Category: Outsourcing

Tim Shorrock, a veteran investigative journalist and a longtime subscriber to the Dirt Diggers Digest, has just come out with a book called Spies for Hire: The Secret World of Intelligence Outsourcing. Shorrock describes how an activity that used to be handled by spooks on the federal payroll has been steadily transformed into a $50 billion Intelligence-Industrial Complex.

Thanks to the contracting scandals surrounding Halliburton and its former subsidiary Kellogg, Brown & Root, the public learned of the extent to which the Pentagon has turned over routine functions to private military companies. The outrageous behavior of Blackwater has highlighted the use of mercenaries to protect U.S. diplomats and other VIPs in Iraq.

Shorrock shines a light on another group of corporations that are carrying out a more sensitive function that most people have no idea is being handed over to the private sector. Careful readers of the revelations concerning abuses at the U.S.-run Abu Ghraib prison in Iraq would have learned that interrogators alleged to have abused detainees included civilians employed by a company called CACI. But that is only the tip of a lucrative iceberg, Shorrock shows.

For example, he writes, more than half the people working at the super-secret National Counterterrorism Center in Virginia are employees of companies such as Science Applications International Corporation (SAIC), BAE Systems and Lockheed Martin. The Center’s terrorist database is maintained by The Analysis Corporation, which subcontracted collection activities to CACI.

Since 9/11, Shorrock says, the Central Intelligence Agency has been spending 50-60 percent of its budget (or about $2.5 billion a year) on contractors—both individuals and companies. At the CIA and its sister spook agencies: “Tasks that are now outsourced include running spy networks out of embassies, intelligence analysis, signals intelligence (SIGINT) collection, covert operations, and the interrogation of enemy prisoners.”

Shorrock devotes an entire chapter to Booz Allen Hamilton, known to most people as a management consultant for large corporations but which pioneered the intelligence outsourcing industry (though it recently agreed to sell its federal business to the Carlyle Group). When Mike McConnell, a former Booz Allen executive, was named by President Bush as Director of National Intelligence, it was the first time, Shorrock notes, that a contractor was put in charge of the country’s entire spy apparatus.

Spies for Hire has much more to offer that cannot be adequately summarized here. I recommend that you read it in full. But let me let also note that profiles of some of the intelligence contractors discussed by Shorrock—such as CACI and ManTech International—can be found on the Crocodyl wiki to which I contribute. Also note that the updated edition of Jeremy Scahill’s valuable book Blackwater, recently issued in paperback, has a discussion (p.453 forward) on the mercenary company’s move into another form of privatized intelligence—a product called Total Intelligence Solutions that is designed to bring “CIA-style” services to Fortune 500 companies.

As I write this, Google News says it contains nearly 900 current stories about the scandal over maintenance lapses at Southwest Airlines—lapses that prompted the Federal Aviation Administration yesterday to propose a record $10.2 million civil penalty against the carrier. Yet fewer than ten of those stories make any reference to the broad threat against airline safety: outsourcing.

Among the handful of items mentioning outsourcing is a statement put out today by Teamsters President James Hoffa. (The mechanics at Southwest are actually represented by an independent union.) Less than a month ago, the Teamsters and the Business Travel Coalition co-sponsored what they called a national summit on aircraft maintenance outsourcing. In addition to a video presentation by Rep. James Oberstar of Minnesota—who today revealed more dirt about Southwest and the FAA—the event included a speech by William McGee of Consumer Reports, whose March 2007 article on maintenance outsourcing was titled “An Accident Waiting to Happen?”

The safety threats from outsourcing have also been cited for years by the Inspector General of the Department of Transportation (FAA’s parent agency).  A 2003 report by the IG found that major carriers were outsourcing some 47 percent of their total maintenance costs. The IG’s examination of conditions at a sample of repair stations used in the outsourcing found that 86 percent had “discrepancies” such as the use of improper parts and equipment and outdated manuals. A 2005 follow-up report found that the majors had upped the outsourced portion of their maintenance spending to 53 percent, with Southwest well above the average at 64 percent (see page 8).

Last June, the IG told Congress that the majors were now spending 64 percent of their maintenance dollars on contractors. He went on to point to the “challenges” facing the FAA in dealing with the continuing growth of outsourcing, including the fact that it did not have a good system for assigning its inspectors. But the agency told the IG it was addressing the problem—by commissioning a study from…a contractor.