Spies for Hire

by Tim Shorrock

  CACI’s largest single contract, worth $450 million, is with the U.S. Army’s electronics communication command, which is responsible for electronic warfare—command, control, communications, computers, intelligence, surveillance, and reconnaissance, also known as C4ISR.35 Other customers include the U.S. Navy’s littoral and mine warfare program, the Air Force’s Pacific Command and Control unit, and the Defense Information Systems Agency, the Pentagon unit responsible for network centric warfare. Elsewhere in the IC, CACI holds major contracts with the Department of Homeland Security and its Customs and Border Protection agency. But the one contract that CACI will always be known for is the one to provide interrogators at Abu Ghraib. How a request for information technology services became a cover for the brutal treatment of Iraqis remains one of the strangest episodes of the history of outsourcing.

  As mentioned earlier, CACI got involved in Abu Ghraib through an IT contract it obtained when it acquired a company called Premier Technology Group in 2003. PTG was formed in the late 1990s by a group of former Army intelligence officers who had worked in Bosnia. By acquiring PTG, CACI told investors, it expanded its activities “to a whole host of tactical units in country and in other theaters of operations” around the world.36 Best of all for CACI, PTG had existing contracts with the Pentagon for intelligence analysis and security services, IT, training, program management, and logistics, and 360 employees with high-level security clearances.

  At the time of CACI’s acquisition, all of PTG’s contracts were being administered by the Department of the Interior. Two of the contracts, one worth $19.9 million, the other $21.8 million, required CACI to supply “screening, interrogation and support functions” and “human intelligence” at an unspecified site in Iraq. Because CACI was also being asked to screen Iraqis captured by U.S. forces, the contracts also called for biometric software that could identify suspects through facial characteristics and fingerprints. According to Frank Quimby, a Department of the Interior press officer, the Army justified these IT requests because “enormous amounts of information had to be integrated in order to prepare for interrogations and make maximum use of the information gathered.”37 It was through this convoluted—and virtually untraceable—route that CACI ended up at Abu Ghraib prison. Altogether, CACI hired thirty-one interrogators under its two IT contracts.

  The interrogators arrived at the prison at a critical time. For the first few months after U.S. forces took control of the prison, the interrogations were conducted by U.S. military intelligence officers. But their efforts didn’t yield the kind of information on the insurgency sought by Rumsfeld and Cambone. Their solution, Seymour Hersh reported in The New Yorker, “was to get tough with those Iraqis in the Army prison system who were suspected of being insurgents.” Cambone ordered Major General Geoffrey Miller, the commander of the detention center at Guantánamo, to visit Baghdad to review interrogation procedures. His solution “was to ‘Gitmoize’ the prison system in Iraq—to make it more focused on interrogation”—by using techniques of sleep deprivation, exposure to extreme temperatures, and placing prisoners in stress positions for lengthy periods of time. Miller and his new recruits, Hersh wrote, brought “unconventional methods to Abu Ghraib.”38 CACI was brought in precisely at the time that Miller’s “unconventional methods” were being introduced.*

  In 2004, after the desperate conditions at the prison were reported to Army criminal investigators by a brave MP, Specialist Joseph M. Darby, the military launched several investigations. The first, by Army Major General Antonio Taguba, found numerous instances of “sadistic, blatant, and wanton criminal abuse” at the prison. Taguba identified a CACI employee, Steven Stefanowicz, as one of four contractors “either directly or indirectly responsible” for the abuses, and recommended that he be fired and have his security clearances revoked. Another investigation, led by Army Major General George Fay, excoriated both the military and the contractors. Fay looked into the military intelligence system at Abu Ghraib and expanded Taguba’s critique of CACI’s personnel. His report detailed serious misconduct “ranging from inhumane to sadistic” on the part of twenty-three military interrogators and four unnamed civilian contractors from CACI.39 Many of the findings in the Taguba and Fay investigations were corroborated during the trials of the guards at the prison. Altogether, nine low-level Army soldiers were convicted for their abuse at Abu Ghraib and given sentences ranging from six months to ten years in prison. But despite the fact that military investigations found that CACI interrogators directed some of the worst abuse at Abu Ghraib, they and their employer escaped scot-free.*

  Since day one, London, CACI’s CEO, has treated Abu Ghraib as a public relations problem. Over the past four years, CACI has sued or threatened to sue more than a dozen journalists because of their coverage of Abu Ghraib. In September 2004, for example, Peter Singer, a Brookings Institution scholar and the author of Corporate Warriors, the now classic book about private military companies, penned a rather mild opinion piece for the Washington Post in which he criticized the fact that corporations involved in Abu Ghraib have escaped federal scrutiny. In response, Singer told me, London wrote several letters to him demanding a retraction. When Singer refused to respond, London upped the ante by threatening to sue Brookings for libel. Brookings’s president, who received the letters, called London’s bluff by ignoring him. London finally gave up. London also threatened to sue Robert Greenwald, the producer of Iraq for Sale, unless he corrected his film. “In my opinion, CACI’s people are classic and complete bullies,” Greenwald told me during a 2007 media conference in Memphis we both attended.

  A sadder coda was offered up that year by General Taguba, who was forced to retire from the Army in January 2007 after more than thirty years of service. During an appearance before San Francisco’s Commonwealth Club on June 25, Taguba was asked what he thought about the presence of private contractors at Abu Ghraib. The “private outsourcing” was “rather interesting,” he replied, but wasn’t by itself significant. What was more important was the way contractors and military officials “pointed fingers at each other” and refused to accept responsibility. “No one but one”—Specialist Darby—“would account for themselves,” he said.40 Like a good soldier, he left unsaid the fact that his own commanders, including Donald Rumsfeld and the other men running the Pentagon, refused to accept responsibility for themselves. But it was very clear, from his tone and body language, that Taguba was deeply troubled about the lack of accountability.

  CACI seemed to lose some of its swagger after Rumsfeld left the Pentagon. Starting in January 2007, CACI’s stock began a rapid plunge in value, sinking from a high of about $60 at the end of 2006 to a low of $42 in August 2007, where it stayed for most of the year. The reason for the sell-off was CACI’s decision to lower its revenue predictions for 2007 from $2 billion to $1.8 billion and cut its earnings estimates about 50 cents per share (in the end, CACI’s 2007 revenues hit $1.9 billion, a 10 percent increase over 2006). The news came “as a shock to Wall Street, whose analysts [had] been overwhelmingly upbeat on the stock,” MarketWatch reported.41 The drop apparently forced the company to seek the resignation of its chief financial officer, Steven Waechter, who left the company in January.42* The company attributed its revised numbers to “unexpected reductions in demand on contracts supporting certain operations and maintenance activities in the Department of Defense.”43 But it was hard not to conclude that CACI’s star had dimmed at the Pentagon.

  Despite the slide in CACI’s stock price, by the end of 2007 CACI’s intelligence business was growing at a rate of nearly 20 percent a year. In September, CACI continued its buying binge by acquiring Athena Innovative Solutions, an intelligence analysis firm owned by Veritas Capital, the private equity fund where Richard Armitage, CACI’s former board member, was a senior adviser from 2005 to 2007. The $200 million deal had an interesting backstory: Athena, once known as MZM, was the company at the center of the bribery scandal of former congressman Duke Cunningham. He is serving
eight years in prison for receiving financial favors from MZM founder Mitchell J. Wade, who left the company as a result of the scandal. Despite its taint, Athena had something CACI wanted: six hundred professionals, over 95 percent of whom possessed security clearances at the top secret level or above. “You can’t duplicate the type of people that Athena has and the clearances it has,” Veritas president Robert B. McKeon told the Washington Post. “In one fell swoop to be able to buy a company with 600 of them is quite an achievement.”44

  In June 2007, London announced that he would relinquish his day-to-day control as CEO and pass those duties to Paul Cofoni, an intelligence industry veteran who came to CACI after working at CSC and General Dynamics. London continued to serve as chairman of the board, a position he had held since 1990. His transition marked the end of an era of meteoric growth in intelligence spending and outsourcing. Still, it was clear the company’s tradition as a shadow intelligence agency would be carried on by CACI’s senior executive team, which, as we saw earlier, expanded in the fall of 2007 to include retired Admiral Albert Calland, the former deputy director of the National Counterterrorism Center. Over his long intelligence career, Calland had been a Navy SEAL, a special operations commander, and deputy director of the CIA. Since the Iranian hostage crisis in 1980, he told Defense News, his focus has been on counterterrorism operations. “What I want to do [now] is to continue to serve in that capacity in a supporting role,” he said. “The terrorism problem can be divided up into three major muscle groups: the defensive piece, which is defending the homeland; then there are two pieces to the offensive, one being capturing and killing bad guys, the other being what’s been termed the war of ideas, but it is really a battle over the image of our country.” He concluded: “The threat posed by terrorism, and the threat to people, really has become more of an information battle.”45 Jack London could retire in peace: his company was in good hands.

  ManTech: On the Battlefield

  CACI’s primary competitor in the world of the pure plays is ManTech International. ManTech, based in Fairfax, Virginia, defines itself as providing “mission-critical national security programs” for the Intelligence Community and the Departments of Defense, State, Homeland Security, and Justice. Since 9/11, its fastest-growing business has been providing communications software and network services to the National Security Agency, the Defense Intelligence Agency, and other military units directly involved in the war in Iraq. Pentagon and intelligence contracts account for 95 percent of its revenues.

  “We are on the battlefield,” proclaimed George J. Pedersen, ManTech chairman and CEO, at the 2006 Friedman, Billings, Ramsey investors conference where Tenet spoke. ManTech, he promised investors, is a “national security pure-play” operating “at the convergence of national security and technology” and “driven by expansion into concentrated intelligence, defense and homeland security.” Among its many services in what executives call its “global war on terror business” is intelligence analysis, data mining, and producing finished intelligence reports.

  ManTech’s hottest markets include Iraq and Kuwait, where the company employs more than seventy consultants working to maintain and repair electronic equipment for the U.S. military. It sells and operates signals intelligence systems to U.S. Army units in the Middle East, Germany, Korea, and Bosnia, and has personnel deployed in Afghanistan, Uzbekistan, and Kyrgyzstan to support U.S. Air Force operations. It provides “cyber and physical security” for U.S. embassies and consulates around the world, and in 2005 signed a $10.5-million contract with the Transportation Security Administration to provide intelligence analysis services for the TSA’s Alien Flight School Program. As a result of that contract, one of the nation’s most important intelligence tasks—monitoring the schools where the 9/11 hijacker pilots received their training—has been outsourced.

  Pedersen is a short, no-nonsense Navy veteran with a shock of red hair. He founded ManTech in 1968 in New York and initially focused on technical projects for the Navy. In the 1980s, he moved his headquarters to Washington and began a slow drive to capture markets in defense and intelligence. In 1988, the Washington Post called ManTech “something of a mystery,” and described Pedersen as a man who shunned the limelight and kept “an unusually low profile.”46 But that’s no longer the case: since the early 1990s, Pedersen has expanded ManTech by hiring as advisers and directors some of the most well-connected figures in U.S. defense and intelligence, and then pushing his way to the top through an aggressive PR and lobbying campaign.

  In 1999, Pedersen hired Richard Armitage to serve on the company’s advisory board (this was at the same time that Armitage was on CACI’s board of directors). After Armitage left the State Department in 2005, Pedersen brought him in again to serve as a ManTech director. Armitage brings “enormous insight into our corporation’s capabilities and operations, and he will be a tremendous strategic asset as we grow the company,” the company said upon his appointment.47

  ManTech’s board also includes three former high-ranking intelligence officials with strong ties to the national security superstructure. Richard Kerr, who was appointed in 2002, is a thirty-two-year veteran of the Central Intelligence Agency, where he served from 1989 to 1993 as deputy director and in 2004 led an internal review of the CIA’s performance prior to the Iraq War. During his career, he also served on a scientific advisory board for the NSA and as president of the Security Affairs Support Association, the predecessor to INSA, the association of CIA and NSA contractors. In 2004, ManTech brought onto its board retired Admiral David Jeremiah, the former vice chairman of the Joint Chiefs of Staff who now sits on President Bush’s Foreign Intelligence Advisory Board and is a paid adviser to the NRO (Jeremiah, readers might remember, also wrote an influential report for the CIA after the agency failed to predict India’s nuclear tests). Kenneth Minihan, the former director of the NSA, was elected to ManTech’s board in 2006. ManTech’s board members, Pedersen explained, are “very knowledgeable people. They are not salesmen for us. They are basically individuals we go to when we look at new markets or develop new technology.”48 These appointments have paid off, in dividends.

  Today, more than 95 percent of ManTech’s revenues come from customers in the Intelligence Community and the Department of Defense, including the NSA, the NRO, the Office of the Secretary of Defense, the U.S. Army’s Intelligence and Security Command, and various intelligence units in the Departments of Energy and State as well as the Air Force and Marine Corps.49 (In 2000, ManTech even bid, in a consortium led by OAO Corp., later acquired by Lockheed Martin, for the NSA’s Groundbreaker project, one of the largest federal outsourcing projects in U.S. history.) Since going public in 2002, ManTech’s revenues have grown substantially, from $701 million in 2003 to $1.1 billion in 2006. Its executives believe that the Pentagon’s need for intelligence in Iraq and other hot spots, along with the organizational shifts in the military that are breaking down barriers between the armed services, means that ManTech’s growth rates can continue almost indefinitely. “DoD funding is not going to change, certainly not during the Bush administration,” Pedersen said at the FBR investors conference. “We believe the war on terror is a long war.”

  ManTech has six thousand employees, 45 percent of whom hold top secret security clearances or higher. According to company literature, ManTech’s intelligence work includes policy development, planning, and program implementation; information collection, intelligence analysis, and linguistic services; and special mission support. Most of its acquisitions are geared toward expanding its workforce, as ManTech did when it acquired Aegis Research Corporation and its five hundred cleared analysts in 2003 and McDonald Bradley and its two hundred cleared employees in 2007. In contrast to many of its competitors, which place their employees in agency offices in the Washington area, ManTech deploys many operatives in Iraq and Afghanistan, where they support U.S. military operations. “The folks they recruit for these positions aren’t what you would call Boy Scouts,” says Thomas Meagh
er, who follows the intelligence industry for Friedman, Billings, Ramsey. “They’re typically ex–special operations people, having in a lot of cases geographical familiarity, usually some IT capability, and, most important these days, language capabilities as well. A ManTech person might be running an intelligence collection system in Iraq, for example.”50

  ManTech doesn’t shy away from talking about its role as an outsourcing agent for the government. In 2006, it paid $100 million to acquire Gray Hawk Systems, a privately held intelligence contractor with $70 million in revenue and 450 employees holding top secret security clearances, and an undisclosed amount to buy GRS Solutions, a company ManTech says is engaged in “counterterrorism/counter intelligence missions around the world.”51 Robert Coleman, ManTech’s president and chief operating officer, explained the acquisitions to analysts in a conference call. “One of the fastest-growing outsourcing opportunities in the intelligence community is in the field of intelligence analysis,” he said, adding that the Gray Hawk and GRS acquisitions extended ManTech’s growth “into a new and highly classified area” of the Intelligence Community. Later on in the call there was an illuminating exchange between Meagher, the FBR analyst, and Coleman and Pedersen about the IC’s personnel policies: