Washington’s corridors of power stretch in a nearly straight line from the Supreme Court to the Capitol to the White House. Keep going west, across the Potomac River, and the unofficial seats of power—the private, corporate ones—become visible. There, in the Virginia suburbs, are the flags of Top Secret America: the Northrop Grumman, SAIC, General Dynamics logos that define the skyline at night. Of the 1,900 or so companies working on top secret contracts in mid-2010, roughly 90 percent of the work was done by 6 percent (110) of them.
To understand how these firms have come to dominate the post-9/11 era, there’s no better place to look than the Herndon office of General Dynamics. One afternoon there, software trainer Ken Pohill was watching a series of unclassified images, the first of which showed a white truck moving across a large monitor. The truck was in Afghanistan, and a video camera bolted to the belly of a U.S. surveillance plane was following it. Pohill could access a dozen images that might help an intelligence analyst figure out whether the truck driver was just a truck driver or part of a network making roadside bombs to kill American soldiers.
To do this, he clicked his computer mouse. Up popped a picture of the truck driver’s house, with notes about visitors. Another click, and up popped infrared video of the vehicle. Click: analysis of an unidentifiable object thrown from the driver’s side. Click: high-resolution U-2 spy plane imagery. Click: a history of the truck’s movement. Click: a Google Earth–like map of friendly forces. Click: a chat window with ongoing commentary from everyone else following the truck. The whole scene would be archived on a hard drive, in case a white truck appeared somewhere else and drew suspicion.
Ten years ago, if Pohill had worked for General Dynamics, he probably would have had a job bending steel. Then, the company’s center of gravity was the industrial port city of Groton, Connecticut, where men and women in wet galoshes riveted and outfitted submarines, the thoroughbreds of naval warfare. Today, the firm’s commercial core is made up of data tools such as the digital imagery library in Herndon, which helps the military and intelligence agencies scan a particular piece of geography for whatever they might be looking for—white trucks, troop formations, men planting IEDs at the side of the road. They also make smaller, handheld technologies like the secure BlackBerry-like personal digital assistant (PDA) carried by President Obama. Both were developed not in the company’s past industrial facilities, like those in Groton, but in carpeted suburban offices, by employees in penny loafers and heels.
The evolution of General Dynamics followed society from an industrial era to the information age: the company embraced the intelligence-driven style of warfare emerging at the end of the twentieth century. Building on its existing technological expertise, it developed small-target identification systems and equipment that could intercept communications on an insurgent’s cell phone and his laptop. It found ways to sort the billions of data points collected by intelligence agencies into piles of information that a single person could analyze.
It also began gobbling up smaller companies that could help it dominate the new intelligence landscape, just as its competitors were doing. Between 2001 and 2010, General Dynamics acquired eleven firms specializing in satellites, signals, and geospatial intelligence, surveillance, reconnaissance, technology integration, and imagery.
That expansion paid off. On September 11, 2001, General Dynamics was working with nine of the sixteen major intelligence agencies. Now it has large contracts with all of them. Its employees fill the offices of the NSA and the Department of Homeland Security. The corporation was paid hundreds of millions of dollars to set up and manage DHS’s new offices in 2003, including its National Operations Center, Office of Intelligence and Analysis, and Office of Security. Its employees do everything from deciding which threats to investigate to answering phones.
General Dynamics’ bottom line reflects its successful transformation. It also reflects how much the U.S. government—the firm’s largest customer by far—has paid the company beyond what it costs to do the work, which is, after all, the goal of every profit-making corporation. The company reported $31.9 billion in revenue in 2009, a staggering rise from the $10.4 billion it reported in 2000. Its workforce 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. That division alone accounted for 34 percent of the company’s overall revenue during that period of time.
The company’s profitability is on display in its Falls Church headquarters. There, employees can marvel at the soaring, art-filled lobby, eat bistro meals served on china enameled with the General Dynamics logo, and attend meetings in a white auditorium with seven rows of white leather-upholstered seats, each with its own microphone and laptop docking station.
“The American intelligence community is an important market for our company,” said a General Dynamics spokesman, retired rear admiral Kendell Pease. “Over time, we have tailored our organization to deliver affordable, best-of-breed products and services to meet those agencies’ unique requirements.” General Dynamics helps counterintelligence operators and trains new analysts. It has a $600 million air force contract to intercept communications. It makes $1 billion a year keeping hackers out of U.S. computer networks and encrypting military communications. It even conducts information operations, the murky military effort of trying to persuade foreigners to align their views with U.S. interests. In September 2009, General Dynamics won a $10 million contract from the Special Operations Command’s psychological operations unit to create websites to influence foreigners’ views of U.S. policy. To do that, the company hired writers, editors, and designers to produce a set of daily news sites tailored to five regions of the world. They appear as regular news websites, with names such as SETimes.com: The News and Views of Southeast Europe. The first and only indication that they are actually run on behalf of the American military comes at the bottom of the home page with the word Disclaimer. Only by clicking on that do you learn that “the Southeast European Times (SET) is a Web site sponsored by the United States European Command.”
All of these contracts add up: in 2010, General Dynamics’ overall revenue was $7.8 billion in the first quarter, Jay L. Johnson, the company’s chief executive and president, said at an earnings conference call in April. “We’ve hit the deck running in the first quarter,” he said, “and we’re on our way to another successful year.”
Take General Dynamics and multiply it by more than 100 to get a rough sense of the commercial mass of all the other companies divvying up the lion’s share of the biggest government pie ever, demonstrating the federal government’s unprecedented dependence on corporations to carry out even the basic missions of intelligence, counterterrorism, security, and the related military fields. Of the 854,000 people with top secret clearances, roughly 265,000 are not government employees; they are contractors working at for-profit companies whose bottom line is to make money. The motives of even the most conscientious, patriotic of these companies is, by definition, self-interested when it comes to working with the government.
Defense Secretary Robert Gates,1 who has been in the private sector in between government jobs, once expressed his concerns about this tension to me: “You want somebody who’s really in it for a career because they’re passionate about it and because they care about the country and not just because of the money.”
Employees who want to keep their corporate jobs must be attentive, first and foremost, to their company’s goal of getting more business, which bothered Obama’s CIA director Leon Panetta,2 too. Contractors, he said, are obviously responsible “to their shareholders, and that does present an inherent conflict,” he told me.
Private firms have long been involved with, and are often key to, helping government succeed. But the unrestricted flood of private industry into Top Secret America was a result of policy decisions within the intelligence agencies, the White House, and Congress to beef up the federal workforce quickly. At the same time, they wanted the public to believe the government was not growing during this vast period of expansion of the early 2000s. Contractors wouldn’t be counted as part of an agency’s workforce, and besides, by turning to the private sector, the government could avoid the rigid federal civil service rules that made the hiring process so slow.
Government executives also thought—wrongly, it turned out—that contractors would be less expensive.
The idea of saving money had been thoroughly repudiated by the tenth anniversary of the 9/11 attacks. In the intervening decade, budget analysts had plenty of time to study the issue—and what they found was disheartening. A 2008 study, published by the Office of the Director of National Intelligence, found that contractors made up 29 percent of the workforce in the intelligence agencies but cost the equivalent of 49 percent of their personnel budgets. Defense Secretary Gates said that defense contractors cost him 25 percent more than federal employees.
Using a contract workforce “is a false economy,” said Mark M. Lowenthal, a former senior CIA official and now president of his own intelligence training academy. But that realization has done little to reverse the stunning handover of the nation’s security apparatus to the private sector. In Afghanistan, the chairman of the Joint Chiefs of Staff Operational Contractor Support Task Force, which started work in July 2009, concluded that contract work accounted for over 95 percent of logistics support and developmental projects. More than 100,000 contractors, three-quarters of whom were Afghan nationals, were hired, mostly by U.S. profit-making corporations, as subcontractors.
Though Secretary Gates pledged to reduce U.S. dependence on private contractors, by the Obama administration’s second year in office, its modest goal was to reduce the number of hired hands by 7 percent over two years. On paper, federal regulations say that contractors can help the government do a lot of different work but that the country’s most sensitive duties must be performed only by people who are loyal, above all, to the nation’s interest. For this reason, contractors are specifically prohibited from carrying out what the federal regulations call “inherently government functions.” One reason for this is obvious: “Their interest is just not the interest of the government. It’s the interest of their company,” said Bernard Rostker, the Pentagon’s former policy adviser on recruitment matters. Rostker studies government workforce issues at the Rand Corporation.
Despite these rules, in Top Secret America, contractors carry out inherently governmental work all the time in every intelligence and counterterrorism agency. What started as a clever temporary fix has turned into a dependency that calls into question whether the federal government is still even able to stand on its own.
Consider the following:
“We could not perform our mission without them. They serve as our reserves, providing flexibility and expertise we can’t acquire,” said Ronald Sanders, chief of human capital for the Office of the Director of National Intelligence. “Once they are on board, we treat them as if they’re a part of the total force.”
Even if an agency wanted to drastically cut the number of contractors it employs, it’s not easy. Operations could suffer, if the giant Office of Naval Intelligence in Suitland, Maryland, just outside Washington, is any example. There, 2,770 people work on the round-the-clock maritime watch floor tracking commercial vessels, in science and engineering laboratories, or in one of four separate intelligence centers. But it is the employees of seventy information technology companies who keep the place humming. They store, process, and analyze communications and intelligence transmitted to and from the entire U.S. naval fleet and commercial vessels worldwide. “Could we keep this building running without contractors?” asked the captain in charge of information technology. “No, I don’t think we could keep up with it.”
Vice Admiral David J. “Jack” Dorsett, director of naval intelligence, said he could save millions each year by converting 20 percent of the contractor jobs at the Suitland complex to civil servant positions. It speaks to the deep dependence of the government on contractors that even though he has gotten the go-ahead, in 2010 his staff managed to convert only one job and eliminate another—this out of 589 contractor positions. Continuing to pay so many contractors “is costing me an arm and a leg,” Dorsett said.
Contractors can offer more money 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 one year for software developers with top secret clearances. The result is a significant brain drain of talent, as people are lured from public service and take more lucrative private jobs.
The government has been left with the youngest intelligence staffs ever, while more experienced employees move into the private sector, often to be hired back to the agency they’d just left. This is especially true at the CIA, where employees from over a hundred firms account for roughly a third of the workforce, or about ten thousand positions, according to senior CIA officers. Many of them are temporary hires, often former military or intelligence agency employees who left government service to work less and earn more while drawing a federal pension.
As CIA director, Panetta worried about his agency’s dependence on a workforce he felt he didn’t totally control. “For too long, we’ve depended on contractors to do the operational work that ought to be done” by CIA employees, he said—but, he added, replacing them “doesn’t happen overnight. When you’ve been dependent on contractors for so long, you have to build that expertise over time.” But Panetta was trapped: the people his agency had invested in for years had left for more money, and, lacking their expertise, he had little choice but to hire them or others with military experience back at the steeper rates.
At the CIA, private contractors have recruited spies in Iraq, paid bribes for information in Afghanistan, and protected CIA directors visiting world capitals. Contractors have helped snatch a suspected extremist off the streets of Milan, interrogated detainees once held at secret prisons abroad, and watched over defectors holed up in the Washington suburbs. At Langley headquarters, they analyze terrorist networks. At the agency’s main training facility in Virginia, they are helping mold a new generation of American spies.
The extent of the contractor presence is powerfully summed up in memoriam. In June 2010, a stone carver from Manassas, Virginia, chiseled another perfect star into a marble wall at CIA headquarters, one of twenty-two for agency workers killed in the global war initiated by the 2001 terrorist attacks. The intent of the memorial is to publicly honor the courage of those who died in the line of duty, but it also conceals a deeper story about government in the post-9/11 era: eight of the twenty-two, more than one-third, were not CIA officers at all. They were private contractors.
Across the government, contract workers are used in every conceivable way. They 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, and 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.
And they are always in demand. When Arkin did one of his periodic top secret job listing counts, he found 1,951 unfilled positions in the Washington area alone, and 19,759 nationwide: “Target analyst,” Reston. “Critical infrastructure specialist,” Washington, DC. “Joint expeditionary team member,” Arlington. And on and on. The need is so vast that more than three hundred companies, nicknamed “body shops,” specialize in finding candidates, often for a fee that approaches fifty thousand dollars a person, according to those in the business.
The job listings Arkin kept track of each day also underlined the diversity of the national security responsibilities being put in private hands. Contractors advise, brief, and work everywhere, including twenty-five feet under the Pentagon in a bunker where they can be found alongside military personnel in battle fatigues monitoring potential crises worldwide. Late at night, when the wide corridors of the Pentagon are all but empty, the National Military Command Center hums with purpose as security-cleared personnel monitor, in real time, the location of U.S. forces everywhere in the world, as well as granular satellite images of strategic locations from Bahrain to Brazil. They maintain an open line to the White House Situation Room. The purpose of all this is to be able to answer any question the Chairman of the Joint Chiefs of Staff might have. To be ready twenty-four hours a day, every day, takes five brigadier generals and a staff of colonels and senior noncommissioned officers—and a man wearing a pink contractor badge and a bright purple shirt and tie.
Erik Saar’s job description is “knowledge engineer.” In one of the most sensitive places in America, he is the only person in the room who knows how to bring data from far afield—fast—from websites, government-only portals, and a mind-blowing array of web-based shared space that he is paid to keep track of. Saar and four teammates from a private company, SRA International, teach these top-ranked staff officers to understand what’s available online and how to interact with it. The team’s mission is to push a tradition-bound, hierarchical culture to act and think differently. They have devised classified chat rooms and classified tweets, called chirps, to get the older generation to realize the power of social media.
Like Saar, many of the contractors represent the best in American innovative thinking. Since 9/11, contractors have made extraordinary contributions to the national quest for security in an increasingly dangerous world. During the bloodiest months in Iraq, the founder of Berico Technologies, a former army officer named Guy Filippelli, working with the National Security Agency, invented a computer program and related technology that made finding the makers of roadside bombs easier. His invention helped stanch the number of casualties from improvised explosives, according to senior NSA officials.
The top secret workforce also includes companies that have revolutionized war fighting: the firms that built the unmanned Global Hawk surveillance drone and the sensors that enable it to see two hundred miles across the Pakistan, Iran, and North Korean borders; the company that equips clandestine commandos with backpack-sized surveillance kits and miniature document copiers that feed the pocket litter of captured al-Qaeda figures back to a national center in suburban Maryland for instant decoding and analysis. It includes the dozens of firms that built the transnational digital highway that carries targeting data to the Predator pilots sitting in trailers north of Las Vegas, Nevada, allowing them to hunt and, if successful, kill a suspected terrorist in Afghanistan on behalf of the U.S. government. But private contractors have also made extraordinary blunders—blunders that have changed history and clouded the public’s understanding of the distinction between the actions of officers sworn on behalf of the United States and those of corporate employees with little more authority than a security badge and a gun. Contractor misdeeds in Iraq and Afghanistan have hurt U.S. credibility in those countries as well as in the Middle East. Abuse of prisoners at Abu Ghraib, some of it carried out by contractors, helped ignite a call for vengeance against the United States that continues today. Security guards working for Blackwater (now called Xe) machine-gunned seventeen Iraqi civilians in September of 2007, adding fuel to the five-year violent chaos in Iraq and becoming a symbol of an America run amok. Guards employed in Afghanistan by ArmorGroup North America, a private security company, were caught on camera in a lewd-partying scandal.
Misconduct happens at home, too. A contractor formerly called MZM paid almost a million dollars in bribes to help a San Diego businessman secure CIA contracts, sending Randy “Duke” Cunningham, who was a California congressman on the intelligence committee, to prison for eight years in 2006 for accepting bribes from a defense contractor and underreporting his income. In 2008, the number-three executive at the CIA, Kyle “Dusty” Foggo, went to prison after he pleaded guilty to steering a contract to a defense contractor involved in the Cunningham scandal.
But none of the misdeeds have even begun to slow the explosive expansion in the number of contractors working in intelligence, terrorism, and defense. The rising tide of contractors has been so overwhelming that the government still doesn’t know how many are on the federal payroll. One small illustration of this came from Defense Secretary Gates. When he wanted to reduce the number of defense contractors by about 13 percent, to pre-9/11 levels, he started out by asking for a basic head count. It was harder to obtain than he would have ever imagined, because big firms often hired smaller subcontractors and didn’t actually know how many employees the subcontractor had on a particular job site.
“This is a terrible confession,” Gates said in his Pentagon office one day. “I can’t get a number on how many contractors work for the Office of the Secretary of Defense.” He was referring to the office of the department’s civilian leadership, of which he was the head.
“It just hits you like a ton of bricks when you think about it,” fumed a senior officer who has been in the military for nearly thirty years and was in Afghanistan when he had this revelation. “The Department of Defense is no longer a war fighting organization, it’s a business enterprise. Afghanistan is a great example of it. There’s so much money being made off this place.”
The profit motive has a tremendous impact on policy and budgets. “The incentive for the contractor is to get more money for the contractor,” said Rostker, the former Pentagon adviser. “When would you ever think of cutting back?”
The money to be made, in Afghanistan and elsewhere, isn’t lost on the people at the top. Thanks to their security clearances and their access to highly guarded information, those running the most sensitive government departments and agencies possess insider information any Wall Streeter would long for and any corporate CEO would pay through the nose for; they know where the government is heading with its intelligence and counterterrorism programs, and what goods and services it needs to get there.
In fact, the counterterrorism business is such a secure, profitable ecosystem that few who enter ever really leave. Some, upon departing government, might take advantage of a teaching sabbatical or take a couple of months off to reconnect with the family, but almost always they return to the counterterrorism business. Some senior government officials argue that this rapidly spinning revolving door is a good thing: the government gains from having people with experience in the private sector’s sophisticated and effective management practices, and corporations profit from those with knowledge of how government works—and all have the best of both worlds. In this view, the cozy arrangement is nothing to hide; it is something to celebrate.
Few have more to celebrate than retired rear admiral J. Michael McConnell. A navy intelligence officer, McConnell rose to become the head of intelligence for the Joint Chiefs of Staff during the first Gulf War in Iraq. After that, President George H. W. Bush appointed him director of the National Security Agency. By many accounts his four-year tenure was something less than stellar, marked by the agency’s inability to adapt to the post–cold war period and its failure to adjust to the emerging communications technologies that would soon and forever change the way governments spied on one another. In fact, it was just such an NSA failure that accounted for lost opportunities to stop the 9/11 plot: American spies just weren’t doing a good job snooping around websites and chat rooms used by known terrorists devising their plans and setting up clandestine meetings.
When McConnell left his government job the first time, in 1996, he was hired to run the national security branch of Booz Allen Hamilton, one of industry’s top management consulting companies, which was making a big dive into intelligence contracting. A decade later, though, President George W. Bush called him back from the corporate world to become the second director of national intelligence, replacing John Negroponte. McConnell’s private-sector job had been so closely intertwined with the government’s intelligence and defense agencies, he announced at a news conference, that he felt like he had “never left” the intelligence business. Perhaps one of the reasons is that today, nearly 100 percent of Booz Allen Hamilton’s business is with the government, making it a profit-making, nonunionized version of the federal workforce, where top managers are paid like celebrities and many mid-managers make more than the heads of the agencies they work for.
As national intelligence director, McConnell was a strong advocate for increasing the contracting work of intelligence companies like Booz Allen. They were, he argued, more efficient and innovative than government. Three years into his tenure as director of national intelligence, a period of time when all sorts of unusual intelligence practices were being unearthed by the press—including warrantless wiretaps by his former National Security Agency—McConnell returned to Booz Allen as a senior vice president in charge of its national security business unit, making $1 million a year in salary but with a total compensation package of $4.1 million. By then Booz Allen boasted of having ten thousand people with security clearances whom it could contract out to government. “I couldn’t be happier to return to Booz Allen as it continues to provide vital national security, civilian, and defense assistance to the government,” McConnell said in a company announcement.
Not only can these retired generals and admirals pocket many times the paycheck they took home while in uniform, but with their personal connections, their public platform, and the credibility conferred by their rank, they can stoke the engine that keeps the machine on course. Retired air force general Michael Hayden is a good example of this. He held the positions of CIA director, NSA director, and deputy director of national intelligence before he left government and began advising corporations on how to make money in the security and intelligence business.
Hayden has lots of company: more of his colleagues from the intelligence world have followed in his footsteps than not. After 9/11, when defense and intelligence spending soared by more than 50 percent in the first five years, the stampede from the Pentagon to the nearby corporate giants raised a cloud of dust along the Beltway. Army general Henry “Hugh” Shelton, the lumbering, likable chairman of the Joint Chiefs of Staff on the day the Pentagon was attacked, joined one of the most plugged-in defense-intelligence firms around, Anteon International. Shelton’s replacement as the nation’s top military officer, air force general Richard Myers, who presided over the invasion of Iraq, eventually found his way to the board of directors of Northrop Grumman, the third largest defense-intelligence contractor in the nation. He also joined United Technologies, a megadefense and intelligence technology firm. When Myers’s successor, Marine Corps general Peter Pace, retired from military service in 2007, he went to work for Behrman Capital. Behrman is a private equity investment firm with $2 billion under management. Pace is its operating partner on defense investments.
McConnell, Hayden, Shelton, Myers, and Pace are but a few examples of the scores of generals and admirals who have left the Pentagon since September 11 and parlayed their taxpayer-funded experience to defense and intelligence corporations making profits on contracting projects also paid for by the American public. Even the more altruistic among these senior officers have joined in the corporate moneymaking. Former marine general Anthony Zinni was one of them. Zinni railed against war profiteering when he first left the military in 2000. But after a stint writing a book, lecturing, and volunteering as a low-visibility U.S. troubleshooter in the Middle East and elsewhere, he, too, joined the corporate bonanza. The man once consumed with waning U.S. influence in the former Soviet satellite nations and with bringing peace to the Palestinians and Israelis became chairman of the board of directors of BAE Systems Inc., one of the largest defense, security, and intelligence firms in the world, with sales of $20 billion annually. He has served on several comparable boards, too, including those of DynCorp International, another security conglomerate, and National Interest Security Company (now a part of IBM), which sells advice and technological services to Top Secret America. As with most of these former generals and admirals, Zinni continues to teach, participate in security-related think tanks, and write publicly on national security.
While the revolving door has long been a tradition for the retired military, it was never a popular choice for the top managers of the Central Intelligence Agency—until 9/11. Before then, with few exceptions, top CIA officials who left the agency became college professors or security managers, or went into New York banking and finance.
The post-9/11 cash cow changed all that. As new intelligence companies sprang up and old ones greatly expanded, the very officials who failed to detect the coming of such an unprecedented plot on U.S. soil, many of whom expressed shame for such a failure, have since been richly rewarded by corporate America. At least ninety senior officers who were in charge of various CIA branches on 9/11 subsequently joined or became otherwise affiliated with corporations doing business with the intelligence community, according to the Washington Post’s Julie Tate. These include CIA director George Tenet; director of operations James Pavitt; the director of the agency’s Counterterrorism Center, Cofer Black; and most of the directors of its analytic, technical, and paramilitary branches, as well as those in charge of the agency’s geographic divisions.
The pattern has been repeated throughout the classified workforce. From the counterterrorism ranks of the FBI, the Justice Department, and the U.S. Treasury, and from their younger siblings at the Department of Homeland Security, the Office of the Director of National Intelligence, and the National Counterterrorism Center, there has been a stampede out the door. But even among this enterprising group, Michael Chertoff, the second secretary of the Department of Homeland Security, stands out.
Chertoff, affable and down-to-earth in person, spent years as a federal prosecutor and judge putting away drug dealers, mobsters, and financial crooks before the security ramp-up after 9/11 transferred him from the war against crime to the war against terror. Chertoff stayed at the DHS four years, during which time he presided over the Hurricane Katrina disaster, in which so many people died or were left homeless, in part because the agency under his leadership was too busy focusing on terrorism and not busy enough preparing for natural disasters and maintaining the nation’s critical infrastructure, in this case the weak New Orleans levees.
Shortly after Chertoff left DHS, in January 2009, he and his chief of staff, Chad Sweet, formed The Chertoff Group. The company advises individuals and companies on how to handle crises, enhance corporate security, and best invest in security and other related fields, some of which were in Chertoff’s government portfolio, including cybersecurity, counterterrorism, and border protection.
Besides Sweet, Chertoff raided much of the leadership of the young federal agency, including the agency’s former counselor, its deputy secretary, the deputy’s counselor, the head of DHS’s intelligence section, the head of its science and technology branch, the head of its health affairs section, and the National Security Agency’s liaison representative to DHS.
Chertoff was not even the first to strip the department’s cupboards bare of leaders. The man he followed into the secretary’s job, former Pennsylvania governor Tom Ridge, the first secretary of the Department of Homeland Security, had done the same thing five years earlier. Ridge, who held the position for two tumultuous years, raided the government of his chief of staff and the chief’s aide, as well as DHS’s special assistant for international affairs, the executive assistant to DHS’s deputy secretary, and the executive director of the department’s advisory council.
But Chertoff went Ridge one better. His company also hired some of the leaders of the major organizations under DHS’s control, including the acting commissioner of U.S. Customs and Border Protection and a deputy chief of the Federal Emergency Management Agency. He also brought on board Michael Hayden and the NSA’s number-two cybersecurity official.
Chertoff set his men up in a sleek, marbled office near K Street and advertised the close bond his partners had formed during their dramatic days in government as a selling point to potential clients. “Our principals have worked closely together for years, as leaders of the Department of Defense, the Department of Homeland Security, the Department of Justice, the National Security Agency and the CIA,” the company’s website says. “We’ve seen each other under pressure—the kind of pressure most people would never want to see, with thousands of lives or even the whole nation’s security at stake, with no time to spare and usually with limited information…. We came to trust each other with our lives. We work incredibly well—together—under pressure. And once you get to know us, you’ll understand how valuable we can be to securing the future of your organization.”
The Chertoff Group, which continues to expand its number of offices, keeps its client list confidential, and because it is a privately held company, it is under no obligation to reveal its income. A spokeswoman said the company does not lobby and has no U.S. or foreign government clients. But the company is not shy about promoting its government experience to clients going after government business. “What sets The Chertoff Group apart is the breadth of our industry knowledge, the depth of our experience and the extent of our close contacts with industry leaders worldwide. We have personally worked with—and at one time or other, often hired or been hired by—the principals of the world’s leading security and risk management firms…. We have overseen billions of dollars of technology development and acquisition for the Defense Department, the Department of Homeland Security, the Department of Justice, the National Security Agency, and the CIA.”
In the shadow of swank start-ups with impeccable pedigree and unstoppable connections like The Chertoff Group are nearly two thousand small to midsize companies that do top secret work. About a third of them were established after September 11, 2001, to take advantage of the huge flow of taxpayer money into the private sector. Though most have nowhere near the star power of a Michael Chertoff, many are led by former intelligence agency officials who know exactly whom to approach for work.
Abraxas Corporation, of Herndon, headed by a former CIA spy, quickly became a major CIA contractor after 9/11. Its staff even recruited midlevel managers during work hours, making their pitch from the CIA’s cafeteria, former agency officers recall. The company’s revenue quickly grew to $100 million, with almost four hundred employees engaged in mostly classified intelligence agency consulting until, in November 2010, in the midst of the recession elsewhere, the giant Cubic Corporation announced it had bought Abraxas.
The counterterrorism bonanza gave some small companies a quick chance to make it big too. In June 2002, from the spare bedroom of his San Diego home, thirty-year-old Hany Girgis, who previously managed large contracts for an IT services company, put together an information technology team that won its first Defense Department contract four months later. By the end of the year, the company he called SGIS (for SkillStorm Government Integrated Systems) had opened a Tampa office close to the Central Command and Special Operations Command; it had turned a profit; and it had hired thirty employees.
Expanding, SGIS offered engineers, analysts, and cybersecurity specialists for military, space, and intelligence agencies. By 2003, the company’s revenue was $3.7 million. SGIS had become a subcontractor for General Dynamics, working at the secret level. Satisfied with the partnership, General Dynamics helped SGIS receive a top secret facility clearance, which opened the doors to more work. By 2006, its revenue had multiplied tenfold, to $30.6 million, and the company had hired employees who specialized in government contracting just to help it win more contracts. “We knew that’s where we wanted to play,” Girgis said in a phone interview. “There’s always going to be a need to protect the homeland.”
Eight years after it began, SGIS was up to revenue of $101 million. It had 14 offices and 675 employees. Those with top secret clearances worked for eleven government agencies. The company’s marketing efforts had grown, too, both in size and sophistication. Its website, for example, showed an image of navy sailors lined up on a battleship over the words “Proud to serve” and another image of a navy helicopter flying near the Statue of Liberty over the words “Preserving freedom.” And if it seemed hard to distinguish SGIS’s work from the government’s, it’s because they were doing so many of the same things: SGIS employees had replaced military personnel at the Pentagon’s 24/7 telecommunications center; SGIS employees had conducted terrorist threat analysis; SGIS employees had provided help-desk support for federal computer systems.
Still, as alike as they seemed, there were crucial differences. For one, unlike in government, if an SGIS employee did a good job, he might walk into the parking lot one day and be surprised by co-workers clapping at his latest bonus: a leased, dark-blue Mercedes convertible. And he might say, as a video camera recorded him sliding into the soft leather driver’s seat, “Ahhh… this is spectacular.” (And a video of the entire scene might wind up on YouTube.)
And then there was what happened to SGIS in mid-2010, when it did the one thing the federal government can never do.
It sold itself.
The new owner is a Fairfax-based company called Salient Federal Solutions, started in 2009. It is a management company and a private-equity firm with lots of Washington connections that, with the purchase of SGIS, it intends to parlay into contracts. “We have an objective,” chief executive and president Brad Antle told me, “to make $500 million in five years.”
Of all the different companies in Top Secret America, the most numerous by far are the information technology firms. Some IT companies integrate an agency’s mishmash of computer systems; others build digital links between agencies; still others have created software and hardware that can mine and analyze vast quantities of data. The government is all but totally dependent on these firms. I witnessed this close relationship when I attended an annual information technology conference in Phoenix put on by the Defense Intelligence Agency. The DIA expected the IT firms that it does business with to pay for the entire five-day get-together. Apparently this is another accepted tradition inside Top Secret America. This meant that the same corporations asking the government to give them contracts had to give what seemed like a nice kickback—as much as thirty thousand dollars to help fund the event—to the agencies from whom they were asking for work. In Phoenix, the kickback came to DIA employees in many forms: free happy hour food and drinks; free nightly entertainment; free massages by a couple of perky women set up in the back of the giant conference center; free shoe shines by another lovely woman; and tons of gifts—from collapsible music speakers to computer screen cleaners, light-up pens, and T-shirts. Before the heavy drinking began at the networking socials, government officials and military officers walked around like trick-or-treaters, filling their goodie bags with everything that would fit. Otherwise respectable adults dissolved into giddy children in front of some of the giveaways. (The favorite freebie seemed to be the stress-relieving sponge grenades.)
As a gold sponsor, General Dynamics spent thirty thousand dollars on the convention, just one of many it participates in each year, its spokesman said. On a perfect spring night, GD hosted a party at Chase Field, a 48,569-seat baseball stadium, reserved exclusively for the conference attendees. As government buyers and corporate sellers drank beer, ate hot dogs, and danced, a video of the director of the largest military intelligence organization in the world was displayed on the gigantic scoreboard. Digital baseballs bounced along the bottom of the screen while his morning keynote speech was broadcast.
Other companies at the Phoenix extravaganza sponsored evening socials, too. The defense-intelligence contractor Carahsoft Technology invited guests to a casino night at which 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 Margaritaville-themed social on the garden terrace of the hotel across the street from the convention site, where 250 firms paid thousands of dollars each to the DIA to advertise their services and make their pitches to intelligence officials walking the exhibition hall. Tom Conway, director of federal business development for McAfee, showed me around and explained the value of rubbing elbows with government officials and potential subcontractors in such a relaxed environment. “If I make one contact each day, it’s worth it,” said Conway, an old hand at these kinds of affairs. Government officials and company executives said these networking events are critical to building a strong relationship between the public and private sectors. No one seemed even a bit worried about the coziness between government buyers and the corporate sellers who were paying for them to have a good time. It was all just the cost of doing business.
I asked the highest-ranking government civilian at the event what he got out of spending time at a conference such as the one in Phoenix. “Our goal is to be open and learn stuff,” said Grant M. Schneider, the DIA’s chief information officer and one of the conference’s main draws. By going outside Washington “we get more synergy…. It’s an interchange with industry.”
Such coziness worries some people inside Top Secret America, though. “It’s a self-licking ice cream cone,” is the way one senior military intelligence officer described it. Another official, a longtime conservative staffer on the Senate Armed Services Committee, described the intelligence-security world that has grown up in the last ten years as “a living, breathing organism,” impossible to control or curtail.
“How much money has been involved is just mind-boggling,” he said. “We’ve built such a vast instrument. What are you going to do with this thing?… It’s turned into a jobs program.” But these officials, as senior and respected as they were, didn’t dare express their criticism in public; as they confessed, laughing bitterly at the irony, if they spoke up, they wouldn’t be able to work in Washington anymore.
Thomas Fingar is one of the only former intelligence officials who has not jumped into the corporate side of Top Secret America. Instead, the former deputy director of national intelligence for analysis and the longtime head of the State Department Intelligence and Research Bureau is a professor at Stanford University. The counterterrorism industry “is like cancer research,” he said. “It supports more people than [cancer] kills.”
The Phoenix-style government-industry get-togethers happen every week in Washington and around the country. In fact, an entire business sector of event planners has been greatly enriched off the money they make pairing up defense and intelligence contractors with defense and intelligence government officials.
Events held at the CIA and NSA are the most exclusive. No one without a top secret clearance is allowed to attend. That means no media, no watchdog group, no outside eyes to witness the exchange of gifts, which by most standards might be considered a little bribe—though not here, the government’s lawyers having approved them.
Peter Coddington, chief executive of InTTENSITY, a small firm whose software configures computers to “read” documents, had glass beer mugs and pens twirling atop paperweight pyramids to help persuade officials of the DIA that he had something they needed. “You have to differentiate yourself,” Coddington said, as government officials left the speakers’ hall and fanned out into the aisles of the vendors section of the convention center, where rows and rows of contractors had set up booths to display their wares and their freebies and, hopefully, to attract the eye of a government buyer.
Coddington’s problem was a familiar one. He needed to stop the officials from walking too quickly past his display. He needed to slow them down just long enough for him to start his pitch. His inexpensive twirling pens seemed to do the job. “It’s like moths to fire,” Coddington whispered, and offered a demonstration. Within minutes a DIA official with a tote bag approached. She spotted the pens, and her pace slowed.
“Want a pen?” Coddington called out.
She hesitated. “Ah… I have three children,” she said.
“Want three pens?”
She stopped. She listened. In Top Secret America, every moment is an opportunity.
“We’re a text extraction company,” Coddington began.
On a day that also featured free ice cream and fruit smoothies, another speaker, Kevin P. Meiners, a deputy undersecretary for intelligence, gave the audience what he called “the secret sauce,” the key to thriving even when the Defense Department budget eventually stabilizes and stops rising so rapidly.
Overhead used to mean paper clips and printer toner, he explained. Now it was information technology services, the very product sold by many of the businesspeople in the audience. His solution? “You should describe what you do as a weapons system, not overhead,” Meiners instructed. “Overhead to them—I’m giving you the secret sauce here—is IT and people…. You have to foot-stomp hard that this is a war-fighting system that’s helping save people’s lives every day.” The performance was unique: a government employee coaching private companies in how to successfully manipulate the system that he helped oversee.
Conventions like the one in Phoenix happen all over the country every week. The Annual Homeland Security Conference in Washington, DC; the Biometric Conference in Arlington, Virginia; the DoD Cyber Crime Conference in Atlanta. I attended a Special Operations Command conference in Fayetteville, North Carolina, where vendors paid for access to the uniformed officials who would decide what services and gadgets to buy for troops.
A month later, I visited the swanky Ritz-Carlton in Tysons Corner, Virginia, for a black-tie evening sponsored by the government-industry group called Intelligence and National Security Alliance (INSA) and funded through “contributions” from the same corporations seeking business from the defense, intelligence, and congressional leaders seated with them at the dinner tables. Tuxedoed waiters glided around the ballroom lubricating the already comfortable chitchat between the senior CIA, Defense Department, and NSA officials and the blue bloods among the Beltway bandits who could afford the entrance fees. Tender steak, rich seafood, and expensive wine followed at tables sponsored by the largest firms in the business, and others that someday hoped to be.
The event was the annual gala of an organization whose main purpose is to promote the symbiosis of government and private industry. The Intelligence and National Security Alliance describes itself as “the premier not-for-profit, nonpartisan, public-private membership organization that works to promote and recognize the highest standards within the national security and intelligence communities.” The organization is underwritten by the major defense and intelligence corporations, including General Zinni’s BAE Systems.
The organization has already advertised for its next, twenty-seventh annual gala dinner. Corporations are able to buy a “Premiere Table,” where the senior-most government and corporate leaders will be seated, for $12,000 each. A “Prominent Table,” with somewhat lesser officials, goes for $9,000, and a “Select Table,” with warm bodies, for $6,000. The ticket price for an individual member is $350; for nonmembers, $450. Government employees are invited to hobnob, eat, and drink for free.
The honoree for 2011, a year marking the tenth anniversary of the 9/11 attacks, couldn’t have been a more appropriate symbol of the new reality in Top Secret America: retired rear admiral and former director of national intelligence, now Booz Allen’s four-million-dollar man, J. Michael “Mike” McConnell.