Inquiry: U.S. spy agencies too large

The top-secret world the government created in response to the Sept. 11, 2001, terrorist attacks has grown so large that no one official can say whether it is efficient or effective.

Fed by nine years of unprecedented spending, the system put in place to keep the United States safe is hidden from public view and lacks thorough oversight, The Washington Post found during a two-year investigation.

This system is made up of more than 3,000 government agencies and private companies spread across 10,000 sites around the country, the Post found.

Among the newspaper’s other findings:

Many security and intelligence agencies do the same work, creating redundancy and waste. For example, 51 federal organizations and military commands, operating in 15 U.S. cities, track the flow of money to and from terrorist networks.

Analysts who must make sense of documents and conversations obtained through foreign and domestic spying share their judgment by publishing 50,000 intelligence reports each year - a volume so large that many are routinelyignored and that actually undermines the intelligence community’s mission.

Private firms have become so entwined with the government’s most sensitive activities that without them important military and intelligence missions would have to cease or would be jeopardized.

These issues also greatly concern some of the people in charge of the nation’s security.

“There has been so much growth since 9/11 that getting your arms around that - not just for the DNI [director of national intelligence], but for any individual, for the director of the CIA, for the secretary of defense - is a challenge,” Defense Secretary Robert Gates said.

Regarding the government’s reliance on private companies for its most sensitive work, CIA Director Leon Panetta said that contracting with corporations presents “an inherent conflict” because those firms’ chief responsibility “is to their shareholders.”

Panetta said his agency has depended on contractors for too long to do work that ought to be done by CIA employees. But replacing them “doesn’t happen overnight. When you’ve been dependent on contractors for so long, you have to build that expertise over time.”

Underscoring the seriousness of these issues is retired Army Lt. Gen. John Vines, who was asked by Gates last year to review the method for tracking the Defense Department’s most sensitive programs. Vines, who once commanded 145,000 troops in Iraq and is familiarwith complex problems, was stunned by what he discovered.

“I’m not aware of any agency with the authority, responsibility or a process in place to coordinate all these interagency and commercial activities,” he told the Post. “The complexity of this system defies description.”

The result, he added, is that it’s impossible to tell whether the country is safer because of all the spending and all these activities.

QUICK MULTIPLICATION

Nine days after the Sept. 11 attacks, Congress committed $40 billion beyond what was in the federal budget to fortify domestic defenses and to launch a global offensive against al-Qaida. It followed that up with an additional $36.5 billion in 2002 and $44 billion in 2003.

With the quick infusion of money, military and intelligence agencies multiplied.

The Post estimates 1,271 government organizations and 1,931 private companies work on counterterrorism, homeland security and intelligence programs.

At least 263 government security and intelligence organizations and 533 businesses came into being, were refashioned or greatly expanded in the wake of 9/11.

Many government entities that existed before the attacks grew to historic proportions as the George W. Bush administration and Congress.

The Pentagon’s Defense Intelligence Agency, for example, grew from 7,500 employees in 2002 to 16,500 today.

The budget of the National Security Agency (NSA), which conducts electronic eavesdropping, doubled.

Thirty-five FBI Joint Terrorism Task Forces became 106.

Each has required more people, and those people have required more administrative and logistic support: phone operators, secretaries, librarians, architects, carpenters, construction workers, air-conditioning mechanics and, because of where they work, even janitors with topsecret clearances.

Today the U.S. intelligence budget is $75 billion, 2 1/2 times the size it was on Sept. 10, 2001. But that figure doesn’t include many military activities or domestic counterterrorism programs.

WHO DOES WHAT?

With so many more employees, units and organizations, the lines of responsibility began to blur.

To remedy this, at the recommendation of the bipartisan 9/11 commission, the Bush administration and Congress created an agencyin 2004 with overarching responsibilities called the Office of the Director of National Intelligence to bring the effort under control.

But the law passed by Congress did not give the director clear legal or budgetary authority over intelligence matters.

Today, many officials who work in the intelligence agencies say they remain unclear about what the Office of the Director of National Intelligence is in charge of.

The office has made some progress, especially in intelligence-sharing, information technology and budget overhaul.

The last director, retired Adm. Dennis Blair, doggedly pursued such issues as procurement overhaul, compatible computer networks, trade craft standards and collegiality.

But improvements have been overtaken by volume at the intelligence office, as the increased flow of intelligence data overwhelms the system’s ability to analyze and use it.

Every day, collection systems at the National Security Agency intercept and store 1.7 billion e-mails, phone calls and other types of communications. The NSA sorts a fraction of those 1.7 billion intercepts into 70 separate databases.

The same problem bedevils every other intelligence agency, none of which have enough analysts and translators for all the work.

INFORMATION OVERLOAD

These analysts - 20- and 30-year-olds making $41,000 to $65,000 a year - are at the core of everything the topsecret agencies try to do.

The analysts’ work is greatly enhanced by computers that sort through and categorize data. But in the end, analysis requires human judgment, and half the analysts are relatively inexperienced, having been hired in the past several years, said a senior official in the national intelligence director’s office.

Contract analysts are often straight out of college and trained at corporate headquarters.

When hired, a typical analyst knows very little about the priority countries - Iraq, Iran, Afghanistan and Pakistan - and is not fluent in their languages.

Still, the number of intelligence reports they produce on these key countries is overwhelming, say current and former intelligence officials.

The overload of hourly, daily, weekly, monthly and annual reports is actually counterproductive, say people who receive them.

Some policy makers and senior officials rely on personal briefings by staff instead of the backlog of reports and data on their computers.

Those staff briefings usually rely on their own agency’s analysis, re-creating the very problem identified as a main cause of the failure to thwart the 9/11 attacks: a lack of information-sharing.

The Office of the Director of National Intelligence analysis unit knows this is a problem. Yet its solution was another publication, this one a daily online newspaper, Intelligence Today. Every day, a staff of 22 culls more than two dozen agencies’ reports and 63 websites, selects the best information and packages it by originality, topic and region.

“Who has the mission of reducing redundancy and ensuring everybody doesn’t gravitate to the lowest-hanging fruit?” asked Maj. Gen. John Custer, former director of intelligence at U.S. Central Command.

‘GOING TO HIT THE WALL’

Beyond redundancy, secrecy within the intelligence world hampers effectiveness in other ways, say defense and intelligence officers.

For the Defense Department, the root of this problem goes back to an ultra-secret group of programs for which access is extremely limited and monitored by specially trained security officers.

“There’s only one entity in the entire universe that has visibility on all SAPs [Special Access Programs] - that’s God,” said James Clapper, undersecretary of defense for intelligence and the Obama administration’s nominee to be the next director of national intelligence.

A senior intelligence official with wide access to many programs said secrecy is sometimes used to protect ineffective projects.

The official suggested that the defense secretary and the director of national security examine every program to see if it is needed.

Gates, the defense secretary, said he does not believe the post-9/11 system has become too big to manage, but acknowledged that getting precise data is sometimes difficult.

Still, he said he intends to review Defense Department programs for waste.

“Nine years after 9/11, it makes a lot of sense to sort of take a look at this and say, ‘OK, we’ve built tremendous capability, but do we have more than we need?’” he said.

Panetta, the CIA director, said he’s begun mapping out a five-year plan for his agency because the levels of spending since 9/11 are not sustainable.

“Particularly with these [budget] deficits, we’re going to hit the wall. I want to be prepared for that,” he said. “Frankly, I think everyone in intelligence ought to be doing that.”

AN EXPENSIVE FIX

Hiring private contractors to perform top-secret work started as a temporary fix in response to 9/11, but has turned into a dependency.The Post estimates that out of 854,000 people with topsecret clearances, 265,000 are contractors.

Private contractors working for the CIA have recruited spies in Iraq, paid bribes for information in Afghanistan, protected CIA directors visiting world capitals, helped snatch a suspected extremist off the streets of Italy, interrogated detainees once held at secret prisons abroad and watched over defectors holed up in the Washington suburbs.

At Langley, Va., headquarters, they analyze terrorist networks. At the agency’s training facility in Virginia, they are helping mold a new generation of American spies.

Congress and the Bush administration made it easier for the CIA and other counterterrorism agencies to hire more contractors than civil servants.

They did this to limit the size of the permanent work force, 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.

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

‘BODY SHOPS’

At the CIA, employees from 114 firms account for roughly a third of the agency work force, or about 10,000 positions.

Many of them are temporary hires, often former military or intelligence-agency employees who left government service, usually to work less and earn more while drawing a federal pension.

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 for talent, the government has been left with the youngest intelligence staffs ever while more experienced employees move into the private sector.

Across the government, contract workers are used in every conceivable way.

Contractors kill enemy fighters. They spy on foreign governments and eavesdrop on terrorist networks. They help craft war plans. They gather information on local factions in war zones. They are the historians, the architects, the recruiters in the nation’s most secretive agencies. They staff watch centers across the Washington area. They are among the most trusted advisers to the four-star generals leading the nation’s wars.

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.

Gates said he wants to reduce the number of defense contractors by about 13 percent, to pre-9/11 levels, but he’s having a hard time even getting a basic head count.

“This is a terrible confession,” he said. “I can’t get a number on how many contractors work for the Office of the Secretary of Defense,” referring to the department’s civilian leadership.

FIRMLY ENTRENCHED

At the Department of Homeland Security, 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 Homeland Security find and hire even more contractors. At the office that handles intelligence, six out of 10 employees are from private industry.

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

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 andsoftware systems.

For example, 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.

Contractors also have advanced the way the military fights.

In Iraq, former Army officer and founder of Berico Technologies Guy Filippelli, working with the National Security Agency, invented a technology that made finding roadside-bomb makers easier and helped reduce the number of casualties from improvised explosives, according to NSA officials.

Contractors have produced blueprints and equipment for the unmanned aerial war fought by drones, which have killed the largest number of senior al-Qaida leaders and produced a flood of surveillance videos.

A dozen firms created the transnational digital highway that carries the drones’ realtime data on terrorist hideouts from overseas to command posts throughout the United States.

“We could not perform our mission without [contractors],” said Ronald Sanders, who was chief of human capital for the Office of the Director of National Intelligence before retiring in February.

“They serve as our ‘reserves,’ providing flexibility and expertise we can’t acquire. Once they are on board, we treat them as if they’re a part of the total force.”

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.

To understand how these firms have come to dominate the post-9/11 era, there’s no better place to start than the Herndon, Va., office of General Dynamics.

Ten years ago, General Dynamics’ center of gravity was the industrial port city of Groton, Conn., where workers built submarines.

Today, the firm’s commercial core is made up of data tools such as the digital imagery library and the secure BlackBerry-like device used by President Barack Obama.

The company embraced the emerging intelligencedriven style of warfare. It developed small-target identification systems and equipment that could intercept a single insurgent’s cell-phone and laptop communications.It found ways to sort the billions of data points collected by intelligence agencies into piles of information a single person could analyze.

Between 2001 and 2010, the company acquired 11 firms specializing in satellites, signals and geospatial intelligence, surveillance, reconnaissance, technologyintegration and imagery.

On Sept. 11, 2001, General Dynamics was working with nine intelligence organizations. Now it is has contracts with all 16.

Its employees fill the halls of the NSA and the Homeland Security Department. Homeland Security paid the corporation hundreds of millions of dollars to set up and manage its new offices in 2003, including its National Operations Center, Office of Intelligence and Analysis and Office of Security.

General Dynamics employees do everything from deciding which threats to investigate to answering phones.

General Dynamics’ bottom line reflects its successful transformation. The company reported $31.9 billion in revenue in 2009, up from $10.4 billion in 2000. Its work force has more than doubled in that time, from 43,300 to 91,700 employees, according to the company.

Revenue from General Dynamics’ intelligence- and information-related divisions, where the majority of its top-secret work is done, climbed to $10 billion in the second quarter of 2009, up from $2.4 billion in 2000, accounting for 34 percent of its overall revenue last year.

A CLOSE RELATIONSHIP

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.

Abraxas, of Herndon, Va., headed by a former CIA spy, quickly became a major CIA contractor after 9/11. Its staff even recruited mid-level managers during work hours from the CIA’s cafeteria, former agency officers recall.

Other small and mediumsize firms sell niche technical expertise such as engineering for low-orbit satellites or long-dwell sensors.

About 800 companies do nothing but information technology, or IT. Some IT companies integrate the mishmash of computer systems within one agency; others build digital links between agencies; still others have created software and hardware that can mine and analyze large quantities of data.

The close relationship between contractors and government was on display recently at the Defense Intelligence Agency’s annual information technology conference this spring in Phoenix. The agency expected the same information technology firms angling for its business to pay for the entire five-day get-together, an agency spokesman confirmed.

And they did.

General Dynamics spent $30,000 on the event. It hosted a party at Chase Field, a 48,569-seat baseball stadium.

Carahsoft Technology, a defense intelligence contractor, invited guests to a casino night where intelligence officials and vendors ate, drank and bet phony money at craps tables run by professional dealers.

The McAfee network security company, a Defense Department contractor, welcomed guests to a social where 250 firms paid thousands of dollars each to make their pitches to intelligence officials walking the exhibition hall.

As for what a government agency gets out of it: “Our goal is to be open and learn stuff,” said Grant Schneider, the Defense Intelligence Agency’s chief information officer and one of the conference’s main draws.

These types of gatherings happen every week. Many of them are closed to anyone without a top-secret clearance.

A lifelong staff member on the Senate Armed Services Committee described the post-9/11 defense-intelligence-corporate relationship as “a living, breathing organism” impossible to control or curtail.

“How much money has been involved is just mindboggling,” he said. “We’ve built such a vast instrument. ... It’s turned into a jobs program.”About this story

This article was condensed and edited from a three-part series, “Top Secret America,” published in The Washington Post on July 18, 19 and 20.

Two years in the making, the Post’s project describes the huge national security buildup in the United States after the Sept. 11, 2001, attacks.

The Post’s investigation into this secret world is based on public government documents and contracts, job descriptions, property records, corporate and social networking websites, additional records, andhundreds of interviews with intelligence, military and corporate officials and former officials.

Most of those interviewed requested anonymity either because they are prohibited from speaking publicly or because, they said, they feared retaliation at work for describing their concerns.

The Post built an online, searchable database of government organizations and private companies based entirely on public records. It can be found at

topsecretamerica.com

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Front Section, Pages 1 on 07/25/2010

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