CHAPTER 14
ANOTHER EMERGING PROBLEM ASSOCIATED WITH THE remarkable growth and sophistication of new technologies is the development of private intelligence companies. These technologies were initially available only to government agencies with generous budgets. Now they are cheaper and commercially available to private entities. Because of constitutional limits on how the CIA or the FBI might take advantage of the new technologies, in 2021 the Department of Homeland Security began considering the employment of private entities to conduct surveillance on citizens who organize resistance to federal policies. Unlike federal agencies, private companies can assume false identities to gain entry into private messaging apps used by dissident groups. In addition, private contractors do not need warrants to gather this type of information.
Before the emergence of private companies doing the work of the intelligence community, private contractors were being recruited to handle specific tasks. For the US intelligence community, the contractor route was effective and contributed to the development of intelligence tools during World War II. Private firms were increasingly recruited because they had the skills and facilities needed to build the arsenal of weapons needed for the Office of Strategic Services (the CIA’s predecessor organization) and other such agencies. Through its Office of Scientific Research and Development, the OSS was able to identify and enlist contractors who could quickly produce highly specialized military related items on demand. These innovators popularized the idea that technology could win the war.
By contrast, the British system involved purchasing the laboratories needed for this work. The British countryside was cluttered with large, splendid estates owned by old families whose resources had degenerated during and after World War I. Consequently, they could no longer maintain those estates and were happy to sell them to the government, which turned them into research institutes for the development of weapons with which to conduct special operations. Although secret at the time, Aston House today is recognized as the location where the first time fuses were developed. Aston House was joined by The Frythe where special weapons were packaged and sent out to OSS operatives. Soon, the British government owned and operated estates that became vital to the wartime effort.
The private American firms that worked over the decades fulfilling often small specialized orders did not get rich from their business with the intelligence community. They did, however, create innovations that emerged as popular consumer items that shape contemporary American life. Through research for the Intelligence Community, companies found themselves being able to market everyday items such as the GPS, text messaging systems, and other commercial successes. Intelligence Community relationships with private firms have been driven by a need for the technical capabilities enjoyed by the private sector. By working with a private aeronautics firm, the CIA was able to develop the U-2 spy plane. This ambitious project would never have been put into operation without the services of private industry. The Air Force would never have had the MQ-1 Predator drone without its private sector partnership.
Employees of private firms often have skills needed by the Intelligence Community. Those skills range from security services for essential installations and language skills to information technology skills needed to maintain interagency coordination. Moreover, private firms offer a degree of flexibility absent within the government work force. If the Intelligence Community recognizes a sudden, unanticipated requirement, it is convenient to enlist teams from a private firm. Since those workers will not enjoy the civil service protection available for regular government employees, they can be dismissed once the urgent need has passed. The Intelligence Community manpower shortage may well be the result of a lack of long-term planning but this option protects it from the consequences of poor planning. The contractors can also fulfill mundane tasks such as data entry that might not be appropriate for more senior government employees.
It is difficult to measure the full extent of the corporate presence within the intelligence community. Press reports have indicated that 51 percent of the workforce of the Defense Intelligence Agency is composed of contractors. A 2007 report by the Director of National Intelligence suggested that contracts with private firms account for 71 percent of the Intelligence Community budget. A Senate Intelligence committee report found that the services of a contractor cost twice as much as a Civil Service employee. If that is true, it would explain the disparity in the Intelligence Community’s budget.
The privatization of intelligence began with modest steps, such as contracts to develop a specific technical device or the recruitment of individuals to do a one-time task. From that point, the contractors became increasingly well organized and surprisingly well known. In the United States, Booz Allen Hamilton, Fusion GPS, and Stratfor have emerged as among the most prominent. In Britain, Control Risks Group and Cambridge Analytica were two of the best known. Cambridge Analytica, after illegally obtaining personal data of millions of Facebook users, was embroiled in controversy and forced to close.
The recent mergers of already powerful intelligence companies have created giant entities with frightening monopolist tendencies. There are now five companies that, together, employ 80 percent of the private sector contractors working for surveillance and spy agencies. Leidos Holdings, after completing a merger with Lockheed Martin’s Information Systems & Global Solutions division, may be the most powerful company in the world of intelligence-contracting. Other companies in the top tier of intelligence contractors are Booz Allen Hamilton, CSRA, SAIC, and CACI International. The monopolization of intelligence contractors began in the late 1990s and fundamentally changed what was previously a diverse industry.
Because these five companies employ 80 percent of the private sector contractors, if a contract entity makes a serious mistake, the government has a limited number of options. Moreover, so much of their work is top secret, there is very little reporting about their activities, a fact that undermines their accountability. When a contractor working overseas engages in questionable practices, it is difficult to determine who has the authority to deal with the resultant problems.
When thinking about private intelligence services, the most common assumption is that government is reaching out to the private sector. There have been situations in which government actors are irrelevant. Histories of the Coca Cola Company often observe that the company has one of the oldest and most effective corporate intelligence divisions. It is obvious that if your business operates around the world, you need to know how local conditions might affect your operations. You will also want to know what your competition is doing so corporate espionage is important.
In previous decades, such companies ran their own intelligence divisions. However, just like the government, their operational model had been changed by the advancement in technology. Therefore, like government agencies, they have turned to private contractors. Not only do the specialized contractors have skills and experiences beyond what your company can do, if they get caught doing something illegal, the company itself has plausible deniability. If a company needs technical surveillance countermeasures, they can turn to a firm like Deutsche Telekom which offers its many services to a variety of customers. They can routinely perform operations such as bug sweeping services to protect a company that feels threatened by its competitors.
There are, however, limits to what a private firm can offer. Many of these firms are staffed by “consultants” who often produce analysis based primarily on open source materials. In the world of the internet, the scope of open source materials should never be discounted. Within the world of governmental intelligence services, there is often a tendency to dismiss open source materials. Any examination of the CIA product once known as the Foreign Broadcast Information Service will disabuse you of the notion that the CIA ignores open sources. In the offices of most analysts, you will see copies of this service on desks or in trash cans. The private consultants may be reading the same reports but they can develop useful studies of important issues. In the end, it is clear that few private contractors have developed independent collection capabilities. First, there are legal barriers. The private contractors cannot get a warrant to tap into a company’s telephone network, for example. Second and probably even more important, the cultivation of private sources is an extremely expensive process and the financial rewards are not sufficient to justify this.
Intelligence work such as surveillance is heavily dependent upon private actors. Companies such as Booz Allen Hamilton, Google and Facebook have become a major part of the world of non-governmen-tal agencies that can perform tasks for the government. Intelligencerelated government agencies depend on Amazon Web Services for their cloud computing infrastructure. Other companies help analyze data needed by the CIA, NSA, the FBI, and a variety of local government agencies. It is, however, important to remember that while they can assist the government, their greatest function is to serve the bottom line on their annual earnings statement.