Spies for Hire
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Many of these companies remain closely entwined with U.S. training programs. MPRI, for example, is one of the largest private military contractors operating in Iraq (it is now part of L-3 Communications’ intelligence division). In 2007, L-3/MPRI was recruiting former U.S. military officers for work in Equatorial Guinea, which receives military aid from the United States, to “advise and assist the transformation of the security forces, starting with the Ministry of Defense (MOD), Maritime Force and National Police.”61 Here again we can see a direct link between practices that originated during the Clinton administration and those that flourish under President George W. Bush. Few people outside the Intelligence Community, however, noticed that outsourcing had also expanded to include intelligence operations and analysis.
One of the companies that capitalized on this development was ManTech International. During the 1990s, ManTech, as we will examine in more detail later, blossomed as an intelligence contractor for the first time. During Operations Desert Storm and Desert Shield, the company provided technical support to Army intelligence and electronic warfare units, and in 1994 provided similar services to U.S. forces in Haiti. One of its first contracts was to provide support services for Army intelligence units in Bosnia, Kosovo, and Albania.62 Under Clinton, ManTech also helped the U.S. Air Force and the National Security Agency pick up signals intelligence from F-16 fighter jets and worked with Booz Allen Hamilton on a $43-million contract with the U.S. Army’s Intelligence and Security Command (the Army wing of the NSA) to support the Army’s intelligence “master plan.”63 During the late 1990s and into 2000, ManTech also supported military intelligence units in Kuwait and East Timor, and after 9/11 sent its signals intelligence support units into Afghanistan and Iraq.
It was also during the Balkans war that military intelligence officers first started leaving the Army to form companies on their own. Premier Technology Group (PTG), for example, was started by a group of retired G-2 Army intelligence officers with U.S. Army V Corps stationed in Heidelberg, Germany. After being deployed in Bosnia, “they created PTG to go back and do exactly what they were doing because they realized there was nobody else there to replace them,” recalls William D. Golden, a former National Security Agency officer who founded a recruitment firm that helped companies like PTG find some of their first employees.64 Five years later, PTG was acquired by CACI International and became the basis for CACI’s interrogation contract at Abu Ghraib.
The changes that occurred under Clinton, particularly in the intelligence arena, were directly related to shifts in technology. By the 1990s, commercial developments in encryption, information technology, imagery, and satellites had outpaced the government’s considerable efforts in these areas, and intelligence agencies began to turn to the private sector for technologies they once made in-house. One of their vehicles was the Defense Advanced Research Projects Agency (DARPA), the central R&D organization for the Department of Defense, which President Clinton had endorsed early in his administration as an important vehicle for improving the competitiveness of U.S. high-tech industries. Under its new acronym, ARPA (the “D” for defense was dropped in 1993, only to be restored three years later), the agency began pouring research money into projects useful to the Intelligence Community.
Researchers at Wright-Patterson Air Force Base in Ohio, for example, developed the first unmanned aerial vehicles, which later evolved into the Global Hawk and Predator used extensively today in the battlefields of Iraq and Afghanistan. ARPA was also involved in the early stages of the NSA’s Project Groundbreaker, a huge program to outsource the NSA’s internal communications system, and began signing contracts with small Beltway bandits that were hiring former intelligence analysts and scientists leaving the NSA, the CIA, and other agencies. ARPA money also funded some of the NSA’s first data mining programs. “Nineteen ninety-eight and 1999 is when it really began,” says former NSA officer Golden. “This was when you had the big push in intelligence to outsource, outsource, outsource.” The ARPA research programs, he adds, marked the first “shift of people in the private sector actually doing intelligence.”65
Clinton officials involved in these programs say they acted out of a belief that private companies were more efficient than the government. “There’s a large body of empirical data that shows that using the commercial market versus doing it in-house in a monopoly environment results in much better performance at much lower cost as long as it is work that is not inherently governmental,” Jacques Gansler, the former Pentagon official, told me.66 “And that’s very important, that distinction.” To keep the private and public sector completely separate, Gansler said the Clinton administration made sure that the management of government contracts remained under government control. “The person who makes the decisions as to which contractor gets the work, how much is budgeted, and does the oversight—things like that are inherently governmental,” he said. There, he was drawing a sharp line between his definition of outsourcing and that of Bush and Cheney, who presided over a contract administration that itself outsourced its acquisition functions to systems integrators like Lockheed Martin and CACI International.
Gansler himself was deeply involved in a little-known incident in which the Clinton administration put a cap on intelligence outsourcing. In 1999, when U.S. and British forces were engaged in NATO’s intervention in the Balkans, the Pentagon grew concerned over a British plan to privatize its Defence Evaluation Research Agency (DERA). As the British equivalent to the Defense Advanced Research Projects Agency, DERA was one of the primary channels of communication between U.S. and British intelligence. Privatizing a national asset like that was too much for Clinton’s Department of Defense. That fall, U.S. officials threatened to suspend sharing of top secret satellite intelligence with Britain if the deal went through. In October 1999, Gansler sent a strongly worded letter to his British counterparts demanding that the plans be scrapped. DERA’s privatization, he warned, could “produce an environment in which the special National Reconnaissance Office relationship with the DERA…would not be possible.”67
I was told by Gansler, who retired from government in 2001 and teaches public policy at the University of Maryland, that the Pentagon’s opposition to the British plans for DERA focused on “very sensitive intelligence issues” and the fact that some of DERA’s work involving satellite reconnaissance and signals intelligence “involved the United States government as well.” The British, in his view, had breached the firewall that defined “inherently governmental.” So the Clinton administration leaned on British officials to keep DERA’s core intelligence functions within government. “We didn’t want all of DERA to be instantly transferred to the private sector. That was the concern,” said Gansler. As a result of those discussions, “some work was kept in the government and the rest was spun off. In other words they assented to our request.”68 DERA’s privatization, however, didn’t actually occur until after the transition from the Clinton to the Bush administration. In 2003, DERA was fully privatized, renamed QinetiQ, and its assets were sold to Frank Carlucci’s Carlyle Group.
By 1999, however, the momentum toward outsourcing was being fueled by new demands for intelligence and surveillance from the conservative, pro-defense Republicans leading the House and Senate. Despite Newt Gingrich’s willingness to work with Clinton on “reinventing government,” he and his allies had little stomach for Clinton’s national security policies. As they rode the crest of their power sweep in the 1994 elections, the Republicans began agitating for increased spending on spy satellites and reconnaissance systems. They believed that the crown jewels of U.S. intelligence were being squandered by the Clinton administration, and won strong support for this position from the Project for the New American Century, a group of neoconservatives who spent much of the 1990s making the case for a more aggressive posture overseas, based on military strength and “moral clarity.” In a famous declaration that became the basis for the foreign policies of the George W. Bush administration, twenty-five P
NAC members, including Donald Rumsfeld, Dick Cheney, and Paul Wolfowitz, wrote in 1997 that “cuts in foreign affairs and defense spending, inattention to the tools of statecraft, and inconstant leadership are making it increasingly difficult to sustain American influence around the world. As a consequence, we are jeopardizing the nation’s ability to meet present threats and to deal with potentially greater challenges that lie ahead.”69
Those words were particularly significant to Cheney, who had taken extraordinary efforts to save intelligence from the big wave of cuts that occurred at the end of the Cold War. When Cheney was secretary of defense, he worked closely with CIA director Bob Gates to reform the intelligence apparatus. The decade of the 1990s, the two men believed, was the perfect time to create the kind of intelligence service needed for an era in which the United States would be the undisputed superpower. “It was as if we were being given a gift,” says Richard L. Haver, the vice president of intelligence strategy at Northrop Grumman, who was Cheney’s senior intelligence adviser at the Pentagon from 1989 to 1992. “The Cold War was over, and the chaotic new world was going to take a decade to fully form itself and manifest itself as problems on our doorstep.” Cheney, said Haver, felt that “what we needed to do was to take a deep breath inside the national security apparatus, particularly inside the defense establishment.”70
Both Cheney and Gates, he said, fought for a common objective: to preserve as much of the intelligence budget as they could from the onslaught of congressional doves intent on creating a real peace dividend. “Cheney believed we shouldn’t be putting less money into intelligence; we should be putting more money into intelligence,” said Haver. And by manipulating the Pentagon budget, that’s exactly what Cheney did. According to Haver, “if anybody has access to the classified budgets” and could compare the line items in the late 1980s and early 1990s, they will see that “the Defense Department gave up nearly twice as much money as it should have to protect cuts in intelligence”—in other words, the intelligence budget was cut at half the rate of the defense budget. The idea, said Haver, was to chop out the “Cold War deadwood” and start reinvesting for the future. But the effort was stopped in its tracks when Bill Clinton moved into the White House. Clinton came to office vowing to slash the intelligence budget by $7 billion, and Congress, as we’ve seen, backed his efforts. As a result, said Haver, little of the reinvestment favored by Cheney and Gates was ever made.*
Now, six years into Clinton’s term, many members of PNAC and the neoconservative right believed that cuts in defense spending—the source of more than 80 percent of the intelligence budget—had greatly reduced the ability of the United States to spy on other countries, particularly those so-called rogue states that were threatening to build nuclear weapons. Moreover, PNAC’s leaders, particularly people like Cheney and Rumsfeld, were deeply suspicious of the CIA, and believed that it was underestimating the threat of ballistic missiles from North Korea, Iraq, and Iran as well as China. Their suspicions of the CIA were rekindled in 1995, when the agency produced a National Intelligence Estimate predicting that no country outside of the five major nuclear powers was capable of developing or acquiring a ballistic missile over the next fifteen years that could threaten the lower forty-eight states or Canada. In response, advocates of a missile defense system in the House introduced legislation to create a commission to study the issue. Gingrich, the House speaker, appointed Rumsfeld to chair the committee; another key member was James Woolsey, fresh from his frustrating tenure at the CIA.
Rumsfeld came to the task determined to prove that the CIA had lost its way, and his experience on the commission apparently deepened his suspicions. The committee’s first report, released in July 1998, flatly declared that the CIA’s NIE of 1995 was wrong, and argued that the potential for U.S. adversaries acquiring a long-range missile threat was much sooner than fifteen years. “The threat to the United States posed by these emerging capabilities is broader, more mature and evolving more rapidly than has been reported in estimates and reports by the Intelligence Community,” the committee said. Among other recommendations, it urged the Pentagon to exert greater control over the nation’s spy satellites through the National Reconnaissance Office, and spend more on collection systems to minimize the ability of other countries to conceal their military activities.71 Gingrich hailed the conclusions as “the most important warning about our national security since the end of the Cold War.”72
Critics of the commission accused Rumsfeld of cooking his data. The commission “basically massaged existing U.S. intelligence data to come up with new conclusions that fit the political needs of its creators for a quasi-official endorsement of their exaggerated views of the missile threat to the United States,” military expert William D. Hartung wrote.73 Many Democratic lawmakers familiar with intelligence were unimpressed, particularly by the commission’s emphasis on the NRO: in January 1996, a congressional investigation had revealed that the satellite agency had lost track of a $2 billion slush fund because, according to the journalist Robert Dreyfuss, “it was so highly classified even top intelligence officials had no control over it.”74 Nevertheless, Republicans seized on the Rumsfeld report, and began pressing for increased spending on missile defense and satellite reconnaissance. They were backed by a phalanx of pro-military think tanks, such as the Center for Security Policy, whose national security advisory council was co-chaired by Jim Woolsey. Its corporate contributors at the time included Boeing, General Dynamics, Lockheed Martin, Northrop Grumman, and TRW—“all major weapons contractors that benefit from the policies advocated by the Center,” Hartung pointed out in a 2004 study.75
Then, just as the rhetoric over the missile threat was reaching fever pitch, the Intelligence Community was caught flat-footed once again. In May 1998, the CIA failed to detect a series of nuclear weapons tests in India; worse, CIA and DIA analysts had discounted the very idea that the Indian government was contemplating its first test since 1974. Once again, Republicans blasted the Clinton administration and the IC. Senator Richard Shelby, R-Alabama, the chairman of the Senate Intelligence Committee, called the CIA’s misjudgment a colossal failure. Chastened by the critique, CIA director George Tenet appointed his own commission to study the failure.
Led by retired Vice Admiral David Jeremiah, a former vice chairman of the Joint Chiefs of Staff, it recommended that the director of central intelligence take “direct charge” of intelligence collection—almost the opposite of what Rumsfeld had proposed. “We have an imbalance today between the human skills associated with reading photography, looking at reports, understanding what goes on in a nation, and the ability to technically collect that information,” Jeremiah said in an interview with PBS’s NewsHour with Jim Lehrer. “In everyday language that means there’s an awful lot of stuff on the cutting room floor at the end of the day that we have not seen.”76 Tenet responded by revamping the CIA’s internal organization with two key appointments: John C. Gannon as assistant director for analysis and production, and Joan Dempsey as director of community affairs.* With his new team in place, Tenet promised major changes for the IC. “I’m going to take direct charge of how our community collects information, how collection and analysis are lashed together to ensure that the kind of event that occurred here will not occur again,” he told reporters.77
As this debate around the IC’s spying abilities was taking place, the CIA was fighting—or trying to fight—a battle against Al Qaeda. In 1993, the World Trade Center was attacked for the first time, and in 1998, Al Qaeda terrorists destroyed the U.S. embassies in Kenya and Tanzania. Tenet and his Republican allies were now seeking funds for both collections and human intelligence. But the White House wasn’t receptive: “In the fall of 1998,” Tenet recalled in his memoir, “I asked the administration for a budget increase of more than two billion annually for the entire intelligence budget over the next five years. Alas, only a small portion of that increase was granted.” Believing that “we were desperately short of needed resources,” T
enet decided to go around his chain of command and “struck up a relationship” with Gingrich. With the assistance of Dempsey, who managed the negotiations with the House, Gingrich “pushed through” a supplemental bill for the 1999 fiscal year that provided a “significant increase” in the IC’s baseline funding, Tenet wrote.78
In 2007, Tenet disclosed the actual amount of that increase—$1.2 billion. That turned out to be the largest ever supplemental increase in the intelligence budget up to that point, and helped expand an already growing industry.* Using the ODNI’s historical figures on intelligence spending I obtained in 2007, it’s now possible to show how much money went into the coffers of the private sector during those years. In 1995, the IC spent $18 billion on contracts. Four years later, that spending reached $22 billion. It dropped to $18 billion in 2000, and rose again to $22 billion in the final year of the Clinton administration. Even in 1990s dollars, that was big money; and by 1999, the intelligence contracting industry—led by TRW, SAIC, Boeing, and Betac Corporation—had arrived.
In line with its new importance, the industry held its first major conference in 1999, with a focus on “Commercial Support to Intelligence.” The event was sponsored by the Armed Forces Communications and Electronics Association (AFCEA), which represents the nation’s largest military and intelligence contractors. It was a classified symposium, open only to officials and contractors with Top Secret/Special Intelligence clearances, and held at the Defense Intelligence Analysis Center at Bolling Air Force Base near Washington, D.C. The agenda, which was available on the Internet for nearly eight years before being taken down in 2007, was a case study in the deep links between the Intelligence Community and the private sector. The event itself was chaired by Robert Juengling, a vice president of Betac. In his opening remarks, he laid out the reasons that intelligence agencies had been outsourcing their analytical and IT functions.