The corporate takeover of U.S. intelligence

Tue Jun 5 19:28:38 PDT 2007

Geodesic Intelligence?

Okay. I'll sit down now.

Cheers,
RAH
I've gotcher "Coase's Theorem" right here, lady...
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<http://www.salon.com/news/feature/2007/06/01/intel_contractors/print.html>

Salon.com News

The U.S. government now outsources a vast portion of its spying operations
to private firms -- with zero public accountability.

By Tim Shorrock

Jun. 01, 2007 | More than five years into the global "war on terror,"
spying has become one of the fastest-growing private industries in the
United States. The federal government relies more than ever on outsourcing
for some of its most sensitive work, though it has kept details about its
use of private contractors a closely guarded secret. Intelligence experts,
and even the government itself, have warned of a critical lack of oversight
for the booming intelligence business.

On May 14, at an industry conference in Colorado sponsored by the Defense
Intelligence Agency, the U.S. government revealed for the first time how
much of its classified intelligence budget is spent on private contracts: a
whopping 70 percent. Based on this year's estimated budget of at least $48
billion, that would come to at least $34 billion in contracts. The figure
was disclosed by Terri Everett, a senior procurement executive in the
Office of the Director of National Intelligence, the agency established by
Congress in 2004 to oversee the 16 agencies that make up the U.S.
intelligence infrastructure. A copy of Everett's unclassified PowerPoint
slide presentation, titled "Procuring the Future" and dated May 25, was
obtained by Salon. (It has since become available on the DIA's Web site.)
"We can't spy ... If we can't buy!" one of the slides proclaims,
underscoring the enormous dependence of U.S. intelligence agencies on
private sector contracts.

The DNI figures show that the aggregate number of private contracts awarded
by intelligence agencies rose by about 38 percent from the mid-1990s to
2005. But the surge in outsourcing has been far more dramatic measured in
dollars: Over the same period of time, the total value of intelligence
contracts more than doubled, from about $18 billion in 1995 to about $42
billion in 2005.

"Those numbers are startling," said Steven Aftergood, the director of the
Project on Government Secrecy at the Federation of American Scientists and
an expert on the U.S. intelligence budget. "They represent a transformation
of the Cold War intelligence bureaucracy into something new and different
that is literally dominated by contractor interests."

Because of the cloak of secrecy thrown over the intelligence budgets, there
is no way for the American public, or even much of Congress, to know how
those contractors are getting the money, what they are doing with it, or
how effectively they are using it. The explosion in outsourcing has taken
place against a backdrop of intelligence failures for which the Bush
administration has been hammered by critics, from Saddam Hussein's
fictional weapons of mass destruction to abusive interrogations that have
involved employees of private contractors operating in Iraq, Afghanistan
and Guantanamo Bay, Cuba. Aftergood and other experts also warn that the
lack of transparency creates conditions ripe for corruption.

Trey Brown, a DNI press officer, told Salon that the 70 percent figure
disclosed by Everett refers to everything that U.S. intelligence agencies
buy, from pencils to buildings to "whatever devices we use to collect
intelligence." Asked how much of the money doled out goes toward big-ticket
items like military spy satellites, he replied, "We can't really talk about
those kinds of things."

The media has reported on some contracting figures for individual agencies,
but never before for the entire U.S. intelligence enterprise. In 2006, the
Washington Post reported that a "significant majority" of the employees at
two key agencies, the National Counterterrrorism Center and the Pentagon's
Counter-Intelligence Field Activity office, were contractors (at CIFA, the
number was more than 70 percent). More recently, former officers with the
Central Intelligence Agency have said the CIA's workforce is about 60
percent contractors.

But the statistics alone don't even show the degree to which outsourcing
has penetrated U.S. intelligence -- many tasks and services once reserved
exclusively for government employees are being handled by civilians. For
example, private contractors analyze much of the intelligence collected by
satellites and low-flying unmanned aerial vehicles, and they write reports
that are passed up to the line to high-ranking government officials. They
supply and maintain software programs that can manipulate and depict data
used to track terrorist suspects, both at home and abroad, and determine
what targets to hit in hot spots in Iraq and Afghanistan. Such data is also
at the heart of the National Security Agency's massive eavesdropping
programs and may be one reason the DNI is pushing Congress to grant
immunity to corporations that may have cooperated with the NSA over the
past five years. Contractors also provide collaboration tools to help
individual agencies communicate with each other, and they supply security
tools to protect intelligence networks from outside tampering.

Outsourcing has also spread into the realm of human intelligence. At the
CIA, contractors help staff overseas stations and provide disguises used by
agents working under cover. According to Robert Baer, the former CIA
officer who was the inspiration for the character played by George Clooney
in the film "Syriana," a contractor stationed in Iraq even supervises where
CIA agents go in Baghdad and whom they meet. "It's a completely different
culture from the way the CIA used to be run, when a case officer determined
where and when agents would go," he told me in a recent interview.
"Everyone I know in the CIA is leaving and going into contracting whether
they're retired or not."

The DNI itself has voiced doubts about the efficiency and effectiveness of
outsourcing. In a public report released last fall, the agency said the
intelligence community increasingly "finds itself in competition with its
contractors for our own employees." Faced with arbitrary staffing limits
and uncertain funding, the report said, intelligence agencies are forced
"to use contractors for work that may be borderline 'inherently
governmental'" -- meaning the agencies have no clear idea about what work
should remain exclusively inside the government versus work that can be
done by civilians working for private firms. The DNI also found that "those
same contractors recruit our own employees, already cleared and trained at
government expense, and then 'lease' them back to us at considerably
greater expense."

A Senate Intelligence Committee report released on Thursday spells out the
costs to taxpayers. It estimates that the average annual cost for a
government intelligence officer is $126,500, compared to the average
$250,000 (including overhead) paid by the government for an intelligence
contractor. "Given this cost disparity," the report concluded, "the
Committee believes that the Intelligence Community should strive in the
long-term to reduce its dependence upon contractors."

The DNI began an intensive study of contracting last year, but when its "IC
Core Contractor Inventory" report was sent to Congress in April, DNI
officials refused to release its findings to the public, citing risks to
national security. The next month, a report from the House Permanent Select
Committee on Intelligence rebuked the DNI in unusually strong language,
concluding that U.S. officials "do not have an adequate understanding of
the size and composition of the contractor work force, a consistent and
well-articulated method for assessing contractor performance, or strategies
for managing a combined staff-contractor workforce."

U.S. intelligence budgets are classified, and all discussions about them in
Congress are held in secret. Much of the information, however, is available
to intelligence contractors, who are at liberty to lobby members of
Congress about the budgets, potentially skewing policy in favor of the
contractors. For example, Science Applications International Corp., one of
the nation's largest intelligence contractors, spent $1,330,000 in their
congressional lobbying efforts in 2006, which included a focus on the
intelligence and defense budgets, according to records filed with the
Senate's Office of Public Records.

The public, of course, is completely excluded from these discussions. "It's
not like a debate when someone loses," said Aftergood. "There is no debate.
And the more work that migrates to the private sector, the less effective
congressional oversight is going to be." From that secretive process, he
added, "there's only a short distance to the Duke Cunninghams of the world
and the corruption of the process in the interest of private corporations."
In March 2006, Randy "Duke" Cunningham, R-Calif., who had resigned from
Congress several months earlier, was sentenced to eight years in prison
after being convicted of accepting more than $2 million in bribes from
executives with MZM, a prominent San Diego defense contractor. In return
for the bribes, Cunningham used his position on the House appropriations
and intelligence committees to win tens of millions of dollars' worth of
contracts for MZM at the CIA and the Pentagon's CIFA office, which has been
criticized by Congress for spying on American citizens. The MZM case
deepened earlier this month when Kyle "Dusty" Foggo, the former deputy
director of the CIA, was indicted for conspiring with former MZM CEO Brent
Wilkes to steer contracts toward the company.

U.S. intelligence agencies have always relied on private companies for
technology and hardware. Lockheed built the famous U-2 spy plane under
specifications from the CIA, and dozens of companies, from TRW to Polaroid
to Raytheon, helped develop the high-resolution cameras and satellites that
beamed information back to Washington about the Soviet Union and its
military and missile installations. The National Security Agency, which was
founded in the early 1950s to monitor foreign communications and telephone
calls, hired IBM, Cray and other companies to make the supercomputers that
helped the agency break encryption codes and transform millions of bits of
data into meaningful intelligence.

By the 1990s, however, commercial developments in encryption, information
technology, imagery and satellites had outpaced the government's ability to
keep up, and intelligence agencies began to turn to the private sector for
technologies they once made in-house. Agencies also turned to outsourcing
after Congress, as part of the "peace dividend" that followed the end of
the Cold War, cut defense and intelligence budgets by about 30 percent.

When the National Geospatial-Intelligence Agency was created in 1995 as the
primary collection agency for imagery and mapping, for example, it
immediately began buying its software and much of its satellite imagery
from commercial vendors; today, half of its 14,000 workers are full-time
equivalent contractors who work inside NGA facilities but collect their
paychecks from companies like Booz Allen Hamilton and Lockheed Martin. In
the late 1990s, the NSA began outsourcing its internal telecommunications
and even some of its signals analysis to private companies, such as
Computer Services Corp. and SAIC.

Outsourcing increased dramatically after 9/11. The Bush administration and
Congress, determined to prevent further terrorist attacks, ordered a major
increase in intelligence spending and organized new institutions to fight
the war on terror, such as the National Counterterrorism Center. To beef up
these organizations, the CIA and other agencies were authorized to hire
thousands of analysts and human intelligence specialists. Partly because of
the big cuts of the 1990s, however, many of the people with the skills and
security clearances to do that work were working in the private sector. As
a result, contracting grew quickly as intelligence agencies rushed to fill
the gap.

That increase can be seen in the DNI documents showing contract award
dollars: Contract spending, based on the DNI data and estimates from this
period, remained fairly steady from 1995 to 2001, at about $20 billion a
year. In 2002, the first year after the attacks on New York and Washington,
contracts jumped to about $32 billion. In 2003 they jumped again, reaching
about $42 billion. They have remained steady since then through 2006 (the
DNI data is current as of last August).

Because nearly 90 percent of intelligence contracts are classified and the
budgets kept secret, it's difficult to draw up a list of top contractors
and their revenues derived from intelligence work. Based on publicly
available information, including filings from publicly traded companies
with the Securities and Exchange Commission and company press releases and
Web sites, the current top five intelligence contractors appear to be
Lockheed Martin, Northrop Grumman, SAIC, General Dynamics and L-3
Communications. Other major contractors include Booz Allen Hamilton, CACI
International, DRS Technologies and Mantech International. The industry's
growth and dependence on government budgets has made intelligence
contracting an attractive market for former high-ranking national security
officials, like former CIA director George Tenet, who now earns millions of
dollars working as a director and advisor to four companies that hold
contracts with U.S. intelligence agencies and do big business in Iraq and
elsewhere.

Congress, meanwhile, is beginning to ask serious questions about
intelligence outsourcing and how lawmakers influence the intelligence
budget process. Some of that interest has been generated by the Cunningham
scandal. In another recent case, Rep. Rick Renzi, a Republican from
Arizona, resigned from the House Intelligence Committee in April because he
is under federal investigation for introducing legislation that may have
benefited Mantech International, a major intelligence contractor where
Renzi's father works in a senior executive position.

In the Cunningham case, many of MZM's illegal contracts were funded by
"earmarks" that he inserted in intelligence bills. Earmarks, typically
budget items placed by lawmakers to benefit projects or companies in their
district, are often difficult to find amid the dense verbiage of
legislation -- and in the "black" intelligence budgets, they are even
harder to find. In its recent budget report, the House Intelligence
Committee listed 26 separate earmarks for intelligence contracts, along
with the sponsor's name and the dollar amount of the contract. The names of
the contractors, however, were not included in the list.

Both the House and Senate are now considering intelligence spending bills
that require the DNI, starting next year, to provide extensive information
on contractors. The House version requires an annual report on contractors
that might be committing waste and fraud, as well as reviews on its
"accountability mechanisms" for contractors and the effect of contractors
on the intelligence workforce. The amendment was drafted by Rep. David
Price, D-N.C., who introduced a similar bill last year that passed the
House but was quashed by the Senate. In a statement on the House floor on
May 10, Price explained that he was seeking answers to several simple
questions: "Should (contractors) be involved in intelligence collection?
Should they be involved in analysis? What about interrogations or covert
operations? Are there some activities that are so sensitive they should
only be performed by highly trained Intelligence Community professionals?"

If either of the House or Senate intelligence bills pass in their present
form, the overall U.S. intelligence budget will be made public. Such
transparency is critical as contracting continues to expand, said Paul Cox,
Price's press secretary. "As a nation," he said, "we really need to take a
look and decide what's appropriate to contract and what's inherently
governmental."

-- By Tim Shorrock

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R. A. Hettinga <mailto: rah at ibuc.com>
The Internet Bearer Underwriting Corporation <http://www.ibuc.com/>
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"... however it may deserve respect for its usefulness and antiquity,
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