Spies for Hire

by Tim Shorrock

  Technically, In-Q-Tel claims not to be either a government agency or part of the CIA (“We are an independent, nonprofit, and nongovernmental firm,” Donald W. Tighe, In-Q-Tel’s vice president of external affairs, told me). Yet every deal it makes must be cleared by the CIA, which appoints its board of trustees and all of its executives. The key players in its formation were George Tenet and his executive director at the CIA, Buzzy Krongard, a former investment banker. To get the fund rolling, they put together an oversight board made up of successful capitalists with strong ties to defense and intelligence. Its chairman, then and now, was Norman R. Augustine, the former CEO of Lockheed Martin. Other current board members include James Barksdale, the former CEO of the computer services firm Netscape Communications and a member of George W. Bush’s President’s Foreign Intelligence Advisory Board (PFIAB); retired Air Force General Charles G. Boyd, the president and CEO of Business Executives for National Security, which conducted the only outside audit of In-Q-Tel in 2001; David Jeremiah, the former vice chairman of the Joint Chiefs of Staff, who sits with Barksdale on the PFIAB and is a director of ManTech International and several other defense contractors; and Paul G. Kaminski, the former undersecretary of defense for acquisition and technology who, like Jeremiah, is very active in the intelligence business. The fund is run by a management staff led by CEO Chris Darby, a former vice president of computer giant Intel. (In-Q-Tel’s name, like the U.K.’s QinetiQ, is derived from the British operative who gives Agent 007 the cuff link cameras, shoe guns, and other gadgets made famous in the James Bond movies.)

  In-Q-Tel’s focus has changed dramatically during its ten years of existence. When it was first founded during the late 1990s, the fund was primarily interested in technologies that would help the CIA and other government agencies improve the way they managed data. “Originally, we were looking for information management software that addressed the challenges of intelligence,” Tighe recalls. “Our challenges were the same as the Fortune 500.”67 As a result, most of what In-Q-Tel invested in was “shrink-wrapped” software products ready to go; in June 2001, the Washington Post described In-Q-Tel as simply an innovative way to “link the bureaucratic, buttoned-up CIA with the entrepreneurial, free-flowing private sector.”68 But the mission changed after September 11. By July 2002, the Post was describing the fund as “a sort of anti-terrorism matchmaker.” Gilman Louie, In-Q-Tel’s CEO at the time, couldn’t get into specific details of what he was looking for, or why, the Post said, because the fund was “focusing much of its energies on tracking terrorists, finding links between criminals and even guessing what they might do next.”69

  Because In-Q-Tel is funded through the classified parts of the intelligence budget, it won’t disclose its total funding levels or how much it invests every year. Tighe, the In-Q-Tel vice president, told me in January 2008 that the fund’s investments “tend to be in the $1 million to $3 million range,” and generally involve twelve to fifteen deals a year. That comes to between $20 million and $30 million a year. The “most important and least well-known” fact about In-Q-Tel, Tighe added, is that the great bulk of its investments—about 80 percent—now go toward funding “specific technology advancement work driven by identified Intelligence Community needs.”70 The remaining 20 percent goes to “simple equity or traditional venture capital–style funding.” Companies lucky enough to obtain In-Q-Tel investment raise the rest of their capital from private venture capital firms. According to the In-Q-Tel Web site, the fund has cultivated a network of more than two hundred venture capital firms and leveraged more than $1 billion in private sector funds “to support technology for the CIA and the IC.”

  Attensity, a CIA and NSA contractor that has developed a method of instantly parsing electronic documents and fitting them into a database, has In-Q-Tel to thank for its business success. In the fall of 2001, it was nearly bankrupt, and the post-9/11 downturn in the stock markets had kept investors away. One day that December, Todd Wakefield, Attensity’s co-founder, got a call from In-Q-Tel asking if his company was still around. “Barely,” he said, according to an account in BusinessWeek, “so talk fast.”71 Within a few months, In-Q-Tel was the lead investor in a $3.5 million cash infusion into the company. Now the company’s text extraction software—which takes less than ten seconds to analyze and diagram the text in Moby-Dick72—is a flourishing, multimillion-dollar company with 60 percent of its sales going to the federal government. Company literature lists its customers as the CIA, NSA, DIA, and the FBI.

  In-Q-Tel works with companies like Attensity because “we let the Intelligence Community agencies know what’s out there, and let the companies know the interests in government,” said Tighe. “There’s some amazing capabilities out there.”73 In an interview during the GEOINT 2006 symposium, where In-Q-Tel had a booth, he pointed out a few more of his success stories. With seed money from In-Q-Tel, piXlogic of Los Altos, California, has developed a software that quickly searches large files of digital images and video for particular objects, such as cars and street signs, and then alerts an analyst when a match to a known object is found. In-Q-Tel invested in the company, which is now contracted with the CIA and selling its software to other intelligence agencies. Joseph Santucci, the company’s president and CEO, underscored that In-Q-Tel sought him out. “We don’t go looking for them,” he told me. “They come looking for you.” Santucci said he couldn’t say how his software is used by the CIA or the Intelligence Community. But the In-Q-Tel relationship helps the company find customers it wouldn’t attract on its own, he said. “They’re very close to the customer and help mediate the process with the agencies.”74

  In 2005, In-Q-Tel invested in a company called SkyBuilt, which has developed a mobile power station that runs on solar and wind power, and can run for months with very little maintenance. That project met an initial demand from U.S. Army units operating in western Iraq, which were having problems keeping electric generators supplied with fuel. “Our investment helped spur their capability,” said Tighe. But developing portable power stations is also important for the clandestine world of the CIA, said Stephanie O’Sullivan. “A basic fact of life for us is, we’re trying to hide things like sensors and packages,” she said. “And sometimes you can’t connect to a power source somewhere. We’ve had a decades-long leadership role in power sources, and it’s something we need to sustain.”

  Agent Logic, which In-Q-Tel helped finance in 2002, sells software that can track streams of data about individuals and business events—such as the cargo manifest and crew list of a ship in transit to a U.S. port—and alert analysts to any changes as they occur en route. In 2003, In-Q-Tel invested in Language Weaver Inc., which has developed capabilities to translate massive volumes of foreign language information into English in minutes. That has saved the CIA four thousand months of man-hours of work that would have been spent translating using human translators, officials said.75 Another In-Q-Tel company, Tacit Knowledge Systems Inc., makes collaboration software that allows a customer like the CIA to search computers linked to a network to glean who on that network is an expert on a given subject.

  Because of the net of secrecy thrown over CIA contracts, it’s extremely difficult to verify claims made by the companies and In-Q-Tel about the reliability or effectiveness of their products for intelligence. Congress, which has oversight authority over the CIA and approved the formation of In-Q-Tel, has not looked into its operations. Its only action was in 2001, when it directed the CIA to arrange for an independent audit of the fund. That was done in 2001 by Business Executives for National Security, the same organization that lobbied in favor of the Clinton administration’s outsourcing initiatives in the Department of Defense.

  The BENS study found the In-Q-Tel model “impressive,” but cautioned that the CIA took too long to insert new technologies into its operations. Since then, the pace of technology funded by In-Q-Tel has risen considerably. But I could find no record of a congressional oversight hearing, either classified or not,
into In-Q-Tel’s operations since then. Ken Beeks, BENS’s vice president for policy, said his organization still keeps tabs on In-Q-Tel. “I think it’s worked pretty well,” he said. “In-Q-Tel has succeeded in finding new and inventive companies and matching them up with the highly classified requirements of the Intelligence Community.”76 Technology experts seem to agree. “In-Q-Tel is probably not a bad investment for the country,” Michael Kleeman, the director of cyber-infrastructure policy research at the University of California, San Diego, told me. “Maybe the government should do more to leverage the market so agencies don’t have to do it all.”77

  Still, the In-Q-Tel model raises questions. For one thing, these taxpayer-funded investments serve as a kind of subsidy for corporate expansion. After obtaining its investment from In-Q-Tel, Attensity, the company that can parse Moby-Dick in ten seconds, created a government advisory board of former high-ranking officials to help it crack the government contracting market. That board includes Arthur L. Money, the former assistant secretary of defense for command, control, communications, and intelligence, and Neil Birch, a former division chief at the NSA. With Attensity’s recent contracts with the Pentagon and the NSA, these appointments have clearly paid off for the company.

  Ionatron, a company that was funded by In-Q-Tel to make laser weapons, went even further. In 2003, the same year it won its first government contracts, Ionatron retained the services of the Blank Rome lobby group, which has close ties to former homeland security secretary Tom Ridge, and in recent years has paid Blank Rome thousands of dollars in lobbying fees; a Blank Rome disclosure statement filed in February 2006, for example, shows that the lobbying firm received $120, 000 in fees from Ionatron in 2005 for lobbying the House and Senate as well as the Departments of Defense and Homeland Security. Ionatron has also dished out more than $80, 000 in campaign contributions to key lawmakers on defense and homeland security committees.78 Chris Byron, a technology reporter for the New York Post, is one of the only reporters who has looked into the underside of In-Q-Tel. In a series of articles he wrote for the Post on Ionatron in 2005, he documented how In-Q-Tel employees—who are allowed to hold stock in companies the fund invests in—pocketed thousands of dollars in profits when they sold their holdings in Ionatron that year. That, too, amounted to a government subsidy, Byron told me. “I think In-Q-Tel is a government-owned black box that has no reason for being.”79

  Getting back to the larger question of outsourcing in general, many former CIA analysts believe that contracting has eroded the CIA’s authority. Ray McGovern, who co-founded Veteran Intelligence Professionals for Sanity, a group of former analysts critical of the Bush administration’s foreign policy, calls it the “sacrifice of professionalism.”80

  “Maybe I’m sounding sort of archaic now,” he told me, “but there used to be an ethos within the CIA that was really, really important. It gave us an esprit de corps that was absent from every other part of the government: we had no agenda to defend, and we could tell it like it is.” During McGovern’s last couple of years at the CIA, he often went to the White House to brief President George H. W. Bush. McGovern and his fellow analysts, he said, “often took a perverse delight in telling the president that the Soviets weren’t twelve feet tall, like the Pentagon said, but were instead five foot nine, and shrinking. That was heady stuff.” Some CIA directors actually lost their jobs because they backed up honest assessments like that, he added. “There’s an absence of any of that courage now—an absence of the ethos that you really do owe the president the truth, and not something contractors want. I did a little bit of contracting myself, and I know that the contracting officer wants a certain gloss on things and most people are paid to provide that. And that’s anathema to intelligence analysis.”

  But that problem is exacerbated when top CIA officials themselves bend their findings to fit a White House agenda, as many believe George Tenet did during the lead-up to the war in Iraq. “There really was no objectivity in the organization” under Tenet, said Melvin Goodman, the former CIA analyst at the Center for International Policy. “Yes, there were people who challenged them on the issues about the aluminum tubes and the mobile biological labs, but they were given short shrift and given other jobs to do. The people who corrupted the stuff were given cash awards and promotions.” Goodman himself resigned from the CIA over what he perceived as the politicization of Soviet analysis during the 1980s. “There’s been a real corruption and a real loss of the whole moral compass of the place,” he added. “But when you add the contractors, that just makes it worse, because then there is no accountability at all.”81

  Veterans of the CIA’s Directorate of Operations see a similar pattern in the area of covert action. Because there was so little growth in the Intelligence Community during the 1990s, “we had no choice but to hire people on contract” after 9/11, said Michael Scheuer, the outspoken former director of the CIA’s bin Laden unit. “But the problem was, the pool they drew from did not necessarily produce people familiar with fighting Islamic militancy. So they used them, but they didn’t really enhance our capability.” To get the IC up to speed, he said, “we need to do a great deal more training, government-wide. Just like we used to train people in Soviet affairs, we need experts in Islamic culture and the religion.”82

  Robert Baer, who worked undercover in Lebanon and Iraq during his years as a covert operator, told me that contractors in the Directorate of Operations are unlikely to take the same risks as a career officer. To truly understand the politics of the Middle East, he said, CIA officers must be able to infiltrate organizations like Hezbollah in Lebanon and recruit spies; being successful in dangerous endeavors like that is also the path to promotion within the agency. “But if you’re a contractor, you don’t get promoted,” he said. “You’re not there for a career, you’re just coming in and collecting a salary. If there’s a risk of getting caught, or even getting executed, what’s your incentive if you’re a contractor? You have no motivation.” Contractors, Baer said, are “inherently risk-averse. Profit is the motive, not intelligence.”83

  Since the CIA wouldn’t talk to me, I passed Baer’s comments by Timothy Sample, the executive director of the Intelligence and National Security Alliance and a former CIA case officer. He didn’t have a simple answer. “I think there may be some concerns about contractors, depending on the type of job that’s been asked of them,” he told me. “But generally, my experience is that, even for some of the most sensitive and dangerous things, contractors are not coming in [to the IC] just to make a fortune, but because they believe in the importance of it. A lot of the contractors I met when I was on Capitol Hill were all about the mission. There may be some areas where Bob is right, and where there might not be an incentive. But I have to tell you, I haven’t experienced much of that.”84

  But Sample’s defense of the CIA underscores a key problem with outsourcing. In addition to his job at INSA, Sample is an executive with General Dynamics Information Technology, one of the agency’s largest contractors, and therefore has an interest in defending the CIA and its contracting policies. After all, companies that profit from CIA outsourcing can hardly be expected to support the renationalization of intelligence analysis; concomitantly, as long as contractors dominate the halls of the CIA, the public can never be sure that profits haven’t trumped principle in the creation of actionable intelligence. Until Congress begins to provide stronger oversight over the contracting process and sets some standards for what work can be outsourced and what should remain in government hands, the issues raised by Baer and other critics will be left unresolved and unanswered, and the American people will be worse off for it.

  5

  The Role of the Pentagon

  “A Kremlin approach to organizational responsibilities.”

  —BOOZ ALLEN HAMILTON VICE PRESIDENT JOAN A. DEMPSEY, SPEAKING ABOUT DONALD RUMSFELD’S MANAGEMENT OF DEFENSE INTELLIGENCE IN A SPEECH AT HARVARD UNIVERSITY, FEBRUARY 2006

  IF THE CIA IS AMERICA’S best
-known intelligence agency, the Pentagon should be considered its most powerful. Its significance is due to one simple fact: more than 80 percent of the Intelligence Community’s budget falls under the jurisdiction of the Department of Defense, whose control extends to the three most important collection agencies in the U.S. government—the National Security Agency, the National Geospatial-Intelligence Agency, and the National Reconnaissance Office. Like the rest of the IC, these agencies outsource at least 50 percent of their operations to private companies; in the case of the NRO, that figure is an astounding 95 percent. Those numbers in part reflect the historical role played by the private sector in building and maintaining the nation’s spy satellites and their ground support system. But over the past seven years, they have stayed high as a result of the technology-intensive military strategies adopted by President George W. Bush and his first Secretary of Defense, Donald Rumsfeld. We begin the narrative in the spring of 2007, when the U.S. Air Force launched the first phase of a new computer network called the Distributed Common Ground System (DCGS).

  Designed and built by Raytheon Corporation, the DCGS is slated to become the Pentagon’s first Internet-based portal to combine tactical intelligence from military units with signals intelligence and imagery from the national collection agencies. When completed in 2008, it will link fighter pilots with intelligence analysts and commanders on the ground, giving them a common platform from which to read, interpret, and act upon intelligence data. Similar systems are being developed for the Army and Navy by Raytheon and several of its competitors in the defense industry, including Lockheed Martin, Northrop Grumman, General Dynamics, and Science Applications International Corporation.

  The idea behind these systems is to give members of the armed forces and their commanders the ability to import raw sensor feeds from military satellites, U-2 spy planes, and unmanned aerial vehicles, and thus see and hear the entire panoply of intelligence, including imagery, signals, streaming video, and radio communications, from a single platform. Eventually, military planners say, the networks will be linked together by a Global Information Grid, which will offer U.S. forces a “seamless, secure, and interconnected information environment, meeting real-time and near real-time needs of both the warfighter and the business user” (that’s according to the NSA, which is charged with protecting the grid from outside tampering).1 Air Force officers involved in the planning describe their prototype as the military’s equivalent to Travelocity, the Internet site used by consumers to make airline and hotel reservations. “For the first time, on a simple workstation, we’ll be able to guide all our ISR [intelligence, surveillance, and reconnaissance] products,” says Steven G. Zenishek, an Air Force lieutenant colonel who is managing the development of the DCGS system for the Air Force. By using the DCGS to create a common “battlespace awareness,” he says, war-fighters will be able to find and track enemy soldiers and insurgents, “making sure we target the bad guys and not the good guys.” The ultimate object is to “compress the kill chain”—the time it takes from identifying a target to launching a strike—from hours into minutes.2