[Congressional Record Volume 157, Number 66 (Friday, May 13, 2011)]
[Extensions of Remarks]
[Pages E905-E908]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


          INTELLIGENCE AUTHORIZATION ACT FOR FISCAL YEAR 2011

                                 ______
                                 

                               speech of

                            HON. PETER WELCH

                               of vermont

                    in the house of representatives

                         Thursday, May 12, 2011

       The House in Committee of the Whole House on the State of 
     the Union had under consideration the bill (H.R. 754) to 
     authorize appropriations for fiscal year 2011 for 
     intelligence and intelligence-related activities of the 
     United States Government, the Community Management Account, 
     and the Central Intelligence Agency Retirement and Disability 
     System, and for other purposes:

  Mr. WELCH. Mr. Chair, today I want to highlight a critical issue 
facing the Intelligence Community: increasing reliance on contractors.
  A 2010 Washington Post story reported that 30 percent of the 
workforce in our intelligence agencies is contractors. Furthermore, the 
Post estimated that out of 854,000 people with top-secret clearances, 
265,000 are contractors. I encourage my colleagues to read this eye 
opening article.
  These startling facts cause me great concern--we've learned the hard 
way time and time again what happens when we fail to monitor the work 
of federal contractors. The federal government has the responsibility 
to maintain its commitment to monitoring their use--with special 
attention made to the evolving nature of their work and the associated 
national security risks inherent to outsourcing these tasks. I look 
forward to working with the Select Committee on Intelligence to achieve 
this goal.

               [From the Washington Post, July 20, 2010]

                        National Security, Inc.

                 (By Dana Priest and William M. Arkin)

       In June, a stone carver from Manassas chiseled another 
     perfect star into a marble wall at CIA headquarters, one of 
     22 for agency workers killed in the global war initiated by 
     the 2001 terrorist attacks.
       The intent of the memorial is to publicly honor the courage 
     of those who died in the line of duty, but it also conceals a 
     deeper story about government in the post-9/11 era: Eight of 
     the 22 were not CIA officers at all. They were private 
     contractors.
       To ensure that the country's most sensitive duties are 
     carried out only by people loyal above all to the nation's 
     interest, federal rules say contractors may not perform what 
     are called ``inherently government functions.'' But they do, 
     all the time and in every intelligence and counterterrorism 
     agency, according to a two-year investigation by The 
     Washington Post.
       What started as a temporary fix in response to the 
     terrorist attacks has turned into a dependency that calls 
     into question whether the federal workforce includes too many 
     people obligated to shareholders rather than the public 
     interest--and whether the government is still in control of 
     its most sensitive activities. In interviews last week, both 
     Defense Secretary Robert M. Gates and CIA Director Leon 
     Panetta said they agreed with such concerns.
       The Post investigation uncovered what amounts to an 
     alternative geography of the United States, a Top Secret 
     America created since 9/11 that is hidden from public view, 
     lacking in thorough oversight and so unwieldy that its 
     effectiveness is impossible to determine.
       It is also a system in which contractors are playing an 
     ever more important role. The Post estimates that out of 
     854,000 people with top-secret clearances, 265,000 are 
     contractors. There is no better example of the government's 
     dependency on them than at the CIA, the one place in 
     government that exists to do things overseas that no other 
     U.S. agency is allowed to do.
       Private contractors working for the CIA have recruited 
     spies in Iraq, paid bribes for information in Afghanistan and 
     protected CIA directors visiting world capitals. Contractors 
     have helped snatch a suspected extremist off the streets of 
     Italy, interrogated detainees once held at secret prisons 
     abroad and watched over defectors holed up in the Washington 
     suburbs. At Langley headquarters, they analyze terrorist 
     networks. At the agency's training facility in Virginia, they 
     are helping mold a new generation of American spies.
       Through the federal budget process, the George W. Bush 
     administration and Congress made it much easier for the CIA 
     and other agencies involved in counterterrorism to hire more 
     contractors than civil servants. They did this to limit the 
     size of the permanent workforce, to hire employees more 
     quickly than the sluggish federal process allows and because 
     they thought--wrongly, it turned out--that contractors would 
     be less expensive.
       Nine years later, well into the Obama administration, the 
     idea that contractors cost less has been repudiated, and the 
     administration has made some progress toward its goal of 
     reducing the number of hired hands by 7 percent over two 
     years. Still, close to 30 percent of the workforce in the 
     intelligence agencies is contractors.
       ``For too long, we've depended on contractors to do the 
     operational work that ought to be done'' by CIA employees, 
     Panetta said. But replacing them ``doesn't happen overnight. 
     When you've been dependent on contractors for so long, you 
     have to build that expertise over time.'' A second concern of 
     Panetta's: contracting with corporations, whose 
     responsibility ``is to their shareholders, and that does 
     present an inherent conflict.''
       Or as Gates, who has been in and out of government his 
     entire life, puts it: ``You want somebody who's really in it 
     for a career because they're passionate about it and because 
     they care about the country and not just because of the 
     money.''
       Contractors can offer more money--often twice as much--to 
     experienced federal employees than the government is allowed 
     to pay them. And because competition among firms for people 
     with security clearances is so great, corporations offer such 
     perks as BMWs and $15,000 signing bonuses, as Raytheon did in 
     June for software developers with top-level clearances.
       The idea that the government would save money on a contract 
     workforce ``is a false economy,'' said Mark M. Lowenthal, a 
     former senior CIA official and now president of his own 
     intelligence training academy.
       As companies raid federal agencies of talent, the 
     government has been left with the youngest intelligence 
     staffs ever while more experienced employees move into the 
     private sector. This is true at the CIA, where employees from 
     114 firms account for roughly a third of the workforce, or 
     about 10,000 positions. Many of them are temporary hires, 
     often former military or intelligence agency employees who 
     left government service to work less and earn more while 
     drawing a federal pension.
       Across the government, such workers are used in every 
     conceivable way. Contractors kill enemy fighters. They spy on 
     foreign governments and eavesdrop on terrorist networks. They 
     help craft war plans. They gather information on local 
     factions in war zones. They are the historians, the 
     architects, the recruiters in the nation's most secretive 
     agencies. They staff watch centers across the Washington 
     area. They are among the most trusted advisers to the four-
     star generals leading the nation's wars.
       So great is the government's appetite for private 
     contractors with top-secret clearances that there are now 
     more than 300 companies, often nicknamed ``body shops,'' that 
     specialize in finding candidates, often for a fee that 
     approaches $50,000 a person, according to those in the 
     business.
       Making it more difficult to replace contractors with 
     federal employees: The government doesn't know how many are 
     on the federal payroll. Gates said he wants to reduce the 
     number of defense contractors by about 13 percent, to pre-9/
     11 levels, but he's having a hard time even getting a basic 
     head count.
       ``This is a terrible confession,'' he said. ``I can't get a 
     number on how many contractors work for the Office of the 
     Secretary of Defense,'' referring to the department's 
     civilian leadership.
       The Post's estimate of 265,000 contractors doing top-secret 
     work was vetted by several high-ranking intelligence 
     officials who approved of The Post's methodology. The 
     newspaper's Top Secret America database includes 1.931 
     companies that perform work at the top-secret level. More 
     than a quarter of them--533--came into being after 2001, and 
     others that already existed have expanded greatly. Most are 
     thriving even as the rest of the United States struggles with 
     bankruptcies, unemployment and foreclosures.
       The privatization of national security work has been made 
     possible by a nine-year ``gusher'' of money, as Gates 
     recently described national security spending since the 9/11 
     attacks.
       With so much money to spend, managers do not always worry 
     about whether they are spending it effectively.
       ``Someone says, `Let's do another study,' and because no 
     one shares information, everyone does their own study,'' said 
     Elena Mastors, who headed a team studying the al-Qaeda 
     leadership for the Defense Department. ``It's about how many 
     studies you can orchestrate, how many people you can fly all 
     over the place. Everybody's just on a spending spree. We 
     don't need all these people doing all this stuff.''
       Most of these contractors do work that is fundamental to an 
     agency's core mission. As a result, the government has become 
     dependent on them in a way few could have foreseen: wartime 
     temps who have become a permanent cadre.
       Just last week, typing ``top secret'' into the search 
     engine of a major jobs Web site showed 1,951 unfilled 
     positions in the Washington area, and 19,759 nationwide: 
     ``Target analyst,'' Reston. ``Critical infrastructure 
     specialist,'' Washington, D.C. ``Joint expeditionary team 
     member,'' Arlington.
       ``We could not perform our mission without them. They serve 
     as our `reserves,' providing flexibility and expertise we 
     can't acquire,'' said Ronald Sanders, who was chief of human 
     capital for the Office of the Director of National 
     Intelligence before retiring in February. ``Once they are on 
     board, we treat them as if they're a part of the total 
     force.''
       The Post's investigation is based on government documents 
     and contracts, job descriptions, property records, corporate 
     and social networking Web sites, additional records, and 
     hundreds of interviews with intelligence, military and 
     corporate officials and former officials. Most requested 
     anonymity either because they are prohibited from speaking 
     publicly or because, they said,

[[Page E906]]

     they feared retaliation at work for describing their 
     concerns.
       The investigation focused on top-secret work because the 
     amount classified at the secret level is too large to 
     accurately track. A searchable database of government 
     organizations and private companies was built entirely on 
     public records. [For an explanation of the newspaper's 
     decision making behind this project, please see the Editor's 
     Note.]
       The national security industry sells the military and 
     intelligence agencies more than just airplanes, ships and 
     tanks. It sells contractors' brain power. They advise, brief 
     and work everywhere, including 25 feet under the Pentagon in 
     a bunker where they can be found alongside military personnel 
     in battle fatigues monitoring potential crises worldwide.
       Late at night, when the wide corridors of the Pentagon are 
     all but empty, the National Military Command Center hums with 
     purpose. There's real-time access to the location of U.S. 
     forces anywhere in the world, to granular satellite images or 
     to the White House Situation Room.
       The purpose of all this is to be able to answer any 
     question the chairman of the Joint Chiefs of Staff might 
     have. To be ready 24 hours a day, every day, takes five 
     brigadier generals, a staff of colonels and senior 
     noncommissioned officers--and a man wearing a pink contractor 
     badge and a bright purple shirt and tie.
       Erik Saar's job title is ``knowledge engineer.'' In one of 
     the most sensitive places in America, he is the only person 
     in the room who knows how to bring data from far afield, 
     fast. Saar and four teammates from a private company, SRA 
     International, teach these top-ranked staff officers to think 
     in Web 2.0. They are trying to push a tradition-bound culture 
     to act differently, digitally.
       That sometimes means asking for help in a public online 
     chat room or exchanging ideas on shared Web pages outside the 
     military computer networks dubbed .mil--things much resisted 
     within the Pentagon's self-sufficient culture. ``Our job is 
     to change the perception of leaders who might drive change,'' 
     Saar said.
       Since 9/11, contractors have made extraordinary 
     contributions--and extraordinary blunders--that have changed 
     history and clouded the public's view of the distinction 
     between the actions of officers sworn on behalf of the United 
     States and corporate employees with little more than a 
     security badge and a gun.
       Contractor misdeeds in Iraq and Afghanistan have hurt U.S. 
     credibility in those countries as well as in the Middle East. 
     Abuse of prisoners at Abu Ghraib, some of it done by 
     contractors, helped ignite a call for vengeance against the 
     United States that continues today. Security guards working 
     for Blackwater added fuel to the five-year violent chaos in 
     Iraq and became the symbol of an America run amok.
       Contractors in war zones, especially those who can fire 
     weapons, blur ``the line between the legitimate and 
     illegitimate use of force, which is just what our enemies 
     want,'' Allison Stanger, a professor of international 
     politics and economics at Middlebury College and the author 
     of ``One Nation Under Contract,'' told the independent 
     Commission on Wartime Contracting at a hearing in June.
       Misconduct happens, too. A defense contractor formerly 
     called MZM paid bribes for CIA contracts, sending Randy 
     ``Duke'' Cunningham, who was a California congressman on the 
     intelligence committee, to prison. Guards employed in 
     Afghanistan by ArmorGroup North America, a private security 
     company, were caught on camera in a lewd-partying scandal.
       But contractors have also advanced the way the military 
     fights. During the bloodiest months in Iraq, the founder of 
     Berico Technologies, a former Army officer named Guy 
     Filippelli, working with the National Security Agency. 
     invented a technology that made finding the makers of 
     roadside bombs easier and helped stanch the number of 
     casualties from improvised explosives, according to NSA 
     officials.
       Contractors have produced blueprints and equipment for the 
     unmanned aerial war fought by drones, which have killed the 
     largest number of senior al-Qaeda leaders and produced a 
     flood of surveillance videos. A dozen firms created the 
     transnational digital highway that carries the drones' real-
     time data on terrorist hide-outs from overseas to command 
     posts throughout the United States.
       Private firms have become so thoroughly entwined with the 
     government's most sensitive activities that without them 
     important military and intelligence missions would have to 
     cease or would be jeopardized. Some examples:
       *At the Department of Homeland Security (DHS), the number 
     of contractors equals the number of federal employees. The 
     department depends on 318 companies for essential services 
     and personnel, including 19 staffing firms that help DHS find 
     and hire even more contractors. At the office that handles 
     intelligence, six out of 10 employees are from private 
     industry.
       *The National Security Agency, which conducts worldwide 
     electronic surveillance, hires private firms to come up with 
     most of its technological innovations. The NSA used to work 
     with a small stable of firms; now it works with at least 484 
     and is actively recruiting more.
       *The National Reconnaissance Office cannot produce, launch 
     or maintain its large satellite surveillance systems, which 
     photograph countries such as China, North Korea and Iran, 
     without the four major contractors it works with.
       *Every intelligence and military organization depends on 
     contract linguists to communicate overseas, translate 
     documents and make sense of electronic voice intercepts. The 
     demand for native speakers is so great, and the amount of 
     money the government is willing to pay for them is so huge, 
     that 56 firms compete for this business.
       *Each of the 16 intelligence agencies depends on 
     corporations to set up its computer networks, communicate 
     with other agencies' networks, and fuse and mine disparate 
     bits of information that might indicate a terrorist plot. 
     More than 400 companies work exclusively in this area, 
     building classified hardware and software systems.
       Hiring contractors was supposed to save the government 
     money. But that has not turned out to be the case. A 2008 
     study published by the Office of the Director of National 
     Intelligence found that contractors made up 29 percent of the 
     workforce in the intelligence agencies but cost the 
     equivalent of 49 percent of their personnel budgets. Gates 
     said that federal workers cost the government 25 percent less 
     than contractors.
       The process of reducing the number of contractors has been 
     slow, if the giant Office of Naval Intelligence in Suitland 
     is any example. There, 2,770 people work on the round-the-
     clock maritime watch floor tracking commercial vessels, or in 
     science and engineering laboratories, or in one of four 
     separate intelligence centers. But it is the employees of 70 
     information technology companies who keep the place 
     operating.
       They store, process and analyze communications and 
     intelligence transmitted to and from the entire U.S. naval 
     fleet and commercial vessels worldwide. ``Could we keep this 
     building running without contractors?'' said the captain in 
     charge of information technology. ``No, I don't think we 
     could keep up with it.''
       Vice Adm. David J. ``Jack'' Dorsett, director of naval 
     intelligence, said he could save millions each year by 
     converting 20 percent of the contractor jobs at the Suitland 
     complex to civil servant positions. He has gotten the go-
     ahead, but it's been a slow start. This year, his staff has 
     converted one contractor job and eliminated another--out of 
     589. ``It's costing me an arm and a leg,'' Dorsett said.
       Washington's corridors of power stretch in a nearly 
     straight geographical line from the Supreme Court to the 
     Capitol to the White House. Keep going west, across the 
     Potomac River, and the unofficial seats of power--the 
     private, corporate ones--become visible, especially at night. 
     There in the Virginia suburbs are the brightly illuminated 
     company logos of Top Secret America: Northrop Grumman, SAIC, 
     General Dynamics.
       Of the 1,931 companies identified by The Post that work on 
     top-secret contracts, about 110 of them do roughly 90 percent 
     of the work on the corporate side of the defense-
     intelligence-corporate world.
       To understand how these firms have come to dominate the 
     post-9/11 era, there's no better place to start than the 
     Herndon office of General Dynamics. One recent afternoon 
     there, Ken Pohill was watching a series of unclassified 
     images, the first of which showed a white truck moving across 
     his computer monitor.
       The truck was in Afghanistan, and a video camera bolted to 
     the belly of a U.S. surveillance plane was following it. 
     Pohill could access a dozen images that might help an 
     intelligence analyst figure out whether the truck driver was 
     just a truck driver or part of a network making roadside 
     bombs to kill American soldiers.
       To do this, he clicked his computer mouse. Up popped a 
     picture of the truck driver's house, with notes about 
     visitors. Another click. Up popped infrared video of the 
     vehicle. Click: Analysis of an object thrown from the 
     driver's side. Click: U-2 imagery. Click: A history of the 
     truck's movement. Click: A Google Earth map of friendly 
     forces. Click: A chat box with everyone else following the 
     truck, too.
       Ten years ago, if Pohill had worked for General Dynamics, 
     he probably would have had a job bending steel. Then, the 
     company's center of gravity was the industrial port city of 
     Groton, Conn., where men and women in wet galoshes churned 
     out submarines, the thoroughbreds of naval warfare. Today, 
     the firm's commercial core is made up of data tools such as 
     the digital imagery library in Herndon and the secure 
     BlackBerry-like device used by President Obama, both 
     developed at a carpeted suburban office by employees in 
     loafers and heels.
       The evolution of General Dynamics was based on one simple 
     strategy: Follow the money.
       The company embraced the emerging intelligence-driven style 
     of warfare. It developed small-target identification systems 
     and equipment that could intercept an insurgent's cellphone 
     and laptop communications. It found ways to sort the billions 
     of data points collected by intelligence agencies into piles 
     of information that a single person could analyze.
       It also began gobbling up smaller companies that could help 
     it dominate the new intelligence landscape, just as its 
     competitors were doing. Between 2001 and 2010, the company 
     acquired 11 firms specializing in satellites, signals and 
     geospatial intelligence, surveillance, reconnaissance, 
     technology integration and imagery.
       On Sept. 11, 2001, General Dynamics was working with nine 
     intelligence organizations. Now it has contracts with all 16. 
     Its

[[Page E907]]

     employees fill the halls of the NSA and DHS. The corporation 
     was paid hundreds of millions of dollars to set up and manage 
     DHS's new offices in 2003, including its National Operations 
     Center, Office of Intelligence and Analysis and Office of 
     Security. Its employees do everything from deciding which 
     threats to investigate to answering phones.
       General Dynamics' bottom line reflects its successful 
     transformation. It also reflects how much the U.S. 
     government--the firm's largest customer by far--has paid the 
     company beyond what it costs to do the work, which is, after 
     all, the goal of every profit-making corporation.
       The company reported $31.9 billion in revenue in 2009, up 
     from $10.4 billion in 2000. Its workforce has more than 
     doubled in that time, from 43,300 to 91,700 employees, 
     according to the company.
       Revenue from General Dynamics' intelligence- and 
     information-related divisions, where the majority of its top-
     secret work is done, climbed to $10 billion in the second 
     quarter of 2009, up from $2.4 billion in 2000, accounting for 
     34 percent of its overall revenue last year.
       The company's profitability is on display in its Falls 
     Church headquarters. There's a soaring, art-filled lobby, 
     bistro meals served on china enameled with the General 
     Dynamics logo and an auditorium with seven rows of white 
     leather-upholstered seats, each with its own microphone and 
     laptop docking station.
       General Dynamics now has operations in every corner of the 
     intelligence world. It helps counterintelligence operators 
     and trains new analysts. It has a $600 million Air Force 
     contract to intercept communications. It makes $1 billion a 
     year keeping hackers out of U.S. computer networks and 
     encrypting military communications. It even conducts 
     information operations, the murky military art of trying to 
     persuade foreigners to align their views with U.S. interests.
       ``The American intelligence community is an important 
     market for our company,'' said General Dynamics spokesman 
     Kendell Pease. ``Over time, we have tailored our organization 
     to deliver affordable, best-of-breed products and services to 
     meet those agencies' unique requirements.''
       In September 2009, General Dynamics won a $10 million 
     contract from the U.S. Special Operations Command's 
     psychological operations unit to create Web sites to 
     influence foreigners' views of U.S. policy. To do that, the 
     company hired writers, editors and designers to produce a set 
     of daily news sites tailored to five regions of the world. 
     They appear as regular news Web sites, with names such as 
     ``SETimes.com: The News and Views of Southeast Europe.'' The 
     first indication that they are run on behalf of the military 
     comes at the bottom of the home page with the word 
     ``Disclaimer.'' Only by clicking on that do you learn that 
     ``the Southeast European Times (SET) is a Web site sponsored 
     by the United States European Command.''
       What all of these contracts add up to: This year, General 
     Dynamics' overall revenue was $7.8 billion in the first 
     quarter, Jay L. Johnson, the company's chief executive and 
     president, said at an earnings conference call in April. 
     ``We've hit the deck running in the first quarter,'' he said, 
     ``and we're on our way to another successful year.''
       In the shadow of giants such as General Dynamics are 1,814 
     small to midsize companies that do top-secret work. About a 
     third of them were established after Sept. 11, 2001, to take 
     advantage of the huge flow of taxpayer money into the private 
     sector. Many are led by former intelligence agency officials 
     who know exactly whom to approach for work.
       Abraxas of Herndon, headed by a former CIA spy, quickly 
     became a major CIA contractor after 9/11. Its staff even 
     recruited midlevel managers during work hours from the CIA's 
     cafeteria, former agency officers recall.
       Other small and medium-size firms sell niche technical 
     expertise such as engineering for low-orbit satellites or 
     long-dwell sensors. But the vast majority have not invented 
     anything at all. Instead, they replicate what the 
     government's workforce already does.
       A company called SGIS, founded soon after the 2001 attacks, 
     was one of these.
       In June 2002, from the spare bedroom of his San Diego home, 
     30-year-old Hany Girgis put together an information 
     technology team that won its first Defense Department 
     contract four months later. By the end of the year, SGIS had 
     opened a Tampa office close to the U.S. Central Command and 
     Special Operations Command, had turned a profit and had 30 
     employees.
       SGIS sold the government the services of people with 
     specialized skills; expanding the types of teams it could put 
     together was one key to its growth. Eventually it offered 
     engineers, analysts and cyber-security specialists for 
     military, space and intelligence agencies. By 2003, the 
     company's revenue was $3.7 million. By then, SGIS had become 
     a subcontractor for General Dynamics, working at the secret 
     level. Satisfied with the partnership, General Dynamics 
     helped SGIS receive a top-secret facility clearance, which 
     opened the doors to more work.
       By 2006, its revenue had multiplied tenfold, to $30.6 
     million, and the company had hired employees who specialized 
     in government contracting just to help it win more contracts.
       ``We knew that's where we wanted to play,'' Girgis said in 
     a phone interview. ``There's always going to be a need to 
     protect the homeland.''
       Eight years after it began, SGIS was up to revenue of $101 
     million, 14 offices and 675 employees. Those with top-secret 
     clearances worked for 11 government agencies, according to 
     The Post's database.
       The company's marketing efforts had grown, too, both in 
     size and sophistication. Its Web site, for example, showed an 
     image of Navy sailors lined up on a battleship over the words 
     ``Proud to serve'' and another image of a Navy helicopter 
     flying near the Statue of Liberty over the words ``Preserving 
     freedom.'' And if it seemed hard to distinguish SGIS's work 
     from the government's, it's because they were doing so many 
     of the same things. SGIS employees replaced military 
     personnel at the Pentagon's 24/7 telecommunications center. 
     SGIS employees conducted terrorist threat analysis. SGIS 
     employees provided help-desk support for federal computer 
     systems.
       Still, as alike as they seemed, there were crucial 
     differences.
       For one, unlike in government, if an SGIS employee did a 
     good job, he might walk into the parking lot one day and be 
     surprised by co-workers clapping at his latest bonus: a 
     leased, dark-blue Mercedes convertible. And he might say, as 
     a video camera recorded him sliding into the soft leather 
     driver's seat, ``Ahhhh . . . this is spectacular.''
       And then there was what happened to SGIS last month, when 
     it did the one thing the federal government can never do.
       It sold itself.
       The new owner is a Fairfax-based company called Salient 
     Federal Solutions, created just last year. It is a management 
     company and a private-equity firm with lots of Washington 
     connections that, with the purchase of SGIS, it intends to 
     parlay into contracts.
       ``We have an objective,'' says chief executive and 
     President Brad Antle, ``to make $500 million in five years.''
       Of all the different companies in Top Secret America, the 
     most numerous by far are the information technology, or IT, 
     firms. About 800 firms do nothing but IT.
       Some IT companies integrate the mishmash of computer 
     systems within one agency; others build digital links between 
     agencies; still others have created software and hardware 
     that can mine and analyze vast quantities of data.
       The government is nearly totally dependent on these firms. 
     Their close relationship was on display recently at the 
     Defense Intelligence Agency's annual information technology 
     conference in Phoenix. The agency expected the same IT firms 
     angling for its business to pay for the entire five-day get-
     together, a DIA spokesman confirmed.
       And they did.
       General Dynamics spent $30,000 on the event. On a perfect 
     spring night, it hosted a party at Chase Field, a 48,569-seat 
     baseball stadium, reserved exclusively for the conference 
     attendees. Government buyers and corporate sellers drank beer 
     and ate hot dogs while the DIA director's morning keynote 
     speech replayed on the gigantic scoreboard, digital baseballs 
     bouncing along the bottom of the screen.
       Carahsoft Technology, a DIA contractor, invited guests to a 
     casino night where intelligence officials and vendors ate, 
     drank and bet phony money at craps tables run by professional 
     dealers.
       The McAfee network security company, a Defense Department 
     contractor, welcomed guests to a Margaritaville-themed social 
     on the garden terrace of the hotel across the street from the 
     convention site, where 250 firms paid thousands of dollars 
     each to advertise their services and make their pitches to 
     intelligence officials walking the exhibition hall.
       Government officials and company executives say these 
     networking events are critical to building a strong 
     relationship between the public and private sectors.
       ``If I make one contact each day, it's worth it,'' said Tom 
     Conway, director of federal business development for McAfee.
       As for what a government agency gets out of it: ``Our goal 
     is to be open and learn stuff,'' said Grant M. Schneider, the 
     DIA's chief information officer and one of the conference's 
     main draws. By going outside Washington, where many of the 
     firms are headquartered, ``we get more synergy. . . . It's an 
     interchange with industry.''
       These types of gatherings happen every week. Many of them 
     are closed to anyone without a top-secret clearance.
       At a U.S. Special Operations Command conference in 
     Fayetteville, N.C., in April, vendors paid for access to some 
     of the people who decide what services and gadgets to buy for 
     troops. In mid-May, the national security industry held a 
     black-tie evening funded by the same corporations seeking 
     business from the defense, intelligence and congressional 
     leaders seated at their tables.
       Such coziness worries other officials who believe the post-
     9/11 defense-intelligence-corporate relationship has become, 
     as one senior military intelligence officer described it, a 
     ``self-licking ice cream cone.''
       Another official, a longtime conservative staffer on the 
     Senate Armed Services Committee, described it as ``a living, 
     breathing organism'' impossible to control or curtail. ``How 
     much money has been involved is just mind-boggling,'' he 
     said. ``We've built such a vast instrument. What are you 
     going to do with this thing? . . . It's turned into a jobs 
     program.''
       Even some of those gathered in Phoenix criticized the size 
     and disjointedness of the intelligence community and its 
     contracting base. ``Redundancy is the unacceptable

[[Page E908]]

     norm,'' Lt. Gen. Richard P. Zahner, Army deputy chief of 
     staff for intelligence, told the 2,000 attendees. ``Are we 
     spending our resources effectively? . . . If we have not 
     gotten our houses in order, someone will do it for us.''
       On a day that also featured free back rubs, shoeshines, ice 
     cream and fruit smoothies, another speaker, Kevin P. Meiners, 
     a deputy undersecretary for intelligence, gave the audience 
     what he called ``the secret sauce,'' the key to thriving even 
     when the Defense Department budget eventually stabilizes and 
     stops rising so rapidly.
       ``Overhead,'' Meiners told them--that's what's going to get 
     cut first. Overhead used to mean paper clips and toner. Now 
     it's information technology, IT, the very products and 
     services sold by the businesspeople in the audience.
       ``You should describe what you do as a weapons system, not 
     overhead,'' Meiners instructed. ``Overhead to them--I'm 
     giving you the secret sauce here--is IT and people. . . . You 
     have to foot-stomp hard that this is a war-fighting system 
     that's helping save people's lives every day.''
       After he finished, many of the government officials 
     listening headed to the exhibit hall, where company 
     salespeople waited in display booths. Peter Coddington, chief 
     executive of InTTENSITY, a small firm whose software teaches 
     computers to ``read'' documents, was ready for them.
       ``You have to differentiate yourself,'' he said as they 
     fanned out into the aisles. Coddington had glass beer mugs 
     and pens twirling atop paperweight pyramids to help persuade 
     officials of the nation's largest military intelligence 
     agency that he had something they needed.
       But first he needed them to stop walking so fast, to slow 
     down long enough for him to start his pitch. His twirling 
     pens seemed to do the job. ``It's like moths to fire,'' 
     Coddington whispered.
       A DIA official with a tote bag approached. She spotted the 
     pens, and her pace slowed. ``Want a pen?'' Coddington called.
       She hesitated. ``Ah . . . I have three children,'' she 
     said.
       ``Want three pens?''
       She stopped. In Top Secret America, every moment is an 
     opportunity.
       ``We're a text extraction company . . . ,'' Coddington 
     began, handing her the pens.
                                 ______
                                 
       Staff researcher Julie Tate contributed to this report.

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