The spy who came in from the boardroom

Why John Michael McConnell, a top executive at a private defense contractor, should not be allowed to run our nation's intelligence agencies.

By Tim Shorrock

Read more: George W. Bush, Politics, Pentagon, ACLU, News, CIA, Colin Powell, Dick Cheney

Jan. 8, 2007 | The Bush administration's choice last week of J. Michael McConnell to be director of national intelligence is a major blunder -- and not just because the man who will be overseeing 16 different spy agencies, including the CIA, took the job after a "personal approach" from an old friend named Dick Cheney.

The problem is with McConnell's résumé. At present, U.S. intelligence is more dependent on private contractors than it has ever been. About half of the rapidly expanding annual intelligence budget, or more than $20 billion, now goes to outside firms. The work those private contractors perform has been slammed repeatedly for mismanagement, privacy violations and bias -- and yet the would-be head of the nation's intelligence effort is a top executive at one of the worst offenders. McConnell, a retired vice admiral and former director of the National Security Agency, is the current director of defense programs at Booz Allen Hamilton.

With revenues of $3.7 billion in 2005, Booz Allen is one of the nation's biggest defense and intelligence contractors. Under McConnell's watch, Booz Allen has been deeply involved in some of the most controversial counterterrorism programs the Bush administration has run, including the infamous Total Information Awareness data-mining scheme. As a key contractor and advisor to the NSA, Booz Allen is almost certainly participating in the agency's warrantless surveillance of the telephone calls and e-mails of American citizens.

If the Democrats now running the House and Senate intelligence committees do their job right, they could learn a great deal about these programs and the instrumental role contractors are playing in U.S. intelligence during McConnell's confirmation hearings. McConnell should be compelled to answer some tough questions before the Democrats even consider confirming him.

The intelligence community's reliance on outsourcing dates back to the late 1990s, when commercial advances in computer software and communications began to outpace the considerable lead U.S. intelligence once had in encryption and other technologies. These shortcomings were particularly acute at the NSA, which suffered a system-wide computer blackout in 2000 that shut down the agency's global listening and surveillance system for more than two days, reducing the contents of the president's Daily Briefing by more than 30 percent. In response, during the waning days of the Clinton era, the highly secretive agency had opened its doors to contractors.

The privatization of intelligence within the NSA accelerated as soon as the Bush administration took office. And then came 9-11. The attacks served as a hiring catalyst for other agencies -- like the CIA and the Pentagon, which found themselves short of analysts, linguists and other specialists -- to follow the NSA's lead. Rather than take on new employees, intelligence agencies and counterterrorism centers sought out companies that, like Booz Allen, had hundreds of employees with security clearances on their staff -- clearances nearly always earned during prior and less lucrative employment with the federal government.

Since 2001, intelligence spending has risen about 40 percent a year, and contracting has ballooned by about that much. In some agencies, contractors make up the majority of employees. At the Pentagon's highly classified Counterintelligence Field Activity office, which has been strongly criticized in Congress for spying on U.S. antiwar protesters, 70 percent of the workforce are contractors.

U.S. intelligence budgets are classified, as are nearly all intelligence contracts. But the overall budget is generally understood to be running about $45 billion a year. Based on interviews I've done for an upcoming book, I estimate that about 50 percent of this spending goes directly to private companies. This is big business: The accumulated spending on intelligence since 2002 is much higher than the total of $33 billion the Bush administration paid to Bechtel, Halliburton and other large corporations for reconstruction projects in Iraq.

Booz Allen, along with Science Applications International Corp., General Dynamics, Lockheed Martin, Northrop Grumman, CACI International and a few other corporations, is one of the dominant players in intelligence contracting. Among its largest customers are the NSA, which monitors foreign and domestic communications, and the National Geospatial-Intelligence Agency, an amalgamation of the imagery divisions of the CIA and the Pentagon that was established in 2003.

A few years ago, Information Week reported that Booz Allen had more than 1,000 former intelligence officers on its staff. Asked to confirm that number last month, company spokesman George Farrar told me: "It is certainly possible, but as a privately held corporation we consider that information to be proprietary and do not disclose."

Buried deep on the company's Web site, however, I recently found an explanation of a Booz Allen I.T. contract with the Defense Intelligence Agency, which carries out intelligence for the Joint Chiefs of Staff and the secretary of defense. It states that the Booz Allen team "employs more than 10,000 TS/SCI cleared personnel." TS/SCI stands for top secret-sensitive compartmentalized intelligence, the highest possible security ratings. This would make Booz Allen one of the largest employers of cleared personnel in the United States.

Among the many former spooks on Booz Allen's payroll are R. James Woolsey, the well-known neoconservative and former CIA director; Joan Dempsey, the former chief of staff to CIA Director George Tenet and recently executive director of the President's Foreign Intelligence Advisory Board; and Keith Hall, the former director of the National Reconnaissance Office, the super-secret organization that oversees the nation's spy satellites.

For his part, McConnell was head of the National Security Agency from 1992 to 1996. Prior to that he was the chief intelligence officer for Colin Powell at the Joint Chiefs of Staff during the first Gulf War, where he worked closely with Dick Cheney. On Friday, McConnell told the New York Times that his work at Booz Allen had allowed him to "stay focused on national security and intelligence communities as a strategist and as a consultant. Therefore, in many respects, I never left." That is an understatement. As a senior vice president at Booz Allen, McConnell is in charge of the firm's assignments in military intelligence and information operations for the Department of Defense. In that work, his official biography states, McConnell has provided intelligence support to "the US Unified Combatant Commanders, the Director of National Intelligence Agencies, and the Military Service Intelligence Directors."

And in a relationship that has been completely missed in media coverage of his appointment, McConnell is the chairman of the Intelligence and National Security Alliance, the primary business association of NSA and CIA contractors. As INSA chairman, I've been told, McConnell is presiding over an initiative to enhance ties between the intelligence agencies and their contractors and domestic law enforcement agencies.

McConnell has said little publicly about what he thinks of the administration he will be serving or of that administration's policies. In an off-the-record address to an intelligence conference last year, however, McConnell did say that on the issue of domestic spying, he might be "a little more liberal" than the administration. "Any bureaucracy -- NSA, CIA, FBI, you name it -- can do evil," he concluded. "My view is, you have to have oversight."

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