NSA leaks put focus on intelligence apparatus’s reliance on outside contractors

U.S. defense contractor Edward Snowden discusses his motivation behind the NSA leak and why he is revealing himself as the whistleblower behind the major story. (Courtesy of Laura Poitras and Glenn Greenwald)
June 10, 2013

The unprecedented leak of top-secret documents by National Security Agency contractor Edward Snowden raises far-reaching questions about the government’s rush to outsource intelligence work to contractors since the Sept. 11, 2001, terrorist attacks.

Never before have so many U.S. intelligence workers been hired so quickly, or been given access to secret government information through networked computers. In recent years, about one in four intelligence workers has been a contractor, and 70 percent or more of the intelligence community’s secret budget has gone to private firms.

Booz Allen Hamilton, which hired the 29-year-old Snowden three months ago to work at the NSA, has been a leader among more than 1,900 firms that have supplied tens of thousands of intelligence analysts in recent years, including technologists and field spies.

But in the rush to fill jobs, the government has relied on faulty procedures to vet intelligence workers, documents and interviews show. At the same time, intelligence agencies have not hired enough in-house government workers to manage and oversee the contractors, contracting specialists said.

On Monday, lawmakers said they will examine Snowden’s hiring and the growing use of private companies for intelligence work.

Who holds security clearances?

“We’ll be going over every inch of this,” said Rep. Adam B. Schiff (D-Calif.), a member of the House Intelligence Committee who expects confidential briefings on the leak in the next few days. Public hearings are likely as well, he said.

Schiff said the committee long has worried about the cost of outsourcing but now will scrutinize the security risks more closely. “Now I think we’ll be looking that through an entirely different lens,” he said.

Intelligence officials, government auditors and contracting specialists have warned for years that the vulnerability to spies and breaches was rising, along with contracting fraud and abuse.

“When you increase the volume of contractors exponentially but you don’t invest in the personnel necessary to manage and oversee that workforce, your exposure increases,” said Steven Schooner, co-director of the government procurement law program at George Washington University. “This is what happens when you have staggering numbers of people with access to this kind of information.”

The reliance on contractors reflects a major shift toward outsourcing over the past 15 years, in part because of cutbacks in the government agencies and commitment to smaller government by the George W. Bush administration.

Most of the work went to the largest contractors, including Booz Allen Hamilton, which had $5.8 billion in revenue last year. Almost all of Booz Allen’s work was for the government, and nearly a quarter of that was for intelligence agencies.

In the first few years after 2001, when the competition for qualified job candidates was the fiercest, it was not unusual for companies to give signing bonuses of $30,000 or a new car for workers with top-secret security clearances.

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By 2010, the overall intelligence budget had grown by 250 percent since 2000. Nowhere was the growth larger than at the NSA. The budget there doubled, as did the physical infrastructure. The hidden Fort Meade complex includes as much square footage as the Pentagon and is surrounded by 112 acres of parking lots, according to military construction documents filed with Howard County. Ten thousand employees are to be added in the next 15 years, according to the plans.

Many of the NSA’s contractors are located in the 285-acre National Business Park, which is connected to the agency by a private road. Booz Allen shares the skyline there with other giants: L-3 Communications, Northrop Grumman and SAIC, to name a few.

By the mid-2000s, all of the intelligence agencies had become dependent on private contractors such as Snowden — who says he made $200,000 a year — to perform everything from information technology installation and maintenance to intelligence analysis and agent protection.

Private contractors working for the CIA recruited spies, protected CIA directors, helped snatch suspected extremists off the streets of Italy and even interrogated suspected terrorists in secret prisons aboard.

The Defense Security Service, the agency that grants security clearances to many of the Defense Department’s intelligence agencies, became so overwhelmed with that task that on April 28, 2006, it shut down the clearance process altogether. Its backlog of pending cases had reached 700,000, and it had run out of money to process any more. The government’s solution was to hire more contractors to administer the security clearance reviews.

Over time, the backlog has been dramatically cut. “A long while ago, we were looking at well over a year for even low-level clearances, and the government has gotten it down to roughly four, five, six months,” said Evan Lesser, who founded ClearanceJobs.com, a career site that specializes in cleared candidates. “Whether that is at the sake of quality is, I think, surely a debate that could be had.”

By 2011, more than 4.2 million government and contract workers had security clearances, and more than a third of them had top-secret access.

But little has been done to beef up the infrastructure needed to ensure that money is well spent and, more important, to protect the reservoirs of secret information the government is gathering to pursue its battle against terrorism.

A review by the Government Accountability Office in 2009 found that of 3,500 security clearance reviews, almost nine in 10 lacked documentation. Of those, nearly a quarter were still approved. “DOD adjudicators granted clearance eligibility without requesting missing investigative information or fully documenting unresolved issues in 22 percent of DOD’s adjudicative files,” the auditors said.

Glenn Voelz, an Army intelligence officer previously assigned to the Joint Chiefs of Staff at the Pentagon, warned in a 2009 essay that “the rapid and largely unplanned integration of many nongovernmental employees into the workforce presents new liabilities that have been largely ignored to this point,” including espionage and counterintelligence.

Among the most aggressive, connected and successful contractors is Snowden’s most recent employer, Booz Allen Hamilton.

The McLean-based Booz Allen has almost 25,000 employees and recorded $5.8 billion in revenue for fiscal 2013, earning $219 million in profit. Its profits have been soaring in recent years. Nearly all of its revenue comes as a result of “strong and longstanding relationships with a diverse group of clients at all levels of the U.S. government,” the company said in a financial filing.

The largest shareholder of the firm is the Carlyle Group, which owns more than two thirds of the shares.

Booz Allen is often referred to as something of a gold standard for intelligence, cybersecurity and other national security issues. It recently described a cutting-edge program this way: “Developing predictive intelligence services that include anticipatory cyber threat solutions, protection, and detection capabilities and the application of social media analytics designed to provide early identification of trends that would otherwise not be possible using after-the-fact analysis of traditional data sources.”

A Booz Allen spokesman declined requests for interviews. In a statement Sunday, the company said: “Booz Allen can confirm that Edward Snowden, 29, has been an employee of our firm for less than 3 months, assigned to a team in Hawaii. News reports that this individual has claimed to have leaked classified information are shocking, and if accurate, this action represents a grave violation of the code of conduct and core values of our firm. We will work closely with our clients and authorities in their investigation of this matter.”

Craig Timberg and Neil Irwin contributed to this report.

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