Tuesday, July 20, 2010

National Security Inc.

To ensure that the country's most sensitive duties are carried out only by people loyal above all to the nation's interest, federal rules say contractors may not perform what are called "inherently government functions." But they do, all the time and in every intelligence and counterterrorism agency, according to a two-year investigation by The Washington Post.

The Post investigation uncovered what amounts to an alternative geography of the United States, a Top Secret America created since 9/11 that is hidden from public view, lacking in thorough oversight and so unwieldy that its effectiveness is impossible to determine. Welcome to the Shadow Government.

The federal budget process, the George W. Bush administration and Congress made it much easier for the CIA and other agencies involved in counterterrorism to hire more contractors than civil servants. They did this to limit the size of the permanent workforce, to hire employees more quickly than the sluggish federal process allows and because they thought - wrongly, it turned out - that contractors would be less expensive.

Contractors can offer more money - often twice as much - to experienced federal employees than the government is allowed to pay them. And because competition among firms for people with security clearances is so great, corporations offer such perks as BMWs and $15,000 signing bonuses, as Raytheon did in June for software developers with top-level clearances.

As companies raid federal agencies of talent, the government has been left with the youngest intelligence staffs ever while more experienced employees move into the private sector. This is true at the CIA, where employees from 114 firms account for roughly a third of the workforce, or about 10,000 positions. Many of them are temporary hires, often former military or intelligence agency employees who left government service to work less and earn more while drawing a federal pension.

So great is the government's appetite for private contractors with top-secret clearances that there are now more than 300 companies, often nicknamed "body shops," that specialize in finding candidates, often for a fee that approaches $50,000 a person, according to those in the business.

The newspaper's Top Secret America database includes 1,931 companies that perform work at the top-secret level. More than a quarter of them - 533 - came into being after 2001, and others that already existed have expanded greatly. Most are thriving even as the rest of the United States struggles with bankruptcies, unemployment and foreclosures.

The privatization of national security work has been made possible by a nine-year "gusher" of money, as Gates recently described national security spending since the 9/11 attacks.

Contractors in war zones, especially those who can fire weapons, blur "the line between the legitimate and illegitimate use of force, which is just what our enemies want," Allison Stanger, a professor of international politics and economics at Middlebury College and the author of "One Nation Under Contract," told the independent Commission on Wartime Contracting at a hearing in June.

Misconduct happens. A defense contractor formerly called MZM paid bribes for CIA contracts, sending Randy "Duke" Cunningham, who was a California congressman on the intelligence committee, to prison.

*At the Department of Homeland Security (DHS), the number of contractors equals the number of federal employees. The department depends on 318 companies for essential services and personnel, including 19 staffing firms that help DHS find and hire even more contractors. At the office that handles intelligence, six out of 10 employees are from private industry.

*The National Security Agency, which conducts worldwide electronic surveillance, hires private firms to come up with most of its technological innovations. The NSA used to work with a small stable of firms; now it works with at least 484 and is actively recruiting more.

*The National Reconnaissance Office cannot produce, launch or maintain its large satellite surveillance systems, which photograph countries such as China, North Korea and Iran, without the four major contractors it works with.

*Every intelligence and military organization depends on contract linguists to communicate overseas, translate documents and make sense of electronic voice intercepts. The demand for native speakers is so great, and the amount of money the government is willing to pay for them is so huge, that 56 firms compete for this business.

*Each of the 16 intelligence agencies depends on corporations to set up its computer networks, communicate with other agencies' networks, and fuse and mine disparate bits of information that might indicate a terrorist plot. More than 400 companies work exclusively in this area, building classified hardware and software systems.

A 2008 study published by the Office of the Director of National Intelligence found that contractors made up 29 percent of the workforce in the intelligence agencies but cost the equivalent of 49 percent of their personnel budgets.

The unofficial seats of power - the private, corporate ones - become visible, especially at night. There in the Virginia suburbs are the brightly illuminated company logos of Top Secret America: Northrop Grumman, SAIC, General Dynamics.

Of the 1,931 companies identified by The Post that work on top-secret contracts, about 110 of them do roughly 90 percent of the work on the corporate side of the defense-intelligence-corporate world.

In September 2009, General Dynamics won a $10 million contract from the U.S. Special Operations Command's psychological operations unit to create Web sites to influence foreigners' views of U.S. policy. To do that, the company hired writers, editors and designers to produce a set of daily news sites tailored to five regions of the world. They appear as regular news Web sites, with names such as "SETimes.com: The News and Views of Southeast Europe." The first indication that they are run on behalf of the military comes at the bottom of the home page with the word "Disclaimer." Only by clicking on that do you learn that "the Southeast European Times (SET) is a Web site sponsored by the United States European Command."

This year, General Dynamics' overall revenue was $7.8 billion in the first quarter, Jay L. Johnson, the company's chief executive and president, said at an earnings conference call in April.

In the shadow of giants such as General Dynamics are 1,814 small to midsize companies that do top-secret work. About a third of them were established after Sept. 11, 2001, to take advantage of the huge flow of taxpayer money into the private sector. Many are led by former intelligence agency officials who know exactly whom to approach for work.

In June 2002, from the spare bedroom of his San Diego home, 30-year-old Hany Girgis put together an information technology team that won its first Defense Department contract four months later. SGIS sold the government the services of people with specialized skills; expanding the types of teams it could put together was one key to its growth. By 2006, its revenue had multiplied tenfold, to $30.6 million, and the company had hired employees who specialized in government contracting just to help it win more contracts.

"We knew that's where we wanted to play," Girgis said in a phone interview. "There's always going to be a need to protect the homeland."

SGIS employees replaced military personnel at the Pentagon's 24/7 telecommunications center. SGIS employees conducted terrorist threat analysis. SGIS employees provided help-desk support for federal computer systems. And then there was what happened to SGIS last month, when it did the one thing the federal government can never do. It sold itself.

We are so fucked.

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