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Originally published June 11, 2013 at 6:58 PM | Page modified June 12, 2013 at 3:09 PM

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Private contractors play key role in U.S. intelligence work

The release of highly classified material underscores one gnawing national-security worry: The more people allowed in the top-secret tent, the higher the risk of leaks.

The Washington Post

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The unprecedented leak of top-secret documents by National Security Agency (NSA) contractor Edward Snowden raises far-reaching questions about the government’s rush to outsource intelligence work to contractors since the Sept. 11, 2001, terrorist attacks.

Never before have so many U.S. intelligence workers been hired so quickly, or been given access to secret government information through networked computers. In recent years, about one in four intelligence workers has been a contractor, and 70 percent or more of the intelligence community’s secret budget has gone to private firms.

Booz Allen Hamilton, which hired the 29-year-old Snowden three months ago to work at the NSA, has been a leader among more than 1,900 firms that have supplied tens of thousands of intelligence analysts in recent years, including technologists and field spies.

But in the rush to fill jobs, the government has relied on faulty procedures to vet intelligence workers, documents and interviews show. At the same time, intelligence agencies have failed to hire enough in-house government workers to manage and oversee the contractors, contracting specialists said.

Snowden’s release of scores of pages of top-secret material about a data surveillance program, code named PRISM, and an NSA program to collect information about millions of phone calls from Verizon, underscores one of the gnawing worries in the national-security community: The more people allowed in the top-secret tent, the higher the risk of leaks.

Rep. Adam B. Schiff, D-Calif., a member of the House Intelligence Committee who expects confidential briefings on the leak in the next few days, said the committee long has worried about the cost of outsourcing.

The reliance on contractors reflects a massive shift toward outsourcing over the past 15 years, in part because of cutbacks in the government agencies and commitment to smaller government by the George W. Bush administration.

Most of the work went to the largest contractors, including Booz Allen Hamilton, which had $5.8 billion in revenue last year. Almost all of Booz Allen’s work was for the government, and nearly a quarter of that was for intelligence agencies.

The company said Tuesday it had fired Snowden “for violations of the firm’s code of ethics and firm policy.” The company said that Snowden, who had been assigned to a team in Hawaii for less than three months, was earning a salary “at a rate of $122,000.” Snowden claimed he made about $200,000, a figure that could have included overtime pay and other bonuses.

Intelligence budgets

By 2010, the overall intelligence budget had grown by 250 percent since 2000. Nowhere was the growth larger than at the NSA. The budget there doubled, as did the physical infrastructure. The hidden Fort Meade, Md., complex includes as much square footage as the Pentagon and is surrounded by 112 acres of parking lots. Ten thousand employees are to be added in the next 15 years, according to the plans.

Many of the NSA’s contractors are located in the 285-acre National Business Park, which is connected to the agency by a private road. Booz Allen shares the skyline there with other giants: L-3 Communications, Northrop Grumman and SAIC, to name a few. Booz Allen also has a Seattle office, which declined Tuesday to provide any information.

By the mid-2000s, all of the agencies had become dependent on private contractors such as Snowden to perform tasks ranging from information-technology installation and maintenance to intelligence analysis and agent protection.

Private contractors working for the CIA recruited spies, protected CIA directors, helped snatch suspected extremists off the streets of Italy and even interrogated suspected terrorists in secret prisons aboard.

The Defense Security Service, the agency that grants security clearances to many of the Defense Department’s intelligence agencies, became so overwhelmed that on April 28, 2006, it shut down the clearance process altogether. Its backlog of pending cases had reached 700,000, and it had run out of money to process any more. The government’s solution was to hire more contractors to administer the security-clearance reviews.

A review by the Government Accountability Office in 2009 found that of 3,500 security-clearance reviews, almost nine in 10 lacked documentation. Of those, nearly a quarter were still approved. “DOD adjudicators granted clearance eligibility without requesting missing investigative information or fully documenting unresolved issues in 22 percent of DOD’s adjudicative files,” the auditors said.

Like many federal contractors, Booz Allen has hired from the government. Its vice chairman, John “Mike” McConnell, was the national intelligence director under President George W. Bush. James Clapper, the current director, is a former Booz Allen executive who previously was director of the Defense Intelligence Agency.

Of the 4.9 million people with clearance to access “confidential and secret” government information, 1.1 million, or 21 percent, work for outside contractors, according to a report from Clapper’s office. Of the 1.4 million who have the higher “top secret” access, 483,000, or 34 percent, work for contractors.

Because clearances can take months or even years to acquire, government contractors often recruit workers who already have them.

Snowden was a former technical assistant for the CIA and likely obtained his security clearance there and kept it after he left and began working for outside firms.

He has worked for the NSA in the past four years for contractors including Dell, according to reports by the Guardian and The Washington Post, which said Snowden provided them with documents.

Booz Allen

Booz Allen, the 13th-largest federal contractor, competes with Lockheed Martin, SAIC, CACI International and other firms for U.S. intelligence contracts.

The firm was founded in 1914 and began serving the U.S. government in 1940, helping the Navy prepare for World War II. In 2008, it spun off the part of the firm that worked with private companies and abroad. That firm, called Booz & Co., is held privately.

Booz Allen was then acquired by the Carlyle Group, an investment firm with its own deep ties to the government. In November 2010, Booz Allen went public. The Carlyle Group still owns two-thirds of the company’s shares.

Booz Allen has almost 25,000 employees and recorded $5.8 billion in revenue for its 2013 fiscal year, earning $219 million in profit.

Analysts caution that any of the 1.4 million people with access to the nation’s top secrets could have leaked the information — whether they worked for a contractor or the government. It was a government employee — U.S. Army Soldier Bradley Manning — who was responsible for the last major leak of classified material, in 2010.

“Fundamentally this is not a contractor problem,” Michael Hayden, former director of the NSA and CIA, said Monday. “It’s a broader cultural problem, it’s a vetting problem and it’s how does somebody so junior” get access to compartmentalized intelligence, he said.

Hayden said the leak raises questions about how a low-ranking member of the NSA team was able to access such “highly classified” material.

The company has also had at least one previous highly publicized problem maintaining data security. In 2011, files maintained by Booz Allen were acquired by the online activist group Anonymous, which claimed to have stolen tens of thousands of encrypted military passwords.

Includes material from Bloomberg News, The Associated Press and The New York Times

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