Spies for Hire

by Tim Shorrock

  Meagher: The Directorate of National Intelligence has published their Strategic Human Capital Plan. And obviously they are trying to increase the number of in-house intelligence analysts. I was just wondering how you see that playing out within the context of what you and other people are doing on an outsourcing basis?

  Coleman: Yes, it’s too early to tell, but I think that’s a longer-term issue, Tom. And the fact is also that as these government folks with this highly specialized training reach the retirement level, they come to contractors. And I don’t think the government is going to want to lose that domain knowledge and talent. But in terms of the impact, I think that’s a longer-term issue.

  Pedersen: May I make a comment? I sat on a committee with one of the intelligence agencies two years ago, and the committee tried to raise the salary structure for the intelligence community because we recognized that it would be very difficult for the government itself to hire the kind of talent they need at the current salary structure. Unfortunately, the committee and those engaged were not successful in raising those salaries. So despite the desire, and I think it would be a damn good thing if they could hire people in-house, I’m not sure they can get their total needs as they anticipate by hiring inside…. I just don’t see the demand from the professional contracting side really going down.52

  The exchange was interesting on a couple of accounts. First, it underscores ManTech’s strategy of leveraging its six-thousand-strong army of cleared analysts and technical specialists to obtain work that used to be performed by government employees, and its certainty that the trend will continue into the indefinite future. Second, it illustrates how closely the industry and the intelligence agencies work. Pedersen, the CEO of one of the largest outsourcing companies in government, was invited to sit as an adviser on personnel issues to an intelligence agency that his company works for. That is a major conflict of interest that underscores the serious need for greater oversight of the Intelligence-Industrial Complex.

  Another distinctive feature of ManTech’s outsourcing business is its global nature. At the FBR conference in 2006, Coleman presented the company’s strategy against a map of the world showing the forty-one countries where ManTech’s operatives work. They included Haiti, Turkey, South Korea, Japan, Guatemala, Nicaragua, and about a dozen more in South America and Europe.

  “This is a road map of where US forces are engaged throughout the world,” explained Coleman, who was trained to give presentations like this when he worked for the White House National Security Council’s Crisis Management Center during the administrations of Ronald Reagan and George H. W. Bush. Pointing to Europe, he added: “As NATO expands its role, our local presence in these areas positions us to take advantage of those opportunities and continue to grow our business. And as information flows to the ultimate point of consumption” on the ground, he went on, “the military will need timely, accessible and actual intelligence that will require more complex systems.” That, in turn, “will require more contractors to support those systems.”

  ManTech won’t place a number on the percentage of its employees working overseas, but it’s substantial. And such work is dangerous. As mentioned earlier, two ManTech contractors deployed in Afghanistan in support of U.S. military operations there were killed in 2005 when an Afghanistan Kam Air Boeing 737 crashed while traveling between the cities of Herat and Kabul.53

  One element of government contracting that ManTech has excelled in involves intellectual property. Contractors are paid a premium when they develop, from scratch, a computer program that is unique for the agency they work for. But there is nothing to stop the same contractor from selling the same software to the government again and again, for the same premium price. This is essentially a form of subsidy, and ManTech has perfected it. “We use IP as a discriminator to open new markets and to continue penetrating our existing markets for the purpose of driving additional contacts,” Coleman explained to investors.

  A notable example is the Joint Regional Information Exchange System (JRIES), which was developed by ManTech in 2002. It allows intelligence agencies operating at the highest levels of security to share information and intelligence with agencies and government employees (and contractors) not cleared to work with classified documents. JRIES was first used by the Defense Intelligence Agency to link its counterterrorism centers with police intelligence units nationwide to share sensitive information about investigations. In 2004, it was adapted for use by the Department of Homeland Security, which called it the Homeland Security Information Network (HSIN). It allows Homeland Security to collect threat information from different parts of the government and share it with its own agents and analysts wherever they are stationed, in both classified and unclassified formats. HSIN is now deployed by police intelligence units in all fifty states.

  The JRIES software was first developed by ManTech for the National Security Agency. After the software was successfully launched at the NSA, ManTech turned around and sold the same program to the DIA and, later, to the DHS. Until the Friedman, Billings, Ramsey conference, ManTech had not disclosed the identity of the intelligence agency that first bought the software. But during his presentation at FBR, Coleman got carried away, perhaps by bravado, which is not uncommon in these road shows for investors. JRIES, he confided, is “an example of how we were able to take intellectual property development, and a contract to the NSA”—and here he chuckled nervously, probably realizing he had let slip classified information—“and develop a security assessment tool that’s one of the mainstream tools of the industry right now.”

  ManTech’s HSIN contract with DHS is worth $7.1 million.54 So far, it has been a mixed success. In 2006, the DHS Office of Inspector General found that HSIN had been implemented so rapidly that Homeland Security officials could not clearly define what the network’s role would be, or how it might work with other systems. Moreover, only about 2 to 6 percent of the potential users were signing on. Those that did use it were frustrated and confused by the system, and didn’t trust it to keep sensitive information secure.

  “Although users generally like the web portal technology because of its user-friendliness and flexibility, those we interviewed said they are not committed to the system approach,” the inspector general said. “Because some lack trust in the system’s ability to safeguard sensitive information, and because the system does not provide them with useful situational awareness and classified information, users do not regularly use HSIN. Instead, users resort to pre-existing means such as related systems and telephone calls to share information, which only perpetuates the ad hoc, stove-piped information-sharing environment that HSIN was intended to correct.”55

  In May 2007, a House homeland security subcommittee held a hearing on the system and found that the problems had persisted. “HSIN was supposed to be the department’s main pipeline for sharing unclassified information with state, local and tribal partners,” said California Democrat Jane Harman. “What we have instead is kind of a mess.”56

  Charles Allen, a former CIA official who is now assistant secretary of homeland security for information analysis, agreed with Harman. “HSIN was not a good system,” he said. Allen also disclosed that contractors made up 60 percent of the workforce in his office, which is the intelligence arm of DHS. “I won’t be comfortable until we reverse the ratio” from 60–40 to 40–60, he said.57

  ManTech, with its red corporate insignia, is ubiquitous at industry gatherings, and the company runs large, colorful ads in industry publications such as Government Computer News and Signal magazine (“To deliver highly sensitive information securely, the military and intelligence communities turn to ManTech”). It sponsors a daily intelligence report on WTOP, Washington’s all-news radio station. ManTech is also a major lobbyist, having spent at least $208, 000 to influence the U.S. Congress during an eighteen-month period in 2005 and 2006, according to company filings with Congress. More than half of that money—$108, 000—went to the defense lobbyist (and earmark speci
alist) John G. Campbell to influence the House and Senate on defense appropriations issues. Another $80, 000 went to Grizzle & Company to lobby Congress on Department of State IT security initiatives. In January 2006, ManTech’s vice president, Robert D. Knight, registered as a company lobbyist. His focus is privatization and “private sector vs. public sector research”—an indication that the company takes seriously the plans by intelligence officials to reduce the community’s reliance on contractors. Meanwhile, to get its way on Capitol Hill, Pedersen runs a political action committee that has become one of the largest donors in the defense industry. In the 2004 and 2006 election cycles, ManTech donated a total of $328, 601 to candidates for federal office, equally divided between Republicans and Democrats, according to the Center for Responsive Politics.

  During that time, one of ManTech’s biggest donations, $21, 000, went to Harold Rogers, R-Kentucky, the former chairman of the House Homeland Security Appropriations Subcommittee, which has jurisdiction over spending on such items as ManTech’s HSIN system. Overall, the largest recipient of ManTech PAC money is Steny Hoyer, D-Maryland, who is now the House majority leader and represents a district where ManTech has a major facility. Between 2001 and 2006, ManTech donated $49, 000 to his campaigns and leadership funds (in a 2006 defense appropriations bill, Hoyer managed to secure $2.8 million in earmarked contracts for ManTech).58 Those donations, ManTech says, reflect the company’s desire to participate in the political process. “We support a broad base of officials with the overall objective of contributing to those officials who support the nation’s efforts to fight terrorism, both at home and abroad—and are committed to protecting our country’s national security.”59

  But ManTech’s contributions to a lawmaker from Arizona with close ties to the company has drawn the attention of federal investigators. That story revolves around former Army Major General Eugene Renzi of Arizona, and his son, the former Republican congressman Rick Renzi. Their actions help us understand how ManTech became a major player in the intelligence outsourcing industry.

  The elder Renzi, who was with ManTech from 1993 until his death in February 2008, was ManTech’s senior executive vice president and president of ManTech Defense Systems Group, the company’s largest unit. He was responsible for management of the company’s extensive command, control, communications, computers, and intelligence (C4I) contracts in support of the Department of Defense and the national intelligence agencies. Renzi also represented ManTech in several contractor organizations, including the Armed Forces Communications and Electronics Association, where he served from 2003 to 2007 as chairman of the board of directors. Before joining ManTech, Renzi spent thirty years in the Army, where he worked at the highest levels of military intelligence. At his retirement, he was director of command and control networks for the U.S. Pacific Command. Before that, he commanded several signals intelligence battalions that are part of the NSA, including the USA Communications Command at Fort Huachuca, Arizona, which is also headquarters for the U.S. Army’s intelligence school. Renzi served twice in senior command posts at Fort Huachuca, where ManTech has held several multimillion-dollar, multiyear contracts.

  Renzi was one of the first Army commanders to outsource military intelligence services. During his years at Fort Huachuca, he developed close ties with Betac, a leading intelligence contractor that we met in chapter 3. During the 1980s, Betac won millions of dollars’ worth of contracts for the continuity of government project created by the Reagan administration to prepare a shadow government in the event of a nuclear war. To build the system, readers will recall, FEMA hired the Harris Corporation, the CIA hired McDonnell Douglas, and the Pentagon hired TRW. Most of the military’s contracting tasks were assigned to the Army’s Information Systems Command in Fort Huachuca. There, the outsourcing orders were handled by Renzi, who was the deputy chief for operations at the base and the senior official for the COG project. Between 1983 and 1985, under Renzi’s watch, Betac’s contract expanded from $316, 000 to nearly $3 million; and by 1988, the journalist Steven Emerson reported in U.S. News & World Report, Betac had obtained “multiple COG contracts worth $22 million.”60

  Around this time, W. Thomas Golden, a civilian intelligence officer working for Renzi, began to question the huge contracts flowing to Betac. Specifically, Emerson reported, “he became curious after learning that a number of Army officials who had worked with Betac at Fort Huachuca and elsewhere were retiring from the Army and being hired back, under the auspices of Betac. As paid consultants to the Army, some were earning up to $400 a day. Seldom had the Pentagon’s revolving door spun more quickly.” Golden also discovered that Renzi “had been the key player” in the Betac award, and that one of his sons, most likely the future congressman Rick Renzi, was working for Betac. Golden took his findings to the Army’s inspector general, which launched an investigation. What the IG found was appalling.

  At the base, Army investigators discovered that many contract documents had been destroyed. COG contractors had billed more than one agency for the same work. Contracts were increased by as much as 50 percent without any input from oversight officials. Communications vital to the project didn’t work properly, and were costing hundreds of millions of dollars in overruns. Despite the massive spending on communications, the agencies involved in the COG network couldn’t communicate with each other. Moreover, after Golden spoke to investigators under an offer of confidentiality, his comments were leaked to General Renzi, who let it be known that Golden was not welcome on his base. But the harassment didn’t stop there. Golden was investigated by four different agencies (he was eventually cleared). Others who testified had their careers ruined, according to several press reports. “It cost myself and my family three years of living in absolute hell,” Golden told CNN in 1991. “My family paid a high price.”61

  The Army inspector general concluded that General Renzi had indeed retaliated against Golden, and reported that because of Renzi’s actions, Golden’s effectiveness “was diminished” and he “could not do his job.”62 The House Armed Services Committee investigated the COG contracts and agreed with the assessment. In the end, some illegal COG contracts were canceled and Renzi was reprimanded by the Army for retaliating against Golden. But he was soon promoted to the rank of major general and stationed in Hawaii, where he finished his Army career at the Pacific Command.

  Renzi’s contacts at Fort Huachuca proved to be invaluable for ManTech. The company’s first contracts at the intelligence base—testing command and communications networks for the Joint Interoperability Test Command—were awarded in 1983, when Renzi was the commandant. Within a few years of Renzi’s hiring at ManTech, the company won several more contracts at the base, including a lucrative $163 million a year contract signed in 2001 to provide IT support through the U.S. Army’s 5th Signal Command; it is still in effect.63 Altogether, ManTech holds $467 million in contracts at Fort Huachuca, with options for an additional $1.1 billion through 2008. The company maintains an office in nearby Sierra Vista, and as of July 2007, was recruiting for at least a dozen jobs at the base.

  Rick Renzi now appears to be carrying on his father’s tradition of helping intelligence contractors. The junior Renzi grew up in Buena Vista, near Fort Huachuca. After apparently working for Betac during the late 1980s, Renzi went to law school and then parlayed his contacts in Arizona to start a lucrative career in insurance and real estate. In 2002, running as a Republican, he was elected to Congress to represent Arizona’s First District during a hotly disputed contest in which both President Bush and Vice President Cheney made personal appearances on his behalf. Once in the House, he quickly earned a seat on the Intelligence Committee, where one of his key issues was integrating information across agency lines—precisely what ManTech does. “Having worked in the intelligence field, and as a member of the House Permanent Select Committee on Intelligence, I know first hand that we must continue to rebuild our intelligence community to guarantee better communication among the various intelligence
agencies,” Renzi stated on his official Web site. (I interpreted Renzi’s “work in the intelligence field” as a reference to his years at Betac, but his staff did not respond to my requests to confirm this.)

  In 2003, Renzi apparently carried his loyalty to ManTech too far. During his first year in office, Renzi added a provision to a defense authorization bill that exempted Fort Huachuca from tight federal restrictions on water use. The amendment reversed a 2002 agreement that required the fort to pay half the costs of mitigating the area’s water use, including use by private contractors, and saved the fort and its contractors hundreds of millions of dollars. Environmentalists who had fought for the initial agreement charged that Representative Renzi’s actions amounted to “a disturbing conflict of interest” because one of the chief contractors at the fort is ManTech, Renzi’s father’s company.64 In 2006, the Justice Department opened an investigation of the younger Renzi, including his ties to ManTech, and later expanded the probe into allegations involving real estate deals. The case quickly became embroiled in the scandal over the Justice Department’s firing of eight U.S. attorneys (one of those fired, Arizona’s Paul Charlton, had opened the Renzi investigation). In April 2007, Renzi resigned from his seat on the Intelligence Committee, and in August announced that he would not seek reelection. (In February 2008, Renzi was indicted on charges of extortion and fraud related to his real estate deals.) Over his career in Congress, no company donated more to his campaigns than ManTech International. Since 2002, ManTech donated a total of $37, 200 to the junior Renzi, according to the Center for Responsive Politics.

  SI International

  Like ManTech, SI International Inc. of McLean, Virginia, took advantage of the post-9/11 rise in military and intelligence spending to go public in 2002. Since then, its revenues have more than tripled, from $150 million to $462 million in 2006. Just a little less than half of SI’s revenue, 48 percent, comes from intelligence work, and the number of its classified contracts has seen “double-digit growth” since 2002, according to CEO Brad Antle. That should solidify the company’s solid record with intelligence, he says. “If we keep that up over five years, that will double our sales,” Antle predicted at the FBR Washington conference.