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CIA Plans Cutbacks, Limits on Contractor Staffing

By Walter Pincus and Stephen Barr
Washington Post Staff Writers
Monday, June 11, 2007

Acting under pressure from Congress, the CIA has decided to trim its contractor staffing by 10 percent. It is the agency's first effort since the Sept. 11, 2001, attacks to curb what critics have decried as the growing privatization of U.S. intelligence work, a circumstance that has sharply boosted some personnel costs.

Contractors currently make up about one-third of the CIA workforce, but CIA Director Michael V. Hayden has said that their work has not been efficiently managed. Associate Deputy Director Michael Morell said in an interview that he does not think the CIA has become a revolving door, but "Director Hayden has said we don't want to become the farm team for contractors."

Morell said reviews are underway "to identify which of our jobs here at CIA should be done by staff and which of our jobs should be done by contractors or a 'mix' of contractors and staff." Effective June 1, the agency also began to bar contracting firms from hiring former CIA employees and then offering the employees' services to the CIA within the first year and a half of their retirement from the agency -- a practice known as "bidding back."

The CIA's contractors do not supervise employees and are not allowed to make commitments on behalf of the government. But Morell said, "We do have contractors who do case-officer work, who are conducting operations" and who work alongside the CIA's career analysts.

Many companies providing contract employees to CIA and Pentagon intelligence agencies are run by former employees at those agencies. One such firm, Abraxas, is run by a former agency case officer, and over the past six years has provided more than 100 former intelligence employees to the intelligence community.

"Over the past three years or so, a fairly significant number of those individuals who resigned -- not retired, but resigned -- from CIA end up coming back as contractors within a short period of time. We want to decrease the number of people who do that. That is what is behind the 18-month rule that we have put in effect," Morell said.

The CIA and many other intelligence agencies were downsized and given personnel limits during the 1990s, so they turned to contractors for staffing surges after the Sept. 11 attacks. For example, the newest Pentagon intelligence agency, the Counterintelligence Field Activity (CIFA), was established in February 2002 to coordinate Defense Department counterterrorism and counterintelligence activities. Last year, CIFA was staffed 70 percent by contractors.

In its report on the fiscal 2008 intelligence authorization bill, the Senate Select Committee on Intelligence last week noted that full-time personnel in the intelligence community had increased by 20 percent since Sept. 11. The report said that the Bush administration had not adequately funded that growth by allowing agencies to add personnel, so agencies turned to contractors to avoid personnel caps.

The committee questioned the additional costs involved in using contractors, citing an estimate that a government civilian employee costs on average $126,500 a year while the annual cost of a "fully loaded" core contractor, including overhead, is $250,000.

"Given this cost disparity, the committee believes the intelligence community should strive in the long term to reduce its dependence on contractors," the Senate report said. It recommended no additional full-time employees be hired "until past growth has been assessed," including the balance between government and contractor personnel. The report also required the director of national intelligence to prepare an annual personnel-level assessment for each of the 15 intelligence agencies.

The House Select Committee on Intelligence also focused on intelligence contracting, saying in its report it was concerned that there was not "a clear definition of what functions are 'inherently governmental' and as a result where . . . contractors [are] performing inherently governmental functions." It ordered a review of "the effect of contractors on the intelligence community workforce" and a report on contractors "found to have committed fraud or failure to perform on a contract."

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