by Tim Shorrock
McConnell came to Booz Allen in 1995 after a long career in Naval Intelligence. He began his service in Vietnam as an officer on a riverboat operating in the Mekong Delta. Later, he was assigned to Navy counterintelligence work in Yokosuka, Japan, home of the U.S. Seventh Fleet. He liked the work, and by the late 1970s was serving as an intelligence officer on ships stationed in the Persian Gulf and Indian Ocean. That’s where he was introduced to the esoteric world of signals intelligence, SIGINT. His Navy experience “changed my understanding, respect for, and use of SIGINT for the rest of my life,” he told the author James Bamford.18 McConnell later served as commander of the Navy’s Middle East Force Operations and as a top assistant to the director of naval intelligence. He first gained national attention when he was working in the Pentagon for Colin Powell and Dick Cheney during the administration of the first President Bush. His work during the Gulf War so impressed the two men that, when Admiral William Studeman left his director’s job at the NSA in 1992 to take a position at the CIA, Cheney ordered the Pentagon to elevate McConnell from a one-star admiral to a three-star vice admiral so he could take Studeman’s place at the top secret agency. It was one of the fastest career boosts in Navy history, and sparked a long friendship between McConnell and the future vice president.19 Fifteen years later, when McConnell was considering the DNI position in the administration of the second President Bush, Cheney once again reached out to his former aide with what Newsweek called a “direct, personal approach,” and convinced him to take the job.20
McConnell took over the NSA just after the collapse of the Soviet Union and at a time of deep budget cuts in defense and intelligence. The consensus among intelligence historians is that he managed effectively and staved off deeper cuts,21 but some critics claim that he allowed R&D efforts to stall as a result. At the NSA, McConnell developed a deep interest in information security, which is one of the primary tasks of the agency. According to Booz Allen, McConnell was one of the first officials to identify information assurance as a strategic issue “in our increasingly networked society.” People who worked with him say that he understood before many of his peers how the development of the Internet would affect intelligence and counterintelligence. That was important during his most trying years at the NSA, when McConnell presided over a contentious debate with the telecommunications and computer industries over export controls on encryption technology that the NSA wanted to impose on business.
Encryption is the process of transforming information into codes so it can’t be read by outsiders, and makes it possible for spies, armies, banks, retailers, and individuals to share confidential information and transact business affairs electronically. Until the late 1970s, the NSA was the sole source of advanced cryptology used in the United States, and provided the secure communications links used by the White House, the Department of Defense, other intelligence agencies, and the diplomatic corps to transmit private and classified messages. By the early 1990s, however, U.S. and foreign computer manufacturers had developed encryption chips so sophisticated that the NSA was having trouble cracking the codes for intelligence purposes; in response, the Clinton administration, with McConnell in the lead, barred U.S. companies from exporting the technology. That put the U.S. firms at a disadvantage over their Japanese and European competitors, who had no such restraints. In the end, McConnell and the NSA settled for a compromise that allowed U.S. companies such as IBM and AT&T to export sophisticated encryption systems so long as they provided the government with “keys” that would allow the NSA to access the systems under a lawful court order.
That experience would serve McConnell well. A few months after leaving the NSA in 1996, McConnell was hired by Booz Allen as a senior vice president. During his first years at the company, his work primarily involved issues revolving around protecting “critical infrastructure,” such as the nation’s transportation and communications networks. McConnell led the firm’s support to President Clinton’s Commission on Critical Infrastructure Protection, which focused on the vulnerabilities of the banking and financial sector, and worked closely with the Pentagon and the NSA on defending the nation’s computer networks from hostile attacks. On a trip to Australia in 2003, he warned that, without a “cyber-9/11” or “something that serves as a forcing issue,” governments and businesses would not be prepared for an attack on their information systems. “We are inviting cyber terrorism,” he said.22 Altogether, McConnell’s cyber-security team won nearly $300 million in government contracts for Booz Allen.23
At the time of his trip to Australia, McConnell was director of Booz Allen’s Infrastructure Assurance Center of Excellence, the company’s research laboratory for the Intelligence Community. The center is just one piece of an extensive intelligence contracting operation that provides expertise to the IC in nearly every aspect of spying, or what is known as the “black” world. Topics available for research, according to the intelligence page on Booz Allen’s Web site, include information warfare, signals intelligence, systems engineering and solutions, multisource intelligence analysis, imagery and geospatial systems, cryptographic design and analysis, systems integration, and “outsourcing/privatization strategy and planning.” Much of that work is done for the NSA. Under McConnell, Booz Allen was hired by his former agency to manage the largest intelligence outsourcing project ever undertaken by the IC: the $3-billion Project Groundbreaker, which rebuilt the agency’s internal communications systems (this project is described in detail later).
The terrorist attacks of September 11, 2001, underscored Booz Allen’s deep connections to the military. Three Booz Allen consultants meeting with Army clients were killed when the hijacked commercial airliner crashed into the Pentagon. The tragedy quickly became opportunity, however. In the months after the attacks, Booz Allen substantially increased its defense and intelligence work and moved aggressively to capture both public and private contracts in homeland security. Ralph Shrader, Booz Allen’s CEO, described the response in the company’s 2002 annual report. Within hours of the attacks, he recalled, “our officers and staff fanned out through Washington, helping clients ranging from the Department of Defense to the Federal Bureau of Investigation deal with an abruptly and forever-changed environment.” That work, he said, included helping the Department of Justice “redirect scarce resources to counterterrorism efforts” and aiding the Immigration and Naturalization Service as it prepared a new visa policy.
At the Pentagon, Booz Allen had a strong ally in Donald Rumsfeld, who ran the Department of Defense for the first six years of the Bush administration and came to the office with intimate knowledge of Booz Allen’s capabilities. In the 1970s, as director of the Office of Economic Opportunity during Richard Nixon’s administration, he had hired Booz Allen to reorganize OEO and kill or outsource many of its programs. Under Rumsfeld, Booz Allen was so trusted that it was hired in 2004 to help prepare President Bush’s national defense budget24 and to perform war gaming for the Quadrennial Defense Review, one of the most sensitive documents produced by the Pentagon. The company also provided assessments of the U.S. space industrial base and performed “cybersecurity strategy, design and implementation” for the Department of Defense.25 And as a consultant to Central Command, the company was at the center of the first preemptive war in U.S. history.
As part of its contribution to the war on terror, Booz Allen helped develop the Blue Force Tracking system, which allows the Pentagon to determine, in real time, the precise location and status of military units, vehicles, and aircraft as well as individual soldiers; the system was first used in a combat situation in Afghanistan. Booz Allen also won several Pentagon contracts in post-invasion Iraq, including as a subcontractor on a telecommunications project managed by Lucent Technologies. And in 2003, shortly after the U.S. invasion, Booz Allen organized a major conference on rebuilding Iraq that attracted hundreds of corporations eager to cash in on the billions of dollars in contracts about to be awarded by the Bush administration.
The event
followed the lead of President Bush himself, who had characterized his plan to transform Iraq along free market lines as a “generational challenge” that would combine the economic scope of the Marshall Plan with the moral clarity of the civil rights movement. Held in the conference room of the Center for Strategic and International Studies in Washington, it featured a string of Pentagon and White House officials, who spelled out to the assembled businessmen how they were rewriting Iraq’s business, property, and trade laws “in a way very conducive to foreign investment,” as David Taylor, a top Treasury official, put it. Woolsey delivered the keynote address in the only off-the-record part of the conference. He bluntly told the assembled businessmen that American firms would receive the majority of contracts in Iraq as representatives of the only world power with the will to stage a preemptive strike on Iraq. “Basically, he said to hell with France, to hell with Germany, and to hell with the United Nations; the United States is going to do this alone,” an Arab banker who asked not to be identified told me after the meeting.
The Pentagon also turned to Booz Allen to manage the controversial Total Information Awareness (TIA) plan to use information technology to counter terrorist threats. In 2002, the Defense Advanced Research Projects Agency (DARPA), the Pentagon’s R&D agency, hired retired Navy Rear Admiral John Poindexter to manage a project that would sift through public databases storing credit card purchases, rental agreements, medical histories, e-mails, airline reservations, and phone calls for electronic “footprints” that might indicate a terrorist plot in the making. Poindexter was a curious choice: he’d been under a cloud since 1987, when he resigned as the national security adviser to President Reagan to take the blame for the Iran-contra scandal, which involved selling arms to Iran and using the proceeds to fund an illegal war in Nicaragua. Nevertheless, he was given a mandate that was breathtaking in scope: to “imagine, develop, apply, integrate, demonstrate and transition” IT systems that would “counter asymmetric threats”—meaning challenges from terrorist groups like Al Qaeda and insurgencies like the one in Iraq—“by achieving total information awareness.” Booz Allen and Science Applications International Corporation were hired as the prime contractors, with Booz Allen winning over $63 million worth of contracts.26 McConnell was a key figure in the outsourcing arrangement, according to a former NSA official interviewed by Newsweek. “I think Poindexter probably respected Mike [McConnell] and probably entrusted the TIA program to him as a result,” the former official said.27
When TIA came to light in 2003, Congress acted quickly to defund the program. Part of the problem was the involvement of Poindexter, who had been convicted of five felony charges for his involvement in the Iran-contra affair (the convictions were later reversed on a technicality). But many lawmakers saw in TIA an attempt to create a national surveillance system. Others were shocked at Poindexter’s plan to create a national betting parlor on terrorism that would harness the “anonymous forces of market capitalism” to predict the likelihood of acts of terrorism, much as commodity traders speculate on the future price of pork or electric power. The Pentagon’s justification, that “markets are extremely efficient, effective and timely aggregators of dispersed and even hidden information,” didn’t sell, and the TIA program was killed.28 The program was kept alive, however, in secret NSA accounts long after 2003, and remained a profit center for Booz Allen throughout McConnell’s tenure.
As a trusted ally of the Bush administration, Booz Allen was also chosen to audit a secret program, run by the CIA and the Treasury Department, that gave U.S. officials access to millions of records of international financial transactions to search for terrorist-controlled money. The transactions were handled by SWIFT, a Belgium-based industry cooperative that routes trillions of dollars every day between banks, brokerages, investment houses, and other financial institutions in 208 countries around the world. In 2006, the New York Times revealed that, after 9/11, SWIFT had agreed to turn over large portions of its database to the CIA in response to a series of subpoenas issued by the Treasury Department.29 Although Booz Allen was brought in as an “outside” auditor for the program, its impartiality was questioned by a European Union panel, which recommended independent supervision and declared “we don’t see such independent supervision under the current situation.”30 In 2006, the American Civil Liberties Union and Privacy International, an organization that monitors government intrusion, issued a scathing report on the issue. “Though Booz Allen’s role is to verify that the access to the SWIFT data is not abused, its relationship with the US government calls its objectivity significantly into question,” the two organizations said.31 Booz Allen rejected the charge. “What clients are buying from us is independence and objectivity,” spokeswoman Marie Lerch told the New York Times.32 But the company’s close ties to the IC through such former high-ranking officials as McConnell, Dempsey, and Woolsey make it difficult to see where that independence might be found.
A more pressing issue, given the degree of collaboration between Booz Allen and the NSA, is whether McConnell and his company knowingly cooperated with the NSA on its warrantless domestic surveillance program. As one of a handful of contractors working with the NSA to integrate its data systems with those of other members of the Intelligence Community, Booz Allen very likely had some involvement in what the Bush administration called the Terrorist Surveillance Program. It is known, for example, that the NSA passed information gleaned from its warrantless intercepts of phone calls to both the Defense Intelligence Agency and the FBI. Booz Allen, according to its own Web site, was “a key member of the team managing the entire NSA infrastructure” and is a major DIA and FBI contractor. As we will see in the chapter on the NSA and its domestic surveillance programs, McConnell was able to discuss intimate details of the NSA’s eavesdropping capabilities within weeks of his confirmation as director of national intelligence. And it was only a few months into his tenure as DNI that he informed the Bush administration—and the nation—that technological changes in telecommunications had vastly increased the amount of global telephone traffic moving through the United States, thus making it more difficult for the NSA, which is bound to legal strictures on tapping U.S. phone lines, to spy. “The intelligence director, Admiral Mike McConnell, alerted us to the intelligence gap, and we asked Congress to fix the law,” Vice President Cheney pointed out in January 2008, on the eve of an important Senate vote on NSA surveillance.33 It’s hard to escape the conclusion that McConnell’s experience at Booz Allen was critical as he prepared for his tasks as the nation’s spymaster.
But McConnell is not simply a yes-man, as some observers have called him. He has expressed concerns about potential abuses of America’s democratic system by the Intelligence Community. In 2006, in an off-the-record address to an intelligence conference in Washington, he noted that spy agencies in most countries around the world are seen as “an evil thing, a secret police.” “We all want security, but won’t give up our privacy,” he said. Without being specific, he added: “So we have to rethink intelligence, reshape it, and we’re not there yet.” On the issue of domestic spying and eavesdropping, which had just emerged as a national issue in the aftermath of the New York Times’s revelations about the NSA, McConnell indicated he might be “a little more liberal” than the Bush administration. “Any bureaucracy can do evil,” he concluded. “There must be oversight.”34
Later that year, he told Stephen F. Hayes, a reporter with the conservative Weekly Standard who recently published a favorable book about Dick Cheney, that he had lost some of his respect for the vice president because of the administration’s attempts to influence the IC’s prewar intelligence on Iraq. “My sense of it is their political faith and convictions influenced how they took information and interpreted [it] as well as how they picked up and interpreted outside events,” McConnell told Hayes, adding that the results in his view “have been disastrous”35 (he added a qualifier, suggesting to Hayes that Cheney should have been used more as a propagandist because “h
e has such a way of making it simple and compelling”). In December 2007, McConnell pulled another surprise by releasing a National Intelligence Estimate concluding that Iran had halted its nuclear weapons program in 2003, directly contradicting assertions made by Cheney and Bush during the past year. That greatly enhanced his reputation as an independent thinker and actor. But, as we will see later in the book, McConnell’s stature as someone who can speak truth to power would suffer greatly during his first year as DNI, particularly during the intense debate over NSA spying.
As McConnell’s confirmation hearing for that position approached in early 2007, Senator Ron Wyden, D-Oregon, and other lawmakers concerned about the Bush administration’s intelligence policies and Booz Allen’s role in them assured the public that they would grill him about contracting. “It’s a critical concern,” Wyden told USA Today.36 But the hearing turned out to be a desultory affair, with few probing questions from the Democrats running the Senate Intelligence Committee. At one point, Senator Wyden asked the former admiral about his role in Poindexter’s Total Information Awareness program. McConnell responded by defending the concept of TIA and downplaying his role in it. The program, he told Wyden, was primarily a response to the use by terrorists of global information networks to plot against the United States. “What’s happening today is the terrorists are using those very systems for their own benefit—think of it as command and control for remote terrorists, who have a particular ideology they’re attempting to spread so they can communicate around the globe,” he said. DARPA, he explained, merely wanted to use data mining to keep ahead of the game. As for his own involvement, McConnell said, “I was more of an operational adviser.” He recalled urging Poindexter to “talk about how information could be used and to be very clear about how it could be applied under today’s laws, rules, values, Constitution [and] regulation”; his argument, he told the senators, “did not persuade.” That explanation seemed to satisfy Wyden, who told McConnell a few minutes later that he would support his nomination.37
