Cloak-and-Dagger, Inc.: The Secret World of Intelligence Outsourcing

VANCOUVER - When Barack Obama visits the Virginia headquarters of the Central Intelligence Agency in the not-too-distant future, he might want to scan the room to see how many of them sport green badges, the telltale sign that they are contractors and not federal employees.

At the dozen or so other intelligence agencies scattered around the Washington area, like the Federal Bureau of Investigation on Pennsylvania Avenue or the Maryland-based National Security Agency, he is likely to find quite a number are from the private sector.

A recent federal survey identified some 37,000 private employees in the intelligence sector who work side-by-side with civil servants as analysts, technology specialists and mission managers. About a quarter of this number are involved in the cloak-and-dagger activities of intelligence collection and operations. Indeed, well over half of the 66 billion dollars spent on intelligence in the United States is believed to go to private military contractors that range from the very well known Boeing and Lockheed to much more obscure companies like Anteon, LPA and Verint Systems.

To learn about the 16 agencies that run the nation's spy operations, Obama might pick up a copy of Jeffrey T. Richelson's authoritative handbook on the intelligence agencies ('The U.S. Intelligence Community'), but if he wants to know what the green badgers do inside the agencies, he'll need a copy of Tim Shorrock's 'Spies for Hire,' released earlier this year by Simon and Schuster in hardback.

A new updated paperback version will be available right after the new administration takes office this spring.

'We Can't Spy...If We Can't Buy,' was the catch-phrase on a PowerPoint slide presented by the Terri Everett, the senior procurement executive of the Director of National Intelligence that Shorrock uncovered last year that sums up the attitude of federal intelligence managers, beginning with the Bill Clinton administration.

Shorrock, an investigative journalist who writes for magazines like The Nation, Mother Jones and websites like Salon, is a former business reporter who worked at the Journal of Commerce. He has dug through hundreds of websites and press releases to compile a guide of precisely what the Clinton and George W. Bush administrations have bought for the spy community in the last two decades.

'Spies for Hire' is rather like the best-selling book 'Code Names' by William M. Arkin, a veritable encyclopedia of intelligence and military secrets, stuffed with details that make one's eyes glaze over. Yet it is the only guide that exists to the new alphabet soup of companies that work primarily out of places like Tyson's Corner in northern Virginia.

Shorrock notes that private contractors have always been part and parcel of the U.S. intelligence community, notably in the field of reconnaissance, starting with the U-2 spy plane in the 1950s that Lockhheed built. Even today the bulk of the money spent on contractors is for delivering hardware like satellites.

What is new is companies like Science Applications International Corporation (SAIC) of San Diego that have multi-million dollar contracts with the Federal Bureau of Investigation and the National Security Agency to create software that analyses the email and phone conversations of ordinary U.S. citizens. While these projects have alarmed civil rights groups, Shorrock notes also that if there's one generalisation to be made about them, it's that 'they haven't worked very well, and some have been spectacular failures.'

Another new trend that Shorrock touches on, although not in detail, is the use of private contractors like CACI and L-3 to provide private interrogators and linguists to the U.S. Army in Afghanistan and Iraq, some of whom have been accused of supervising torture, including participation in the torture at Abu Ghraib.

'It's not just the secrecy, or the corruption, or the cronyism, or the lack of oversight that's wrong with intelligence contracting: it's also the extent of outsourcing itself and the way it's carried out,' says Shorrock in his book. 'The government has yet to spell out what intelligence functions are safe to outsource and which are not.'

What jobs are 'inherently governmental'? Companies like Halliburton already do the bulk of the cooking and cleaning for the military at home and abroad, but is interrogation going too far?

Interrogators that this reporter knows who have worked at Abu Ghraib, Bagram, Camp Cropper and Guantanamo Bay say that they are often more qualified than the soldiers that they work with, and this is mostly true.

Despite several well-publicised cases of alleged contractor abuse during interrogation, the vast majority of the cases of abuse documented by groups like Human Rights Watch in its 'By the Numbers' report, the most detailed study to date, have mostly been conducted by military personnel and not contractors.

Some private contractors have actually challenged government propaganda, like David Kay of SAIC who went into Iraq in 2003 to search for the weapons of mass destruction that Pres. Bush claimed Saddam Hussein had hidden. Kay returned in January 2004 to say Iraq did not have any such weapons.

Yet the contract interrogators I have spoken to themselves point out the lack of supervision that they are given and the fact that the worst punishment that they are ever threatened with is being fired.

The question then is who will do this oversight and decide what can be outsourced and what should not?

Obama has already said that he will be extremely vigilant. 'Under my plan, if contractors break the law, they will be prosecuted,' he told students at the University of Iowa last year.

'I've proposed tougher government reforms than any other candidate in this race -- reforms that would eliminate the kind of no-bid contracts that this administration has given to Blackwater,' he said.

But Shorrock's book demonstrates that the Obama administration is facing the very same conflicts of interest that the Bush administration did because most of the top-ranking officials in the intelligence industry today are already compromised by having crossed back and forth from public to private employment (at twice their government pay or more) and then back again.

Take the case of Michael McConnell, the current director of national intelligence, who ran the National Security Agency before quitting to work for Booz Allen Hamilton for 10 years, and then returned to work for the Bush administration as the nation's spy chief, where he effectively oversees the agencies that provided most of the revenues of his former employer. McConnell also used to head the Intelligence and National Security Alliance, or INSA, a chamber of commerce for the intelligence contractors.

Obama's first pick for the head of the CIA was John Brennan, a former CEO of The Analysis Corporation, a major intelligence contractor, who actually has the same job at INSA that Mike McConnell once held.

Brennan has since dropped out of the running, but Obama observers would do well to refer to 'Spies for Hire' to see what conflicts of interest his future intelligence choices might bring to the table.

Pratap Chatterjee is managing editor of CorpWatch. His new book 'Halliburton's Army' from Nation Books will be in stores in February 2009.