Don't Privatize Our Spies

[R.A. Hettinga]

Geodesic espionage, anyone?


Obviously, if the NYT hates it, it must be a good idea. Letters of Marque,
and all that.

Eventually, people can just hire spies for themselves, there's no need to
pay a "bandit who doesn't move" (the state) to pay spies for you, right?
:-).

Icrasez l'Infbme!*: Disintermediate Langley Now.

Cheers,
RAH
*"Icrasez l'Infbme!" ('crush infamy', typically applied to the Church,
repressive authority, etc.) -- Voltaire
------

<http://www.nytimes.com/2007/06/25/opinion/25keefe.html?th=&emc=th&pagewanted=print>

The New York Times


June 25, 2007

OP-ED CONTRIBUTOR

Don't Privatize Our Spies

By PATRICK RADDEN KEEFE

SHORTLY after 9/11, Senator Bob Graham, the chairman of the Senate
Intelligence Committee, called for "a symbiotic relationship between the
intelligence community and the private sector." They say you should be
careful what you wish for.

In the intervening years a huge espionage-industrial complex has developed,
as government spymasters outsourced everything from designing surveillance
technology to managing case officers overseas. Today less than half of the
staff at the National Counterterrorism Center in Washington are actual
government employees, The Los Angeles Times reports; at the C.I.A. station
in Islamabad, Pakistan, contractors sometimes outnumber employees by three
to one.

So just how much of the intelligence budget goes to private contracts?
Because that budget is highly classified, and many intelligence contracts
are allocated without oversight or competitive bidding, it seemed we would
never know. Until last month, that is: a procurement executive from the
Office of the Director of National Intelligence gave a PowerPoint
presentation at a conference in Colorado and let slip a staggering
statistic - private contracts now account for 70 percent of the
intelligence budget.

Of course, our spies always relied on private sector expertise. But in the
decade after the cold war the intelligence community's budget was cut by 40
percent. On 9/11, our spies found themselves shorthanded - untrained in the
languages spoken by terrorists, unable to crack new communications
technologies, generally lagging behind their counterparts outside the
government. The privatization boom emerged out of sheer necessity. As one
slide at the Colorado briefing had it, "We can't spy ... if we can't buy!"

As it happened, the dot-com bubble had burst shortly before 9/11, cutting
loose a generation of technology entrepreneurs who, when the government
came calling, were only too happy to start developing new data-mining
algorithms and biometric identification programs. New startups began
sprouting in the suburbs around Washington. The number of "contractor
facilities" cleared by the National Security Agency grew from 41 in 2002 to
1,265 in 2006. It was a gold rush, a national security bubble.

Seeing this emerging market, the traditional Beltway Bandits -
military-industrial giants like Boeing, Lockheed Martin and Northrop
Grumman - established intelligence and homeland security divisions. At Booz
Allen Hamilton, a consulting firm one former C.I.A. official called "the
shadow intelligence community," revenue has doubled since 2000.

There is nothing inherently wrong with all this. We want our spies to have
access to the best technology and expertise, and if that means they have to
look outside the building - and pay top dollar - then so be it. The problem
is that the "symbiotic relationship" has turned decidedly dysfunctional, if
not downright exploitative.

Take, for example, one (very big) contractor, and one (very big) contract.
In 2002, Science Applications International Corporation, a San Diego
behemoth with more than 40,000 employees and $8 billion in annual revenue,
received a $280 million contract from the National Security Agency to
modernize its systems for sifting through the vast flows of information it
intercepts. The project was called Trailblazer. By 2005, costs had
ballooned to over $1 billion and the system had still not gotten off the
ground. One C.I.A. veteran familiar with the program has declared it "a
complete and abject failure."

Trailblazer was a notorious boondoggle, but it wasn't the biggest. That
prize goes to the Future Imagery Architecture, a contract Boeing won before
9/11, in 1999, to develop a new generation of spy satellites that could
photograph targets from space.

Inexperienced at building satellites with optical lenses, Boeing started
missing deadlines and exceeding cost estimates almost immediately. By the
time the Pentagon took the program away from Boeing in 2005, it was five
years behind schedule and had cost $10 billion, including $4 billion in
cost overruns. For contractors, this sort of failure is seldom punished -
it's often rewarded. Many contracts are "cost plus," meaning there will be
no penalty if a contractor wildly exceeds the initial projection. Better
still, a contractor can break something, then bid for the job of putting it
back together. When the N.S.A. wanted to create another program,
ExecuteLocus, to replace Science Applications International's failed
Trailblazer, it needed a contractor to build it. Who got the job? Science
Applications.

The orthodoxy of privatization - that it's the government that's mired by
inefficiency and a lack of competition - has been turned on its head in the
intelligence industry. However patriotic, contractors must ultimately
answer to their shareholders and the bottom line. There's more than one way
to read Lockheed Martin's recent advertising slogan: "We never forget who
we're working for."

It's not just the money that flows out the door, either: it's also the
people, as the companies offer hefty raises to government employees who
join their ranks. A recent report from the Office of the Director of
National Intelligence found that "contractors recruit our own employees,
already cleared and trained at government expense, and then 'lease' them
back to us at considerably greater expense."

This process - called "bidding back" - has created a brain drain.
Two-thirds of the Department of Homeland Security's senior officials and
experts have departed for private industry. Michael Hayden, the C.I.A.
director, worries that his agency has become "a farm team for these
contractors."

The revolving door helps firms score more contracts. Federal law prohibits
executive branch officials from lobbying former colleagues after leaving
public office - but just for the first year. Can a government acquisitions
officer who might someday like a job at a contractor really evaluate the
contractor's bid objectively?

William Black Jr. left the National Security Agency in 1997, after a
38-year career, to become a vice president at Science Applications. He
returned to the agency as deputy director in 2000, and shortly thereafter
the Trailblazer contract was awarded to his former employer. Nothing
illegal here, but is there not at least the appearance of a conflict of
interest? The good news is that Congress seems to have finally caught on to
the scale of the problem. The intelligence authorization bill that passed
the House last month included an amendment that would require the director
of national intelligence to submit a report on the functions performed by
contractors, the ways contracts are vetted, and the savings associated with
outsourcing. The Senate Intelligence Committee explicitly chided the spy
agencies earlier this month for "increasing reliance on contractors." In
response, the C.I.A. announced that it would pare the number of contractors
by 10 percent.

These are promising first steps. But the inspectors general of America's
intelligence agencies must become more aggressive in policing how contracts
are awarded - and in halting cost overruns before they reach the billions.
The intelligence community should limit the parasitic practice of bidding
back, perhaps by limiting contracts with firms that poach too many federal
employees. It should also fine companies - or at least stop rewarding them
- when they fail to deliver on time and on budget.

Congress should enact more comprehensive legislation, establishing
oversight procedures to govern the many conflicts of interest that arise
when agencies and industry are this close. If our spy agencies are truly
going to protect us, they must learn how to develop - and retain - their
own in-house expertise.

Patrick Radden Keefe, a fellow at the Century Foundation, is the author of
"Chatter: Dispatches From the Secret World of Global Eavesdropping."

-- 
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R. A. Hettinga <mailto: rah at ibuc.com>
The Internet Bearer Underwriting Corporation <http://www.ibuc.com/>
44 Farquhar Street, Boston, MA 02131 USA
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