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Defense Agency Proposes Outsourcing More Spying
Contracts Worth $1 Billion Would Set Record

By Walter Pincus
Washington Post Staff Writer
Sunday, August 19, 2007

The Defense Intelligence Agency is preparing to pay private contractors up to $1 billion to conduct core intelligence tasks of analysis and collection over the next five years, an amount that would set a record in the outsourcing of such functions by the Pentagon's top spying agency.

The proposed contracts, outlined in a recent early notice of the DIA's plans, reflect a continuing expansion of the Defense Department's intelligence-related work and fit a well-established pattern of Bush administration transfers of government work to private contractors.

Since 2000, the value of federal contracts signed by all agencies each year has more than doubled to reach $412 billion, with the largest growth at the Defense Department, according to a congressional tally in June. Outsourcing particularly accelerated among intelligence agencies after the 2001 terrorist attacks caught many of them unprepared to meet new demands with their existing workforce.

The DIA did not specify exactly what it wants the contractors to do but said it is seeking teams to fulfill "operational and mission requirements" that include intelligence "Gathering and Collection, Analysis, Utilization, and Strategy and Support." It holds out the possibility that five or more contractors may be hired and promised more details on Aug. 27.

The DIA's action comes a few months after CIA Director Michael V. Hayden, acting under pressure from Congress, announced a program to cut the agency's hiring of outside contractors by at least 10 percent. The CIA's effort was partly provoked by managers' frustration that officials with security clearances were frequently resigning to earn higher pay with government contractors while performing the same work -- a phenomenon that led lawmakers to complain that intelligence contract work was wasting money.

"Mind-blowing," was the reaction of Rep. Jan Schakowsky (D-Ill.), a member of the House Permanent Select Committee on Intelligence, when she learned of the DIA proposal. In a telephone interview, she described it as "definitely something to be concerned about."

In its notice, published on a procurement Web site, the DIA said that "the total price of all work to be performed under the contract(s) will exceed $1 billion," adding that the tally "is only an estimate and there is no guarantee that any orders will be placed."

A DIA spokesman, Cmdr. Terrence Sutherland, said this week that "this is the first DIA contract of its type specifically intended for the procurement of intelligence analysis and related services." He said the primary purpose of the proposal is to ensure that adequate outside support is ready to assist the DIA, as well as Army, Navy, Marine and Air Force intelligence centers and the military's overseas command centers.

In May, Schakowsky and Rep. David E. Price (D-N.C.) sponsored an amendment to the 2008 intelligence bill that requires the Defense Department to compile a database of all its intelligence-related contracts. The aim, Schakowsky said, is to force a review "of what contractors are doing and, importantly, whether contractors are performing inherently governmental functions."

Some activities, she said, are so sensitive that "if and when they are done," it may not be appropriate for the government to "contract these activities out."

Price asked during the debate whether contractors should be involved in intelligence collection and analysis, interrogation, and covert operations, or whether those activities are so sensitive that "they should only be performed by highly trained intelligence community professionals."

In a statement Friday, Price questioned whether "a contract award of this scale is consistent with the DNI's commitment to reduce the alarming portion of the intelligence budget that goes to private contractors." (DNI refers to the director of national intelligence, Mike McConnell.)

The DIA is the country's major manager and producer of foreign military intelligence, with more than 11,000 military and civilian employees worldwide and a budget of nearly $1 billion. It has its own analysts from the various services as well as collectors of human intelligence in the Defense HUMINT Service. DIA also manages the Defense attaches stationed in embassies all over the world.

Unlike the CIA, the DIA outsources the major analytical products known as all-source intelligence reports, a senior intelligence official said, speaking on the condition of anonymity.

A former senior Pentagon intelligence official said yesterday that the DIA is struggling to do "the in-depth intelligence work required under present circumstances" and that is why it is preparing to contract for outside help. He cited the military's efforts in Iraq to provide human intelligence sources to forces that rotate out after tours of a single year. "That is hardly enough time to develop serious, dependable Iraqi sources," he said.

The former official added that for years intelligence has not been a prime career path for officers who seek to reach the top positions in the Army, which favors infantry, armor and special forces as the specializations that lead to promotions.

The war in Iraq has required the hiring of outside contractors by the Pentagon to perform not just security jobs but also the collection of intelligence used for force protection. Earlier this year, retired Marine Gen. Anthony C. Zinni, a former head of the U.S. Central Command who today advises defense contractors, said there is a legitimate role for private firms in security missions. But he warned that problems can arise "when they take on quasi-military roles," such as planning intelligence operations.

In its report in June on the fiscal 2008 intelligence authorization bill, the Senate Select Committee on Intelligence noted that Congress had allowed full-time positions in the intelligence community to grow 20 percent since Sept. 11. But personnel caps forced the agencies to turn to contractors.

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 core contractor, including overhead and benefits, is $250,000.

Many companies that provide contract workers to the CIA and Pentagon intelligence agencies are headed by former employees of those agencies. For example, Abraxas, which is run by a former CIA case officer, has hired -- and then contracted out to the government -- more than 100 former intelligence employees over the past six years.

The CIA imposed a rule that former personnel cannot perform work with a CIA contractor in the 18 months after they leave the agency.

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