Spies for Hire

by Tim Shorrock

  Merging the interests of the private and public sector. That astonishing phrase, which is now the mantra of the intelligence contracting industry, suggests the creation of a new mode of capitalism that specifically serves the needs of government and its “intelligence apparatus.” The implications are staggering: once private and public interests are merged, then the need for oversight disappears, along with regulation and other institutions designed to act as a brake on unbridled capitalist development or as watchdogs against corruption. Indeed, with 70 percent of the U.S. intelligence budget now going to private sector contractors, we may have already reached the point of no return. We’ve seen the manifestations of this merger of private and public throughout this book, as intelligence industry executives seek to convince investors that their interests, and those of the Pentagon and the IC, are one and the same. ManTech is “on the battlefield.” CACI is “working with the intelligence community in its mission to preeempt, disrupt, and defeat terrorism worldwide.” SAIC “is a stealth company; we’re everywhere but almost never seen.”10

  If Minihan is the personification of the new ideology, Booz Allen Hamilton—“the shadow IC,” as Joan Dempsey once called it—is its corporate embodiment. We’ve seen how Booz Allen and its one-thousand-plus former intelligence officials have played a central role in virtually every front in the war on terror, from Total Information Awareness to Iraq, and from the NSA to domestic surveillance. Since 2001, Booz Allen has defined the creation of “partnerships” between government and business as one of its strategic corporate goals. Just weeks after the 9/11 attacks, the company organized a CEO Summit that “explored public-private partnerships for national security” and attracted dozens of senior executives from Fortune 500 companies, according to Booz Allen CEO Ralph Shrader’s personal account in his company’s 2002 annual report. At the summit, participants agreed that the government needed to create “new types” of partnerships as well as “new types of market incentives” for companies engaged in homeland security. Most critically, Shrader pointed out, using the now familiar refrain, the executives agreed that “business leaders cannot opt out of geopolitics and leave the job of security solely to government and the military.”

  In 2003, Booz Allen launched an initiative to “shape and implement public-private partnerships” and chose Jim Woolsey to lead it as vice president of its newly created Global Strategic Security unit. It was a fortuitous moment for Woolsey: since 9/11, he’d been working feverishly on behalf of the neoconservatives inside the Bush administration to promote the idea that Saddam Hussein’s Iraq was responsible for the September 11 attacks.* His new job, according to the company, was to help CEOs of major corporations integrate security into their strategic business planning and lead an initiative to shape and implement public-private partnerships “to reduce risk and help ensure resilience in corporations, government agencies and critical infrastructures.”11 It allowed Woolsey to seamlessly mesh his obsession with Islamic terrorism and Iraq with his new interest in homeland security.

  Woolsey’s speeches soon began to reflect his dual interests, and were peppered with references to potential threats to America’s privately owned oil and gas, food distribution, electricity, and communications networks. Since 9/11, he told the Northern Virginia Business Council in 2004, “evil men” have figured out how to exploit the weaknesses in our networks. “That’s war,” he said. “And to fight that you have to think like a warrior, look at the vulnerabilities in your networks that can be intentionally exploited, make them more resilient, and fight back.”12 By pushing the idea that protecting the homeland was the equivalent of armed struggle, Woolsey and his corporate allies helped to expand the defense and intelligence markets into domestic security, thus broadening the scope of firms like Booz Allen, SAIC, and other large government contractors. The ultimate outcome of that dual mission is the use by domestic security agencies of imagery and signals intelligence from military spy satellites and surveillance aircraft—a plan drafted by Booz Allen and implemented at the Office of the Director of National Intelligence by Mike McConnell, a former Booz Allen vice president.

  The key phrase in the new counterterrorism lexicon is “public-private partnership.”13 Once reserved for partial privatizations in which private capital was mobilized to support public utilities such as subways and roads, that term has been subverted in post-9/11 America to mean something very specific to national security: defense, homeland security, and intelligence contracts and practically any government decision that favors business interests. In reality, “partnerships” are a convenient cover for the perpetuation of corporate interests.* Examples abound. During his tenure as CEO of In-Q-Tel, Gilman Louie referred to the CIA’s venture capital firm as a “private-public partnership” between the agency and the information technology industry, masking the fact that the CIA’s investments amounted to a hefty government subsidy that allowed companies to do things like hire lobbyists to expand their market share.14 In 2007, J. Michael Hickey, the vice president of government and national security affairs for Verizon, told a House subcommittee that, as a member of the U.S. Chamber of Commerce Homeland Security Task Force, he had organized a “public-private partnership with the Intelligence Community,” an endeavor that involved scheduling briefings with the Office of the Director of National Intelligence on “issues of mutual, long-term strategic interest,” including “insider threats from terrorism.”15 There, too, the term masked the fact that Verizon and other large corporations, through the National Security Telecommunications Advisory Committee and the NSA’s alliance with industry, have a special relationship with top intelligence officials that no other segment of society can claim.

  The most pertinent example of the term came in an amicus curiae brief filed during the summer of 2007 by the Chamber of Commerce to help AT&T defend itself in the lawsuit filed against the telecommunications company for cooperating with the NSA in its warrantless domestic surveillance program. “Homeland security, especially the protection of our nation’s critical infrastructure (85% of which is under private control), continues to be one of the Chamber’s top policy priorities,” the nation’s largest business lobby wrote. “To achieve this vital objective, maintaining an effective ‘public-private partnership,’ particularly between key industrial sectors and the national intelligence community, is essential.”16 There you have it: a secret alliance between business and government that may be one of the most egregious examples of a corporation skirting U.S. privacy and foreign intelligence laws described as a friendly “partnership.” That is the ultimate result of the privatization of intelligence activities.

  But those partnerships may have reached their limit. By the fall of 2007, it was increasingly evident that the age of unbridled contracting and outsourcing was coming to an end. For that story, we turn to Congress, which has finally found a way to exercise its oversight responsibilities over the Intelligence Community and its corporate shadow.

  In May 2007, the House Permanent Select Committee on Intelligence published a report to accompany its budget authorization bill for 2008, which provided a record $48 billion to fund the activities of the U.S. Intelligence Community for the next year.17 The budget, which included the IC’s annual appropriation as well as supplemental funding for the wars in Iraq and Afghanistan, provided the first real oversight over intelligence contracting since outsourcing emerged as a public policy issue in the first years of the Bush administration. It was therefore somewhat of a triumph for Silvestre Reyes, the Texas Democrat who was the surprise choice of House Speaker Nancy Pelosi of California to head the committee after the Democrats took control of Congress in the winter of 2007. The legislation was approved by the full House on May 11, and then sent to the Senate, which passed it in October. After a House-Senate conference in which some of the House language was watered down, the final bill was passed on December 13, 2007.

  Under the conference language, the Office of the Director of National Intelligence is now required to provide, on a
n annual basis, detailed reports to the congressional intelligence committees on the Intelligence Community’s use of contractors, including—for the first time ever—an assessment of what intelligence activities should be considered inappropriate and off-limits to private contractors. The DNI must also report on its accountability mechanisms governing the performance of contractors in all sixteen agencies of the IC and submit a list of all contractors that have been the subject of audits by an inspector general or have been investigated for criminal violations, fraud, financial waste, and other actions that could affect their ability to deliver services. And to encourage the hiring of agency employees, McConnell was given authority to convert positions held by contractors into full-time government jobs by allowing him to increase personnel levels by 10 percent. The DNI must also identify agencies where a contractor is performing a “substantially similar function” to that of a government employee and compare the compensation of contract employees and government workers performing the same service. Unfortunately, the Senate deleted a House provision that would have provided much greater transparency on what contractors are actually doing. That provision would have required the DNI to estimate the number of contractors working in the most sensitive areas of intelligence, including collection and analysis; covert action; interrogation of enemy prisoners; the detention and transportation of prisoners; and the “conduct of electronic or physical surveillance or monitoring of United States citizens in the United States”—a reference to the private sector support for NSA domestic spying operations. That amendment would have to wait for a new administration and a new Congress.*

  Still, the 2007 intelligence oversight bill, which was the first passed by Congress in three years, was an important document. No longer will the ODNI be allowed to hand over tens of billions of dollars in classified work to the private sector without providing solid and measurable explanations to Congress. At the same time, if the ODNI follows the letter of the law, Congress and the American public will finally have a chance to see how extensive contracting has spread into classified intelligence operations and to understand the standards used by intelligence agencies to determine which jobs can be contracted out and which jobs should be retained as government functions.

  Even though it was left out of the final legislation, one section of the House bill was particularly significant. Using unusually strong language, the House committee bluntly declared that U.S. intelligence officials did not “have an adequate understanding of the size and composition of the contractor workforce, a consistent and well-articulated method for assessing contractor performance, or strategies for managing a combined staff-contractor workforce.” Worse, the IC lacked a “clear definition of what functions are ‘inherently governmental’ and, as a result, whether there are contractors performing inherently governmental functions.” Those were stunning accusations: after nearly ten years of unprecedented growth, the government was spending more than $40 billion a year on intelligence contracts, yet at no point had the government stopped to consider which one of these services could be safely performed by private companies and which ones should be handled only by government employees.* If they follow the letter of the 2007 law, Admiral McConnell and his organization will be forced to come to grips with the dilemma voiced by John Humphrey of CACI International, who warned in 2006 that the Intelligence Community faced “blowback” as a result of the “blurring of lines” in Iraq between private contractors and government intelligence operatives.

  The outsourcing amendment to the intelligence bill was largely the work of one congressman who has been diligently pursuing the issue of contractor accountability since 2003: David Price, D-North Carolina. Price, a former professor of political science at Duke University, represents North Carolina’s Fourth Congressional District, which encompasses the area known as the Research Triangle and includes Raleigh, Durham, and Chapel Hill. Like many citizens, he was alerted to the issue of contracting by two seminal events: the torture scandal at Abu Ghraib and the horrific incident in 2004 in Fallujah, Iraq, when four security guards working for Blackwater, which is based in North Carolina, were killed and mutilated, and their bodies strung up on a bridge over the Euphrates River by Iraqi insurgents and fighters.

  In the wake of those incidents, Price began to look into what contractors were doing in Iraq and elsewhere in the war on terror, and discovered that the field was a murky one that offered few answers. “Once you get into outsourcing, you find layers upon layers,” Price told me in an interview for this book. “My primary concern was that private security contracting has become so widespread and unaccountable that Congress needed to assert some legal authority.” He was certain of one thing: “Interrogations are not what should be in the hands of private companies.”18 In 2004, Price started a small study group within the Democratic Caucus to educate himself and others about contracting. One of the people he sought out was Peter Singer, the military outsourcing expert at the Brookings Institution and the author of Corporate Warriors: The Rise of the Privatized Military Industry, the first book to call public attention to the military outsourcing phenomenon. I interviewed Singer around the same time he was meeting with Price’s study group.

  Singer was especially critical of the government’s oversight of military and intelligence contractors. By 2006, after four years of war involving at least 25, 000 intelligence and private military contractors in Iraq and Afghanistan, only one private sector intelligence operative, a CIA contractor named David Passaro, had been investigated and charged for a crime—the beating death of a prisoner held in a CIA detention center in Afghanistan. To Singer, that was proof that the government had deliberately turned a blind eye toward contractors. “Your conclusion has to be one of two things: we’ve either found 25, 000 perfect angels—the Stepford Village of Iraq—or we have found the town of 25, 000 where no crimes happen,” he told me. “It’s a statistical impossibility.”19 Singer was further disturbed by a decision, apparently made sometime in 2004 by federal attorneys in Virginia, not to prosecute any of the CACI and Titan contractors referred to their office for criminal investigation by U.S. Army investigators for their role at Abu Ghraib. CACI’s response to the decision not to prosecute, Singer told me, was “that ‘nobody’s done anything, so everything’s OK.’ I would say no, it doesn’t prove that; it actually shows we have major problems.”*

  Representative Price began his quest for accountability in 2006 by drafting an amendment to an intelligence spending bill that asked the Bush administration to disclose the types of activities that were appropriate for contractors and show how their hiring saved money for American taxpayers; it also asked the ODNI to make public all intelligence contracts worth more than $1 million. As the bill was being debated in the House, I sought out the contractors’ view on the legislation from Tim Sample, the former CIA officer and General Dynamics executive who runs the Intelligence and National Security Alliance. INSA never took a formal position on the legislation. But Sample’s contempt for the amendment—and for Price’s attempt to create a modicum of transparency for intelligence contractors—was all too clear.

  As a former House intelligence committee staffer, Sample told me, he had “very little sympathy personally” for the idea that contracting information should be made public. “The public, quite frankly, doesn’t know what to do with it. And number two, I’ve met more people across the United States more surprised by what the Intelligence Community isn’t doing as opposed to what it is doing. If you are legislating things to get information that you’re going to utilize in some practical and meaningful way, then that’s great. But if it’s just that we’re going to [do this] because we want everybody to know how many contractors there are, we’re going to have people spending endless man-hours compiling lists.”20 For someone who’d been feeding at the government trough for his entire career, Sample’s response seemed remarkably obtuse.

  Steve Jacques, a former Raytheon executive and a consultant to the U.S. Geospatial Intelligence Foundation, w
as less hostile to Price’s bill but questioned the logic of making certain contracts public. “The devil’s in the details,” he told me. “I don’t think it’s a big deal to say that Lockheed Martin just got a $500 million contract with the IC. But if it’s a $500 million contract with the NSA to do X, that starts to be a security problem; it’s de-layering the onion skin. I honestly cannot imagine [the Price] amendment surviving.”21 He was right about that. After winning approval by a substantial majority in the Republican-controlled House, the Price amendment was added to the Senate’s version of the intelligence bill. But in 2006, the Senate never got around to passing an intelligence spending bill, and the Price amendment died with it. But with the Democrats in control in 2007, the provision finally made it through Congress and is now the law of the land.*

  Price and his congressional allies were less successful in an attempt to make intelligence contractors operating overseas subject to U.S. criminal law. On October 4, 2007, the House, by a lopsided margin of 389 to 30, passed a bill, partially drafted by Price, designed to bring all military and intelligence contractors under U.S. law. The legislation extended the jurisdiction of the Military Extraterritorial Jurisdiction Act to cover all contractors working for the government in a war zone; previously, contractors working for the State Department and other agencies were not held liable for criminal activity. Before the final vote, however, the Bush administration successfully lobbied to ensure that the bill did not cover intelligence contractors, such as companies working for the CIA and engaged in covert activities. The bill, as written, “would have unintended and intolerable consequences for crucial and necessary national security activities and operations,” the White House declared. J. Randy Forbes, R-Virginia, explained the implications for U.S. intelligence in a speech on the House floor. If the legislation passed and a “clandestine asset” was implicated in a crime, he said, “investigating and arresting that asset under traditional criminal procedures could expose other assets and compromise critical intelligence activities.” As a result, the bill could “implicate the authorized business of the intelligence community employees and contractors.” With Bush’s backing, he successfully introduced a motion exempting the Intelligence Community and its contractors from possible criminal liability. “Nothing in this Act shall be construed to affect intelligence activities that are otherwise permissible prior to the enactment of this Act,” it read.