Spies for Hire

by Tim Shorrock

  Out of that grew a $65-million company with over two hundred former intelligence officers on its payroll—“the largest aggregate of analytical counter-terrorism capabilities outside of the US government,” according to Helms.45 Many of them work as contractors in CIA stations overseas and desk positions in Langley.46 Indeed, so many CIA officers were enticed by Abraxas to leave the agency for better-paying contractor jobs that, in 2005, CIA director Porter Goss had to ask the company, and a few others, to stop recruiting in the CIA’s cafeteria on the Langley campus (director Hayden’s recent crack about the CIA being a “farm system” for contractors was reportedly directed at Abraxas). With Abraxas’s offices in nearby McLean, Virginia, however, all it takes is a short walk for a dissatisfied CIA employee to find a new job. And Helms has tapped into a rich vein of intelligence talent to grow his company.

  Abraxas’s president is Richard Calder, the CIA’s former deputy director for administration. In 1999, Calder set a precedent at the CIA by bringing in PricewaterhouseCoopers, the global accounting firm, to help the CIA adopt “business-like procedures and analyze CIA products and services for potential outsourcing from other intelligence agencies.”47 Other key executives include Barry McManus, Abraxas’s vice president of “deception detection services,” who was the CIA’s chief polygraph examiner for ten years and served in “worldwide operational activities” during his thirty-year career with the agency, and Terry Wachtell, who put in twenty-two years at the CIA “working against narcotic, terrorist and hostile intelligence service targets,” according to the company’s Web site. Helms also recruited the CIA’s former station chief in China to work for Abraxas.48 In 2005, Abraxas was rated as one of the nation’s fastest-growing technology companies by the Deloitte & Touche accounting firm, and in 2006 Helms received the Ernst & Young Entrepreneur of the Year award.

  Abraxas was first identified as a CIA contractor by James Bamford, the author of several books about the National Security Agency.49 In 2004, he reported that Mary Nayak, who formerly ran the Directorate of Intelligence’s South Asia Group, was then working for Abraxas, and had been hired as an Abraxas consultant to the CIA group that reviewed pre-9/11 intelligence. Then, in September 2006, the Los Angeles Times blew the cover on one of the company’s most sensitive projects: crafting covers, or false identities and front companies, for the agency’s nonofficial cover (NOC) program. This was a startling development for the CIA: one of its most sensitive and dangerous tasks had been outsourced. Officers in the NOC program—such as Valerie Plame, whose official cover, until she was outed, was as an energy specialist for the fictional law firm Brewster-Jennings & Associates—operate overseas without diplomatic immunity and face possible prosecution and worse if captured by a hostile government. Abraxas had obtained the work, the L.A. Times said, as the CIA came under pressure to devise “more imaginative cover arrangements that might give operatives closer access to terrorist networks.”50 It’s unclear whether Abraxas still holds that contract.

  But the company is still deeply involved in top secret contracts. Abraxas, I was told by sources inside the intelligence contracting industry, is working on a highly classified project in China: securing the building materials for the new U.S. embassy under construction in Beijing. “It’s their job to make sure that the new Beijing embassy isn’t another Moscow,” a source familiar with Abraxas’s work told me. She was referring to the fiasco in the mid-1980s, when construction of the U.S. embassy in the Soviet Union was suspended for nearly two years after U.S. officials discovered that Soviet intelligence had installed hundreds of tiny electronic eavesdropping devices in the floor planks and walls.51 The Abraxas embassy job was described to me as a natural outgrowth of the company’s business in China and its latest offerings in counter-terrorism software. In 2004, the company opened an office in Shanghai to provide political risk assessments and security services for foreign multinationals in China.52 And in 2007, the company began marketing a new software product, called TrapWire, which uses complicated mathematical formulas called algorithms that allow digital surveillance systems to detect patterns of suspicious behavior. The software, the company claims, can predict terrorist attacks or other criminal behavior, and is being tested by police departments in New York and Los Angeles as well as by the Department of Energy and the Marine Corps.53

  Abraxas would not comment about any aspect of its business. “Sir, we don’t talk to the media,” an executive in its McLean, Virginia, office told me after I’d called numerous times. The new Beijing embassy, slated for completion in 2008, is being built by a joint venture between Zachry Construction of San Antonio and Caddell Construction Company of Montgomery, Alabama. Caddell, the lead contractor, would neither confirm nor deny Abraxas’s role in the project. “We have a very strict policy about the job,” a company official who would not identify himself told me. “We have a strict protocol with the State Department to remain silent about it. Talking is strictly verboten to the extent that we could be thrown off the job.” Virtually all of Caddell’s senior management, as well as most of its engineers and operational managers on the site, have obtained top secret security clearances to work on the project.54

  To help Abraxas market its surveillance software, Helms recently hired John “Jack” Reis, the former president of i2, a software company with extensive contracts with intelligence agencies, as president of a new company division, Abraxas Applications. Helms has also created partnerships with several defense contractors, including Northrop Grumman, to broaden his company’s exposure in defense and intelligence. Another Abraxas partner, Sentia Group, developed a political simulation tool called Senturion that has been used by the CIA to predict events in Iraq and other countries. Brian Efird, a Sentia executive associated with the National Defense University, told me that Sentia supplies its modeling software to Abraxas for intelligence use but doesn’t itself have contracts with the CIA. The agency seems to be getting a lot of use out of the software, however. In an e-mail posted on a private Listserv on Iraq, Efird wrote that the CIA “has done the most comprehensive external audit of the accuracy of [Sentia’s] methodology, and they concluded that its forecasts are accurate in excess of 90 percent of the time.”55*

  As Abraxas has grown, it has started buying up smaller companies developing technology useful to its intelligence and corporate customers. In December 2006, it acquired Dauntless, a McLean, Virginia, company that makes a search engine technology used by intelligence agencies.56 And with intelligence and homeland security markets booming, the company has followed the example of many other intelligence contractors by creating an advisory board staffed with former high-ranking officials. In March 2007, Abraxas announced that Tom Ridge, George W. Bush’s first secretary of homeland security, had joined its advisory board and was already working “behind the scenes” to refine the company’s TrapWire software, which is also designed to protect “critical infrastructure” from terrorist attacks. Another key appointment was retired Air Force General John Gordon, who worked in the Bush White House from 2002 to 2004 as the president’s top national security adviser on counterterrorism, and from 1997 to 2000 as the CIA’s deputy director. A third adviser, retired federal judge Eugene R. Sullivan, once served as the general counsel of the NRO. And the recruiting goes on: in May 2007, Abraxas was looking for analysts with specific experience and expertise in counterterrorism, counterproliferation, and other national intelligence issues and disciplines, including signals intelligence, biometrics, and financial networks.

  While Abraxas is making a splash with its advisory board and high-profile small business awards, Scitor, a CIA and defense contractor company based in Herndon, Virginia, has become a $300 million company without creating a single ripple in the media. “It’s the biggest company you never heard of,” said a former NSA officer who knows the company well.

  Scitor is a technology company that does extensive work for the U.S. Air Force in aerospace communications and satellite support services. The privately held company is
also an important contractor for the CIA’s Directorate of Science and Technology, according to industry sources who have knowledge of the company but spoke only on condition of anonymity. Within that directorate, two sources said, it is used primarily by the Office of Technical Services, the secretive unit that develops the gadgets, weapons, and disguises used by spies. That work apparently involves building and maintaining small satellites used in signals and electronic intelligence. An intelligence analyst familiar with Scitor said the company also does “a lot of value-added software packages, taking commercially available packages and configuring them for specific usages.” Scitor did not return numerous phone calls to its offices in California and Virginia.

  Scitor was founded in 1979, and has been led since 1994 by Jim Hoskins, an Air Force veteran who is the company’s CEO and chairman of the board. He came to Scitor after a long career in U.S. intelligence. He first worked at the Air Force Cryptological Depot, a unit of the Air Intelligence Agency, and then the National Security Agency and the CIA.57 Scitor’s Web site says that Scitor (which is derived from a Latin word meaning “to see to know”) provides a “diverse range of systems engineering, information technology, and program management expertise” to government and commercial customers. A Scitor contract with the General Services Administration posted on the GSA’s Web site lists the CIA among the company’s clients. It states that Scitor helps government agencies manage “major acquisitions and cradle-to-grave programs that are vital to national defense.” Those agencies include the National Reconnaissance Office, the National Security Agency, the NGA, the CIA, and the Pentagon. Scitor also provides expertise to government agencies “in all aspects of the privatization process,” the GSA contract says. In October 2007, in a significant expansion of its defense business, Scitor led a consortium of fourteen companies that was awarded a $250 million contract by the Office of the Undersecretary of Defense for Intelligence to provide technical and analytic support in the areas of intelligence, surveillance, and reconnaissance over the next five years. (That contract came to light only because a Scitor subcontractor, McDonald Bradley, announced it in a press release.)58

  In addition to its offices in Northern Virginia, Scitor has a sizable presence in Colorado, which is home to the U.S. military’s Northern Command, the Air Force Space Command, and several other important national security agencies. In 2005, Scitor invested over $12 million in a new building in Colorado Springs, where such key intelligence contractors as SI International, Boeing, Lockheed Martin, Northrop Grumman, The Aerospace Corporation, SAIC, and Booz Allen Hamilton also have a presence.59 Financial information about the company is sparse. In 2002, Allied Capital, a Washington, D.C., investment bank, invested $22 million in Scitor’s long-term debt to help the company’s employees finance an employee stock ownership plan (“We’re not sure exactly what they do,” Bill Walton, Allied’s chairman and CEO, told the Washington Business Journal, “but we know it’s something important”).60 Under the employee stock ownership plan, Scitor employees bought out Scitor’s founders, Roger Meade and Gene Priestman, said Houlihan Lokey Howard & Zukin, the Virginia bank that advised Scitor on the deal.61 In 2007, Scitor was acquired by Leonard Green and Partners LLP, a Los Angeles private equity fund. As usual, Scitor released no details about the deal, which was reported in a brief story in Washington Technology.62 According to that story, the company employs 1, 200 people; other reports indicate that Scitor’s revenues rose from $16 million in 1994 to $300 million in 2005.63

  One area of intelligence where Scitor appears to be a leading contractor is measurement and signatures intelligence, or MASINT, a highly classified form of intelligence that uses infrared heat imaging, acoustic signatures, seismic data, and other information picked up by air and ground sensors to “sniff” for weapons tests and other activities that other countries want to hide from the United States. MASINT collection is managed by the Defense Intelligence Agency and used extensively by the CIA and other agencies as a tool in arms control and in tracking the use of IEDs and other weapons by insurgent groups in Iraq and Afghanistan (by detecting the “signature” of certain explosives used in IEDs, for example, MASINT analysts have developed countermeasures to those explosives). Scitor is a leading member of the MASINT Association,* a group of contractors that specialize in its science, and in 2005 sponsored and provided some of the funding for a national symposium on MASINT signatures technology. The symposium, which was co-sponsored by the MASINT Association and the DIA, was held at the Scitor Conference Center in Chantilly, Virginia, according to information posted on the association’s Web site. A summary of the conference papers says that MASINT “is the intelligence discipline specifically focused on combating terrorism in all its forms.” Members of the association include all of the major intelligence contractors, from BAE Systems to SAIC. Scitor may be unknown, but it is definitely not a small player.

  There is another class of CIA contractors: companies financed and, in some cases, created by In-Q-Tel, the CIA’s venture capital fund. In-QTel was formed in 1999 during the Tenet era, and has invested about $300 million in government money in some ninety companies. It was started at a time when intelligence budgets had been substantially reduced and CIA directorates were trying to figure out how to cope with fewer material and human resources. The budget crunch had been especially difficult for the Directorate of Science and Technology, where the CIA’s top scientists had helped develop the cutting-edge technologies, from the U-2 spy plane to the CORONA satellite, that allowed the United States to become the global leader in surveillance and earned the directorate the nickname “the wizards of Langley.”

  Yet all around the CIA in the private sector, in places like Silicon Valley and the high-tech industrial zone around Washington, revolutionary developments in information technology, computers, and the Internet were taking place, almost at warp speed. Faced with the political realities of post–Cold War Washington and the rapidity of change in the commercial world, the CIA proposed the creation of In-Q-Tel as a technology incubation center that would fund research and development in innovative IT technologies that held promise for intelligence agencies; in return for direct investments from the CIA and other agencies, high-tech companies would be offered a huge, natural market—the Intelligence Community and the federal government, plus assistance in testing and perfecting their products for use by the private sector. Congress approved the program in 1998.

  With an initial investment of $28.5 million, the venture fund set about to provide seed money to small firms that could help the CIA and other government agencies deal with the vast amounts of data they were processing, thus leveraging the private sector to accomplish what the government could no longer do. This was the final frontier of intelligence outsourcing: after years of downsizing, the CIA was now contracting out its core skills in research and development. Rather than have its own scientists, physicists, engineers, and behavioral psychologists find the breakthrough technology that would help the CIA confront the new dangers of the twenty-first century, the agency began turning to the private sector to do it. The need for outsourced R&D grew exponentially after 9/11, when the demand for analysis and technology grew by leaps and bounds, and the CIA, already strapped for staff, was forced to “surge” its resources to areas where they were needed most.

  Nine years after the In-Q-Tel project got off the ground, Stephanie O’Sullivan, the CIA’s director for science and technology, would actually use the word “outsource” to describe In-Q-Tel. By tapping into the private sector, the CIA is “incentivizing outsourcing,” O’Sullivan said in a rare public speech in 2006.* “We’re getting the best minds that we can find out there to think about our problems, to think about our need and the technology curve. It’s a human capital investment, and it pays off.” The CIA, she continued, faces adversaries who are “adept and agile” and doing things that require an immediate response. “So we need to be leveraged in every way possible. In-Q-Tel was one of our first initiatives to leverage resear
ch. We were going after those mosquitoes out there—the small businesses and start-ups where a lot of the innovation of this country resides—to make them part of our team. There is no technology out there that is not relevant to our mission.”64 The fund now makes about ten investments a year from an annual budget of about $30 million.

  One of the most valuable technologies funded by In-Q-Tel is now used by virtually anyone who uses a computer: Google Earth. This massive database of 3-D satellite images, which lets a computer user “fly” anywhere in the world and zoom in and out of cities and countries, was first developed as EarthView by a company called Keyhole Inc., based in Mountain View, California. In 2003, seeing value in EarthView for military applications, the CIA fund—in a partnership with the National Geospatial Intelligence Agency—invested an undisclosed amount of money in the company, and within two weeks EarthView was being used by U.S. forces in Iraq.65 Google bought In-Q-Tel’s shares in Keyhole in 2004 and quickly incorporated the program into its widely used search engine. One of In-Q-Tel’s most recent investments was in Initiate Systems Inc., a Reston, Virginia, company that got its start in 1995 by matching health care records with huge patient databases. In 2006, the fund invested in the company to adapt its records system to help intelligence and law enforcement agencies track down suspected terrorists across large nationwide databases. Since In-Q-Tel made its investment, Initiate’s sales have grown by nearly 70 percent and the company has been hired by Raytheon to refine its database tracking system for the FBI.66