Ghost of Outsourcing Yet to Come

This article appeared in the Middle East Times December 27, 2007.
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It is that time of year again, when we both look back at what happened and what will be. Just as Ebenezer Scrooge did, aided by the Ghosts of Christmas Past and the Ghost of Christmas Yet to Come in Charles Dickens’ famous classic, “A Christmas Carol.” So in the spirit of Christmas let’s look at the issue of national security and privatization. Among the issues that assumed public prominence in 2007 was that of the use of private sector companies taking on responsibilities that people generally associate with the public sector; in particular that of military affairs. If 2007 was anything, it was the year where private security companies like Blackwater, DynCorp, Triple Canopy, Aegis Defence and a host of others became public icons, due to the popular, albeit highly sensationalistic, book “Blackwater” by Jeremy Scahill. The September shootings of Iraqi civilians in a Baghdad square by Blackwater contractors set off an ongoing controversy about how to both use and regulate such firms and whether they should be used at all.

These are interesting, but not easy, questions. In fact, the outsourcing of functions formerly considered inherently governmental is a phenomenon that while only recently received widespread public attention has been decades in the making. And it goes far beyond the use of private security contractors.

Consider, for example, the U.S. intelligence community, which, thanks to a forthcoming book, promises to be the outsourcing controversy of 2008. In the post‐​Sept. 11, 2001, rush to strengthen intelligence, the U.S. government has thrown open the doors, which were already ajar, to the corporate takeover of intelligence.

The use of private contractors in the intelligence community is, to paraphrase Winston Churchill, a classified enigma wrapped in a sensitive and compartmentalized black hole. Not even the U.S. government knows the extent its intelligence community relies on private contractors. That would explain why there is a provision in the FY 2008 Intelligence Authorization Act calling for “the best estimate of the number and costs of contractors to be funded.”

Tim Shorrock, who has long written on U.S. foreign policy and national security issues, has written a book, “Spies For Hire: The Secret World of Intelligence Outsourcing,” to be published in May 2008 by Simon & Schuster.

Shorrock’s book is under tight wraps, but some of his research has been previously published in Salon​.com. He notes that “spying has become one of the fastest‐​growing private industries in the United States. The federal government relies more than ever on outsourcing for some of its most sensitive work, though it has kept details about its use of private contractors a closely guarded secret. Intelligence experts, and even the government itself, have warned of a critical lack of oversight for the booming intelligence business.”

While the real‐​life counterpart to “24”’s Jack Bauer is still a public sector employee, his Counter Terrorism Unit is being staffed increasingly by people from powerful private corporations; firms like SAIC, Booz Allen Hamilton, Northrop Grumman and ManTech International.

It’s not hard to understand why. There’s gold in those classified cubbyholes. On May 14, at an industry conference in Colorado sponsored by the Defense Intelligence Agency, the U.S. government revealed for the first time how much of its classified intelligence budget is spent on private contracts: a whopping 70 percent. Based on this year’s estimated budget of at least $48 billion, that would come to at least $34 billion in contracts.

The same DNI figures showed that the aggregate number of private contracts awarded by intelligence agencies rose by about 38 percent from the mid‐​1990s to 2005. But the surge in outsourcing has been far more dramatic measured in dollars: Over the same period of time, the total value of intelligence contracts more than doubled, from about $18 billion in 1995 to about $42 billion in 2005.

Considering the prevalence of contractors, some agencies should consider changing their names. Given that former officers with the Central Intelligence Agency have said the CIA’s workforce is about 60 percent contractors, perhaps they should rename it Contractors In Action.

What is the problem with this? Why should the public care whether it is public or private sector employees doing the work as long as the job gets done? Consider that any time you have a situation where things are kept secret it is an open invitation to trouble. Traditionally, congressional oversight, with a few exceptions, has not been particularly stringent. When you add in the private sector, which only has accountability to the extent it is written into the contract, it’s just a matter of time until scandal erupts.

A case in point is former Rep. Randy “Duke” Cunningham, R‐​Calif., who resigned from Congress in 2006 and was sentenced to eight years in prison after being convicted of accepting more than $2 million in bribes from executives with MZM, a prominent San Diego defense contractor. In return for the bribes, Cunningham used his position on the House Appropriations and Intelligence committees to win tens of millions of dollars’ worth of contracts for MZM at the CIA and the Pentagon’s Counter‐​Intelligence Field Activity office, which has been criticized by Congress for spying on American citizens. The MZM case deepened earlier this year when Kyle “Dusty” Foggo, the former deputy director of the CIA, was indicted for conspiring with former MZM CEO Brent Wilkes to steer contracts toward the company.

It seems that even the intelligence community is having second thoughts on its use of contractors. According to Shorrock, the Office of the Director of National Intelligence itself has voiced doubts about the efficiency and effectiveness of outsourcing. In a report released in 2006, the agency said the intelligence community increasingly “finds itself in competition with its contractors for our own employees.” Faced with arbitrary staffing limits and uncertain funding, the report said, intelligence agencies are forced “to use contractors for work that may be borderline ‘inherently governmental’ ” — meaning the agencies have no clear idea about what work should remain exclusively inside the government versus work that can be done by civilians working for private firms. The DNI also found that “those same contractors recruit our own employees, already cleared and trained at government expense, and then ‘lease’ them back to us at considerably greater expense.”

David Isenberg

David Isenberg is a U.S. Navy veteran and a member of the Coalition for a Realistic Foreign Policy. He is an adjunct scholar with the Cato Institute, a contributor to the Straus Military Reform Project, and a correspondent for Asia Times.