Three quarters of the U.S. intelligence budget now goes to outside contractors.

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Reviewed by Jeff Stein
Sunday, June 1, 2008; Page BW03


The Secret World of Intelligence Outsourcing

By Tim Shorrock

Simon & Schuster. 439 pp. $27

Not long ago I had lunch with a recently retired senior CIA officer who worked himself into an expletive-laced rage over private contractors who had taken up seats in the agency's sanctum sanctorum, the clandestine services where the spies roam.

Many of them, he said, had spent only a few years working for the agency. Then they performed Washington's version of alchemy, turning their top-secret security clearances into gold-plated jobs with the new breed of Beltway bandits, the intelligence contractors, at twice their old pay.

Unlike in decades past, when firms such as Boeing and Lockheed provided spy planes and satellites and other hardware that the CIA could not possibly build itself, the new breed of contractor offers the CIA guys in trench coats and black ops gear, ready to do the work the agency traditionally has done.

My CIA acquaintance, who retired as chief of a large European station, groused that making money had replaced duty, honor, country in the spy ranks -- and along with it, accountability. "If they make a mistake," he asked, "do you think their company is going to admit it, if it threatens their contract?"

Late last year, CIA Director Michael V. Hayden finally jammed a crowbar into the revolving doors, barring ex-employees from returning to work on their old projects for 18 months.

As investigative reporter Tim Shorrock notes in this valuable (and angry) book, contractors have long had the run of the Pentagon and CIA, working hand in hand on projects ranging from reconnaissance satellites to Predator drones. But Shorrock persuasively shows that the business has changed dramatically in recent years, beginning even before the Sept. 11 attacks set off a homeland security gold rush.

Today, intelligence contracting is a $45 billion-a-year industry, he says, chewing up three quarters of the estimated $60 billion intelligence budget. It is no longer limited mainly to providing hardware; its reach now extends from top to bottom, from data-mining contractors who sift the Internet for terrorist activity to spy handlers, regional intelligence analysts and ex-special operations troops who run paramilitary operations.

Cold War-era hardware, such as the U-2 spy plane, unquestionably made us safer. Has outsourcing made us safer in an age of non-state terrorism? Shorrock does not think so. As the U.S. occupation of Iraq was tanking in 2006, he writes, intelligence contractors gathered "over sushi and Chinese hors d'oeuvres . . . sipping cognac" at a conference at the Mandarin Oriental Hotel in Washington, where they gloated over their business fortunes. "The industry's on a roll," one investment adviser told him, even if the war on terror isn't.

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