photo credit: Sam cole

Contractors on defense

During the Cold War, the heart of the aerospace and defense industry was in Southern California, where Jet Age engineers began remaking the American arsenal. The public kept pace with the change with one eye on the heavens. Overhead, they could look with pride at gleaming jetliners sharing the skies with bombers capable of striking targets inside the Soviet Union.

Since 2001, America’s defense companies evolved to take on new roles that followed an unprecedented increase in spending on private-sector defense services. The cutting edge of the defense business, focusing on the budget-rich intelligence world, has been out of sight for much of the country. The public gets glimpses of this reality, perhaps with an incongruous airplane-maker’s logo in a stale office park in suburban Virginia near the CIA. Amid the shadow wars and the invasions of Iraq and Afghanistan, the narrative of conflict and American business became intertwined in the formation of a new era for the defense industry.

Until, in an instant, a super-empowered defense contractor, Edward Snowden, opened a new window into the more than $50 billion world of intelligence contracting. It is an insular world, where people entrusted with the nation’s most sensitive secrets, like Snowden, a contractor with Booz Allen Hamilton, must run a security clearance gauntlet that is itself outsourced.

Part of the country is up in arms over the scope of National Security Agency electronic surveillance programs. In and around the Beltway, the epicenter of the for-hire intelligence world, the case stands to drive a wedge in the close relationship between contractors and the agencies that count on them for critical national security work.

Intelligence spending in the contractor community was supposed to be easily protected from a postwar slump. Talk of cutbacks to contractors was measured, not bombastic. The White House was eyeing “reductions to the contractor workforce” as the Director of National Intelligence “seeks to streamline operations and make the” intelligence community “more efficient.”

Intelligence and defense officials continue to rely on the Maginot Line of bureaucratic tactics with the unimaginative reminder that the world remains a dangerous place and strong spending must be upheld. It turned out that a wholly unexpected maneuver by one of their own community might have changed this calculus for good.

Opponents of the aggressive outsourcing of national security functions now have fresh ammunition with which to lobby Capitol Hill and rally their own constituents.

For organizations such as the American Federation of Government Employees, which represents government workers, the Snowden incident and the political and commercial aftershocks come at a time when the the battle to keep contractors at bay in federal jobs was intensifying because of overall federal spending pressure.

Moreover, the Snowden case exposes a nagging question of confidence in the industry among lawmakers and civil servants. The intelligence contracting business, like the intelligence field, is one built on relationships between individuals more than organizations. That is true in and out of government. Booz Allen’s executive ranks are thick with former senior government intelligence and defense managers. Its vice-chairman is Mike McConnell, who left the firm in 2007 to become the Director of National Intelligence before returning to Booz Allen in 2009 after his service. Once that confidence is shaken, trust in the digital age turns out to be wafer-thin.

These kinds of moments offer policymakers and company executives opportunities for remedy. The larger defense-industrial system needs to get brought back in line when contractors get too much control, even if the process is far slower and costlier than it should be. There are recent examples. One is the demise of the so-called lead-systems integrator model, which once had big defense companies such as Boeing overseeing the development of an Army modernization program with unprecedented authority before being cancelled. A similar approach was tried with a sweeping Coast Guard modernization program before it was bagged for being too costly and badly managed.

After the Snowden case, intelligence contracting is going to change. It will be easier to reduce spending on contractors, which account for more than two-thirds of the taxpayer dollars spent on spying. Agencies eager to avoid deeper cuts will go to great lengths to accept oversight in order to prove they are not going employ another Snowden. But this business isn’t going away.

Intelligence contracting may never be a side of the defense industry that Americans regard with awe or wonder as they once gazed at the high-flying products built during the Jet Age. There is nothing stirring about Tysons Corner, a sprawling locus of contractor offices and shopping a short drive from CIA headquarters. Then again, intelligence work is supposed to be conducted out of sight, whether it is carried out by contractors or not.