The disclosure of the NSA phone and internet data-mining programs, only the first of many spying programs The Guardian plans to leak, should make us call into question how our intelligence community operates both in terms of transparency and accountability. Part of that is understanding how agencies such as NSA work, which more often than not requires examining the controversial role of the over 500,000 private contractors who help monitor threats to national security.
Edward Snowden was one of those contractors, working for Booz Allen Hamilton (BAH), and although he likely stole the information when he was previously working for the NSA, this scandal has shed some light on how companies such as BAH operate, often at an unnecessary cost to the taxpayer.
"After 9/11, intelligence budgets were increased, new people needed to be hired," former senior CIA and Booz Allen official Joseph Augustyn said. "It was a lot easier to go to the private sector and get people off the shelf." Since then the reliance on contractors has only increased as the government continues to scramble to keep up with evolving threats, and more recently because of Congress' efforts to limit the size of federal agencies and shrink the budget. However, some reports indicate that the “faux privatization” of intelligence is more expensive and less reliable than government work.
As Forbes’ Erik Kain writes, “When it’s an actual private company doing work for profit, there’s an incentive to keep costs down. When it’s an actual government worker with democratic oversight, there’s an incentive to keep costs down. But when you contract out to a private contractor and take both competition and government oversight mostly out of the picture, you’ve created a government-sanctioned monopoly — a private company basically does the work of the state but with an eye toward making profit, not through competition but through a parasitic relationship with the state.”
Kain’s theory has been proven correct on many occasions, most recently in a study study conducted by the Project on Government Oversight (POGO), a nonprofit Washington group. Looking beyond simple salaries, where the private sector numbers are roughly equivalent to if not lower than those in the public sector, POGO says it “compared the full compensation paid to federal government and private sector employees to the billable rates in federal service contracts. Across the board you see that it costs government more to pay for contractors.” The study found that on average outsourcing more than doubled the cost of a project.
James Sherk of the Heritage Foundation was skeptical of the POGO findings. “It’s not a real apples to apples comparison,” he said. “When the federal government hires contractors, it’s for the short-term. When they hire for the public sector, they are on the hook for the salaries and compensation for years.”
But as Scott Amey, POGO’s general counsel, accurately points out, the government has increasingly been paying contractors for costly multiple-year jobs, not the short-term projects that most would acknowledge can effectively be outsourced. Most recently, Booz Allen signed a five-year, $5.6 billion contract with the Department of Defense.
Last year, 98% of BAH's $5.9 billion in revenue came from U.S. government contracts, and the deep ties this business relationship creates poses another threat, the risk of information misuse.
Employing private contractors as a key part of the U.S. intelligence apparatus therefore is not only cost-ineffective under its current form, but also reduces transparency. POGO’s Scott Amy explains, "It's very difficult to know what contractors are doing and what they are billing for the work — or even whether they should be performing the work at all… It has muddied the waters."
At Booz Allen alone, three-fourths of its 25,000 employees hold government security clearances, and half have top-secret clearances. The entire private intelligence industry accounts for 21% of “confidential and secret” government information clearances, and 34% of top-secret clearances, with these numbers set to go nowhere but up.
The hundreds of thousands of private contractors cleared to handle highly sensitive information, and as we now know highly private data, are removing the last barrier that some used to justify the security programs: government oversight. It has gotten so out of hand the private contractors are now even handling the distribution of security clearances.
Former NSA General Counsel Stewart A. Baker acknowledges that the privatization of intelligence even makes the government more vulnerable to leaks: “Inside the government, there are structures designed to make sure that people understand that they can raise concerns about the lawfulness of particular activities in a variety of established channels,” Mr. Baker said. “You can go to the inspector general or to the Intelligence Committees, and you don’t have to pierce the veil of secrecy to get high-level attention to your concerns without exposing national secrets. It is a little less obvious to employees at a contractor.”
When Edward Snowden reveled the details of two NSA programs, among other details soon to be released, he once again showed the risk of employing private contractors in the U.S. intelligence apparatus, a risk becoming far too great as the “faux privatization” of our security, and now our privacy, continues.