Spies for Hire

The Secret World of Intelligence Outsourcing

Tim Shorrock

• Publisher: Simon & Schuster
• Year: 2008
• ISBN:
  9781416553519
• Topic: Politics & International Relations
• Subtopic: International Relations
• Index: Politics & International Relations

In Spies for Hire, investigative reporter Tim Shorrock lifts the veil off a major story the government doesn't want us to know about -- the massive outsourcing of top secret intelligence activities to private-sector contractors. Running spy networks overseas. Tracking down terrorists in the Middle East. Interrogating enemy prisoners. Analyzing data from spy satellites and intercepted phone calls. All of these are vital intelligence tasks that traditionally have been performed by government officials accountable to Congress and the American people. But that is no longer the case. Starting during the Clinton administration, when intelligence budgets were cut drastically and privatization of government services became national policy, and expanding dramatically in the wake of 9/11, when the CIA and other agencies were frantically looking to hire analysts and linguists, the Intelligence Community has been relying more and more on corporations to perform sensitive tasks heretofore considered to be exclusively the work of federal employees. This outsourcing of intelligence activities is now a $50 billion-a-year business that consumes up to 70 percent of the U.S. intelligence budget. And it's a business that the government has tried hard to keep under wraps. Drawing on interviews with key players in the Intelligence-Industrial Complex, contractors' annual reports and public filings with the government, and on-the-spot reporting from intelligence industry conferences and investor briefings, Spies for Hire provides the first behind-the-scenes look at this new way of spying. Shorrock shows how corporations such as Booz Allen Hamilton, Lockheed Martin, SAIC, CACI International, and IBM have become full partners with the CIA, the National Security Agency, and the Pentagon in their most sensitive foreign and domestic operations. He explores how this partnership has led to wasteful spending and threatens to erode the privacy protections and congressional oversight so important to American democracy. Shorrock exposes the kinds of spy work the private sector is doing, such as interrogating prisoners in Iraq, managing covert operations, and collaborating with the National Security Agency to eavesdrop on Americans' overseas phone calls and e-mails. And he casts light on a "shadow Intelligence Community" made up of former top intelligence officials who are now employed by companies that do this spy work, such as former CIA directors George Tenet and James Woolsey. Shorrock also traces the rise of Michael McConnell from his days as head of the NSA to being a top executive at Booz Allen Hamilton to returning to government as the nation's chief spymaster. From CIA covert actions to NSA eavesdropping, from Abu Ghraib to Guantánamo, from the Pentagon's techno-driven war in Iraq to the coming global battles over information dominance and control of cyberspace, contractors are doing it all. Spies for Hire goes behind today's headlines to highlight how private corporations are aiding the growth of a new and frightening national surveillance state.

1

The Intelligence-Industrial Complex

“We can’t spy…If we can’t buy.”

—TERRI EVERETT, SENIOR PROCUREMENT EXECUTIVE IN THE OFFICE OF THE DIRECTOR OF NATIONAL INTELLIGENCE, IN A PRESENTATION TO A CONFERENCE ORGANIZED BY THE DEFENSE INTELLIGENCE AGENCY, MAY 14, 2007

SOMEWHERE IN Northern Virginia, tucked inside an innocuous and unmarked office complex called Liberty Crossing, is a cavernous room loaded with high-tech communications and computer gear and staffed 24/7 by analysts and action officers from all sixteen agencies that comprise the Intelligence Community. The monitors and video screens in the room cast an eerie glow as the staffers pore through classified reports and images flowing into the room from every corner of the globe. The few reporters who’ve been allowed to enter this secure facility are sworn not to disclose its exact location. When they do talk about it, they inevitably compare it to the fictional headquarters of the Counter Terrorism Unit in the Fox hit series 24 or the mock intelligence station in The Bourne Ultimatum, the Matt Damon thriller that depicts a rogue CIA officer relentlessly pursuing a dissident agent around the world using the latest in digital surveillance and eavesdropping technology.¹

This is the National Counterterrorism Center (NCTC), the electronic hub of the U.S. Intelligence Community and the heart of the national security state established by the administration of President George W. Bush in the aftermath of September 11. Since opening its doors in 2005, the NCTC has been the government’s central collection point for monitoring global threats to national security. Its analysts have at their disposal more than thirty separate government computer networks, each carrying more than eighty unique sources of data. As they go about their tasks, they draw on human intelligence from the Central Intelligence Agency, communications intercepts from the National Security Agency, and domestic reports from the Department of Homeland Security, the FBI, and local law enforcement agencies around the country.²

The center’s chief product, the Threat Matrix, is a highly classified status report that forms the centerpiece of a daily eight A.M. teleconference led by the NCTC’s director, former federal prosecutor Michael Leiter. That meeting is beamed, via secure video, to the White House, the CIA, the NSA, and other key offices in and around Washington. The center also maintains the nation’s central repository of known and suspected terrorists, and compiles highly classified briefing books for the Office of the Director of National Intelligence and the White House. In the fight against terrorism, “the best asset we have is the people represented right here in this building,” President George W. Bush declared during a visit to Liberty Crossing in 2006.* Behind him in the shadows, dozens of men and women dressed in suits and military garb stood at attention next to their computer stations. It was an impressive sight, designed to convince a skeptical public that the U.S. government was drawing on all its resources to prevent another 9/11 and protect the American people.

But it was all a charade. More than half of the people working in the center, then as now, are private sector contract employees, working not for the government but for the dozens of companies that do business with the Intelligence Community.* Most of them are employees of large defense contractors that dominate the intelligence landscape, such as Booz Allen Hamilton, Science Applications International Corporation (SAIC), BAE Systems, and Lockheed Martin. Others work for the dozens of small and medium-sized information technology companies that have crowded into Washington to feed its insatiable appetite for outsourced government services. And quite a few have walked out of the NCTC as government employees and walked back in as contract employees.

The center’s terrorist database, for example, is maintained by The Analysis Corporation (TAC), an intelligence contractor in nearby Fairfax, Virginia, run by John O. Brennan, the former chief of staff of the CIA and the NCTC’s first director. TAC, in turn, has subcontracted the collection activities for the database to CACI International, the same company that provided contract interrogators to the U.S. military prison at Abu Ghraib in Iraq. In 2007, to strengthen its ties with the center, CACI hired retired Navy Vice Admiral Albert Calland, the NCTC’s former deputy director for strategic operational planning, as its executive vice president for security and intelligence integration.³ Far from displaying government resolve, the NCTC is a powerful symbol of American capitalism and a stark example of the way the United States organizes its national security infrastructure in the twenty-first century.

Over the past ten years, the private sector has become a major supplier of tools and brainpower to the Intelligence Community. The CIA, the NSA, and other agencies once renowned for their analysis of intelligence and for their technical prowess in covert operations, electronic surveillance, and overhead reconnaissance have outsourced many of their core tasks to private intelligence armies. As a result, spying has blossomed into a domestic market worth nearly $50 billion a year.

Tasks that are now outsourced include running spy networks out of embassies, intelligence analysis, signals intelligence (SIGINT) collection, covert operations, and the interrogation of enemy prisoners. Private companies analyze intelligence collected by satellites and low-flying unmanned aerial vehicles (UAVs), and write reports that are passed up the line to high-ranking officials and policy-makers in government. They supply and maintain software programs that are used to manipulate and visualize data. They provide collaboration tools to help individual agencies communicate with each other, and they supply security tools to protect classified computer networks from outside tampering. Throughout the Intelligence Community, contractors manage the work of other contractors and, in some cases, the work of government employees. They also draft budgets for government agencies and write Statements of Work that define the tasks that they and other contractors carry out for the government.

The bulk of this $50 billion market is serviced by one hundred companies, ranging in size from multibillion-dollar defense behemoths to small technology shops funded by venture capitalists that have yet to turn a profit. At one end of the scale is Lockheed Martin, whose $40 billion in revenue and 52, 000 cleared IT personnel make it the largest defense contractor and private intelligence force in the world. At the other is SpecTal of Reston, Virginia, a privately held company that employs three hundred specialists with top secret security clearances who perform intelligence missions in Afghanistan and Iraq. In between are dozens of firms, some well known (IBM) and some obscure (Scitor), who make up a business that has grown so large that even its champions aren’t afraid to borrow a weighted term from President Dwight Eisenhower to describe it. “Call it the Intelligence-Industrial Complex,” says retired Vice Admiral Herbert A. Browne, who served from 2002 to 2007 as executive director of the Armed Forces Communications and Electronics Association (AFCEA), the largest industry association in the intelligence business.

The analogy between the intelligence industry and the military-industrial complex famously described by President Eisenhower in 1961 is fitting. By 2006, according to the Office of the Director of National Intelligence, 70 percent, or almost three-quarters, of the intelligence budget was spent on contracts.⁴ That astounding figure, which I first reported in June 2007, means that the vast majority of the money spent by the Intelligence Community is not going into building an expert cadre within government but to creating a secret army of analysts and action officers inside the private sector.

From the contractors’ perspective, that shift represents the triumph of capitalist innovation and the coming of a new age in business-government cooperation. “The fact that we can have a professional intelligence organization outside of the government to support the government is no more offensive to me than the fact that we have 80 percent of our military communications traveling on commercial satellites or commercial fiber optics,” says Browne, who left the military in 2000 to work for the defense intelligence division of AT&T. “In fact, I find it very healthy for the nation.”⁵

But critics of the industry don’t see it that way, particularly in view of the intelligence debacles of the past six years. “Contracting has simply gone crazy,” says Eugene Fidell, the president of the National Institute for Military Justice, the nation’s largest organization of military lawyers. He is most troubled about the CIA’s and the Pentagon’s use of contractors to interrogate enemy prisoners. “That’s really playing with fire,” he says. “That kind of activity, which so closely entails the national interest and exposes the country to terrible opprobrium, is something that ought to be done only by people who are government employees.”⁶

There’s a lot of daylight between those two perspectives. But whatever one’s position on outsourcing, there is little doubt that spying for hire has become a way of life in twenty-first-century America.

• Since 9/11, the Central Intelligence Agency has been spending 50 to 60 percent of its budget on for-profit contractors, or about $2.5 billion a year, and its number of contract employees now exceeds the agency’s full-time workforce of 17, 500. Outsourcing has also spread to human intelligence. At the CIA, contractors help staff overseas stations and provide disguises used by agents working undercover. Contractors make up more than half the workforce of the CIA’s National Clandestine Service (formerly the Directorate of Operations), which conducts covert operations and recruits spies abroad. According to Robert Baer, a former CIA officer who worked undercover in the Middle East for many years, a contractor stationed in Iraq even supervises where CIA agents go in Baghdad and who 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. “Everyone I know in the CIA is leaving and going into contracting whether they’re retired or not.”⁷
• The National Security Agency, once so secretive it was jokingly called No Such Agency, has become one of the largest users of contractors in the federal government. The agency began reaching out to the private sector in the late 1990s to help it cope with the massive amount of information it was scooping up from its global eavesdropping network, the largest and most powerful spying operation on earth. After the 9/11 terrorist attacks, the need for such information increased drastically. To feed the NSA’s insatiable demand for data and information technology, the industrial base of contractors seeking to do business with the agency grew from 144 companies in 2001 to more than 5, 400 in 2006. “Partnerships with industry,” NSA official Deborah Walker says, are now “vital to mission success.”⁸
• Intelligence outsourcing has mushroomed at the Department of Defense, which controls more than 85 percent of the U.S. intelligence budget. On the battlefields of Iraq and Afghanistan, civilian intelligence specialists under contract to the NSA and the National Geospatial-Intelligence Agency operate signals intelligence and imagery equipment for Army and Marine units on the move against Iraqi insurgents and Islamic militias. NSA contractors also capture electronic signals emanating from enemy weapons, determine the exact type of weapons being fired, and relay that information to Air Force Airborne Warning and Control System (AWACS) aircraft flying overhead. At least 35 percent of the staff at the Defense Intelligence Agency (DIA), which provides intelligence to the Secretary of Defense and the Joint Chiefs of Staff, are employed by contractors. At the Counterintelligence Field Activity, a Pentagon agency that was criticized by Congress in 2005 for spying on American citizens, the figure is 70 percent.
• With contractors deeply imbedded in the CIA, the NSA, and the Pentagon, substantial portions of the President’s Daily Brief, the most sensitive document in government, are based on the work of private sector analysts. It is well established that about 70 percent of the brief is drawn from telephone and e-mail intercepts provided by the NSA, which relies heavily on SAIC, CACI International, Northrop Grumman, and other companies for the analysis and interpretation of signals intelligence. The same is true for the Office of the Director of National Intelligence, which prepares the final draft of the president’s brief, and the DIA, which supplies much of the president’s intelligence about foreign military forces. This adds even more contracted intelligence to the presidential mix, and dilutes the significance of the DNI seal on the President’s Daily Brief. At best, that seal is misleading, says R. J. Hillhouse, an intelligence expert and the author of a popular blog on outsourcing. “For full disclosure, the PDB really should look more like NASCAR with corporate logos plastered all over it.”⁹
• As they did in Abu Ghraib, private interrogators working at the U.S. military prison in Guantánamo Bay, Cuba, have led the questioning of enemy prisoners from the Middle East and South Asia. That puts contractors at the heart of one of the darkest chapters in the history of the war on terror: the CIA’s use of extreme measures to coerce suspected terrorists to confess to their crimes. At Guantánamo, according to New Yorker reporter Jane Mayer, the CIA hired a group of outside contractors who implemented “a regime of techniques” described acidly by a former adviser to the U.S. Intelligence Community as a Clockwork Orange type of approach. The contractors, Mayer learned, were retired military psychologists who had trained U.S. Special Forces soldiers in how to survive torture.¹⁰ (As of this writing, none of the actual companies has been identified.) Meanwhile, at the U.S. Army’s Intelligence Center in Fort Huachuca, Arizona, even the training of military interrogators has been turned over to corporations, which supply private instructors to lead classes in interrogation techniques for young Army recruits.
• At the National Reconnaissance Office (NRO), the agency in charge of launching and maintaining the nation’s photoreconnaissance and eavesdropping satellites, almost the entire workforce is composed of contract employees working for companies. According to Donald M. Kerr, who directed the NRO from 2005 to 2007, “ninety-five percent of the resources over which we have stewardship in fact go out on a contract to our industrial base. It’s an important thing to recognize that we cannot function without this highly integrated industrial government team.”¹¹ With an estimated $8 billion annual budget, the largest in the IC, contractors control about $7 billion worth of business at the NRO, giving the spy satellite industry the distinction of being the most privatized part of the Intelligence Community.
• The CIA itself has even become part of the intelligence contracting industry by creating its own investment fund. In-Q-Tel, started under CIA director George Tenet in 1999, works with the CIA’s Directorate of Science and Technology to find companies that produce software and other products with intelligence applications, and then buys equity positions in these firms—many of which are managed by former intelligence officials. By 2007, In-Q-Tel had invested in more than ...

Table of contents

• Cover
• Colophon
• Title Page
• Copyright
• Dedication
• Contents
• PROLOGUE
• 1.   The Intelligence-Industrial Complex
• 2.   Booz Allen Hamilton and “The Shadow IC”
• 3.   A Short History of Intelligence Outsourcing
• 4.   The CIA and the Sacrifice of Professionalism
• 5.   The Role of the Pentagon
• 6.   The NSA, 9/11, and the Business of Data Mining
• 7.   Intelligence Disneyland
• 8.   The Pure Plays
• 9.   The Rise of the National Surveillance State
• 10.   Conclusion: Ideology, Oversight, and the Costs of Secrecy
• ACKNOWLEDGMENTS
• NOTES
• About The Author