be filled by one of the company’s own—Mike McConnell. The shadow IC was now helping the real IC prepare for an immediate future when the real IC would be led by the shadow IC. This was more than a revolving door: the private and the public sides of intelligence were now sharing the same room.