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Why Spy, When You Can Buy?

It may seem logical for a nation to outsource and privatise its intelligence gathering. But we should first consider the costs and challenges.

“The American Dream, it’s made in China,” said Chris Pine in an American comedy motion picture. The point was that manufacturing anything in America costs a bomb, while outsourcing it to China costs a few pennies. One of the primary motivations for businesses across the world to outsource is to reduce operational costs. So, does this logic apply to the business of intelligence too?

In the wake of 9/11 and the Iraq invasion, the US intelligence agencies began to embrace outsourcing and privatisation of intelligence with great vigour. A vast majority of the US intelligence agency began to be manned by private contractors, termed as “Green Badgers”, differentiating them from the agency’s blue badge employees. Nevertheless, unlike the business rationale for outsourcing, the cost-reduction model did not apply to the intelligence business. For instance, in 2008, the core contractors working in the US intelligence cost the agencies $250,000 annually, for the same work comparable to government employees working at $126,500/yr. Instead of cutting costs, the reverse effect seemed to be in play here. Similarly, many other benefits that privatisation offers in other spheres did not apply to intelligence.

In this article, I narrate some of the key pointers from the US’ experience in privatisation. Despite being an ardent supporter of the idea of privatisation, my conclusions of this article against the idea of privatisation of intelligence —   especially outsourcing core national security intelligence responsibilities to private contractors — are built entirely on the empirical observations on the American experience and the debates that have emerged in the Western intelligence studies community. So, wherever a criticism of privatisation is offered, it is limited to the sphere of intelligence, not the broader idea of privatisation. That said, let’s explore the questions: why the US embraced privatisation? What challenges have they faced in their experience?

Need of the Hour

The primary impetus for outsourcing of intelligence duties came in the early 90s with the revolution in information technology (IT). This gave birth to an increase in a new form of intelligence known as “Open-Source Intelligence”, whose pros and cons have been debated extensively by academia and practitioners. However, this article focuses on outsourcing and privatisation of national security intelligence, which is mostly clandestine activity, and gained pace after the 9/11 attacks. Let us examine the circumstances that actually led to an increased enthusiasm and practice of outsourcing and private contracting of national security intelligence.

Private contractors for intelligence duties were favoured by the US mainly to assist military operations in distant lands that were previously unbeknownst to them. The fall of the Soviet Union and the end of the Cold War led to a diversification of threats that had to be addressed immediately by persons with knowledge of the entire world, their politics, cultures and languages. As scholar Van Puyvelde explains, “No intelligence community can afford the luxury to keep such a diverse array of capabilities in-house at any point in time.” It was only logical that the private sector be consulted for expertise in areas of operation. This is what happened post-Cold War when the US national security concerns reached beyond the traditional focus of the intelligence community. It was the ‘need of the hour’ to approach the private contractors for expertise. In places like Somalia, Haiti, Bosnia and Kosovo, and later in Afghanistan and Iraq, the US government agencies began to rely on private contractors for HUMINT tasks like translation, interrogation, briefing, media interpretation in foreign languages, and analysis of ‘pocket-litter’—miscellaneous items confiscated incidentally after an attack or on apprehending an individual, like wallet contents.

Private contractors assisted the governments at both strategic and operational levels. At the strategic level, their knowledge of the target country has enabled the production of long-term assessments that has helped policymaking. For instance, during the 2003 Iraq invasion, Aegis Defense Security Ltd, a British privates security firm, provided a detailed intelligence assessment of the intentions and capabilities of Shiite militias and criminal gangs in the Basra province (Iraq) to the US Army Corps of Engineers. On the operational front, apart from the HUMINT aspects mentioned above, the private contractors have also assisted the military in identification of targets for attack. With knowledge of the target country, the private contractors were used to develop targets as well as validate the proposed targets, and also provide details about other battle sustaining critical infrastructure of the enemy—a process known as ‘point dropping’.

In addition to collection and analysis, the US government has sought private partnership in two other significant aspects of intelligence, namely: technical strengths and IT skills. The CIA and the Department of Defense (DoD) have benefited from private technical and aeronautical firms notably in at least two known revolutionary intelligence gathering equipment. During the Cold War it was the procurement of the U-2 spy plane that was active through the Cold War years for SIGINT operations and reconnaissance missions. Post-Cold War, private companies have partnered in the designing and manufacturing of the MQ-1 Predator Unmanned Aerial Vehicle that has seen action in Afghanistan, Pakistan, Iraq, Libya, Serbia, Somalia and many more.

Private firms have been assisting the US intelligence community by providing collaboration tools that enhance interagency coordination and security for government computer systems. IT support has been sought extensively by the National Security Agency (NSA) through private partnership. It is this aspect that has invited a host of criticisms against the agency for violating principles of individual privacy. Initially, a project named Trailblazer was experimented by the NSA in partnership with private firms. However, the project had to be canned over allegations of financial misuse. In the later years, the NSA has sought private partnerships in developing software like SDL that are capable of accessing servers of tech firms like Facebook and Twitter, and quickly translating thousands of posts in foreign languages to English.

Challenges to Privatisation of Intelligence

Despite the high monetary cost of outsourcing and privatisation, it was sheer necessity that drove the American intelligence community to embrace by the practice of privatisation. It has been a recent phenomenon, mainly functioning on a trial and error basis. Nevertheless, the challenges that the process has revealed are not just limited to visible financial costs, which can be debated favourably against the costs of maintaining a fulltime in-house capacity. But there are bigger worries that require further expansion:

Where is the red line?

As observed previously, private intelligence contractors are employed in several theatres, in support of military operations. The necessity is well understood, as the contractors carry those skills that are not at the disposal of government agencies. However, to what extent can they be utilised? At what point do their activities eclipse those aspects that are mandatorily under the purview of government agencies—known as “inherently governmental”? For instance, investigations into the excesses committed at Abu Ghraib detention facility exposed the use of private contractors in employing torture techniques for interrogation. This led to an increased confusion about the chain of command.

Were the contractors under the command of the US Army? If yes, would they be considered as military personnel and treated accordingly? If not, would the Army’s rules apply to them? Such confusions over the distribution of command responsibilities have persisted. One firm CACI which had contributed interrogators observed that the interrogators were working under a dual chain of command.

In order to tackle this problem, it is inevitable that the contractors, like the intelligence personnel, be subject to congressional oversight—a characteristic that the American system prides itself. However, this is easier said than done. According to Steven Aftergood, “The more work that migrates to the private sector, the less effective congressional oversight is going to be.” Even where officials were subject to congressional oversight, there was sufficient room to escape conviction. Stephen Cambone, a deputy of Donald Rumsfeld, for instance, outsmarted the Congress by stating that the “contractors were of a military nature when questions arose with intelligence oversight and that they were intelligence-oriented when armed services oversight raised questions.” In such situations, it is extremely difficult to have effective political oversight on intelligence activities.

To rectify such dilemmas and the resultant mishaps, the US government has now charted a list of actions that are regarded as ‘inherently governmental’ and cannot be commercialised. Broadly, these include, command, control of intelligence and military activities, certification of technologies, budget and legal policies, and other critical functions closely linked to public interests. A similar challenge that privatisation of intelligence has encountered is the lack of clear definition and statement of work outsourced. A ‘statement of requirement’ is a necessary management condition to ensure that the private contractors offer exactly what the agencies seek, without unnecessarily wasting time and resources.

The lack of a clear statement of requirement had led to the employment of interrogators at the Bagram Air Base in Afghanistan who lacked military intelligence training. The contractors supplied interrogators as requested, but what was required was interrogators who possessed an understanding of military intelligence to assist operations. “The government has been complicit in creating such outcomes by habitually providing insufficient requirements criteria and utilizing vague standards of performance in developing contract language,” says Lieutenant Colonel Glenn J. Voelz.

The Abraxas Effect

Shortly after the 9/11 attacks, Richard Helms, a former head of CIA’s European Division, founded a private intelligence firm called Abraxas Corps. The recruitment pattern employed by Abraxas, and later on by other private companies, poses a severe challenge to the government agency in the form of a brain drain. Many of the company’s recruits were serving and former intelligence professionals of mid and high-ranks. One CIA officer summed up the developments in his words, “You would see people leave the CIA on a Friday and come back on Monday in the same job but working for Abraxas.” The reason for this exodus of serving professionals to the private companies was the lure of money. Julie Tate reckons that at least 91 senior level officers from the IC had moved to private jobs in a span of 10 years. Along with them, exclusive knowledge like institutional knowledge, personal contacts and access to the intelligence repository are lost. Many of these officers who leave the agencies hold ‘top secret level’ security clearances.

A 2006 study conducted by the Office of the Director of National Intelligence (ODNI), mentions the problem as “war for talent” to describe the IC’s competition with its contractors for their own employees. In the intelligence parlance it is called ‘bidding back’. Looking from the perspective of the IC’s lamentation, the issue is that, a good amount of resources gets spent on training an intelligence professional. In the event, it shouldn’t appear that the IC is used as a training hub for private contractors. Hence, the CIA, in 2007, began to forbid hiring of former employees as contractors within the first year and a half of their retirement. Yet, such moves have had only little effect on the issue of brain drain.

Monopoly-Competition Paradox

The ‘need of the hour’ rationale for intelligence outsourcing means that there is little time for security screening and vetting of personnel, which is important in any intelligence agency. As a result, the hiring agency prefers well established contractors comprising former intelligence personnel with known credentials and security clearances. Gradually, this practice leads to a handful of contracting firms oligopolising the business. As a logical riposte, the alternative would be to open tenders to the market and encourage competition between firms. However, this has a dangerous side-effect. The bottom-line for good intelligence is objectivity and independence from consumer influence. However, in the event of competition among contractors there is always a risk that the contractors might tailor the process and product to obtain contracts rather than develop objective intelligence. Smaller firms are at the greater risk of doing this because the market works on ratings and customer evaluation. So, to ensure survivability, there is a fear that the contracting firms may cater to the customer’s desires rather than the product’s objectivity. Intelligence is essentially not a business that runs on the logic of customer satisfaction. It functions on the basis of delivering the objective truth, irrespective of its flavour.

You Help Me, I Help You

Privatisation of intelligence, with all its benefits, does provide room for corruption. Over the years, India has witnessed several political leaders and bureaucrats accused of corruption in cases of privatisation. The 2G scam is well known and needs no expansion. Similar forms of corruption are applicable even to the privatisation of intelligence. As we have observed above, many of the employees of the contractors are former high-ranking intelligence personnel. These top-level bureaucrats leave the bureaucracy with significant number of contacts, which the contracting firms would prefer to exploit. These are easy sources for the contracting firms to guarantee that their firm wins the contracts.

Bribery and cronyism isn’t limited to the bureaucratic circles alone, even the politicians join the entourage. In democracies like India and the US, political parties are funded by private businesses, who seek favours from one another. The best case to cite dates back to 2006, when Congressman Duke Cunningham and three others were convicted of accepting bribes from defense contractors in return for contract assurances. Millions of dollars’ worth of defense and intelligence contracts were sold, in what came to be famously known as the Cunningham Scandal.

Security, Counterintelligence and Conflict of Interest

The problem of security and counterintelligence is interlinked with the previous section. The CIA, for example, has an elaborate process of personnel vetting and selection procedure to ensure that candidates with the right motives and professionalism are recruited for the job. However, the same cannot be said of the profit motive contractors. Full-time employees at the CIA have to mandatorily report all foreign travels and their contact details with foreigners, produce financial disclosures, submit to polygraph examinations, and many other routine counterintelligence screenings for security purposes. Such measures are not generally applicable on private individuals. In order to counteract, the CIA would again have to rely on those firms with former employees with top secret level clearances, which plausibly would lead to monopolisation of the business.

The fundamental issue pertaining to the divergence of interests between the hiring agency and the contractors is best raised in the words of Lt Col Glenn Voelz, “a basic question that must be considered by policymakers is whether the institutional values guiding the intelligence profession are consistent with the profit motives of private corporations whose interests necessarily reflect those of the shareholders.” Former CIA Director Leon Panetta also expressed similar concerns, stating, “I get very nervous relying on outside contractors to do that job . . .  because I’m not sure who they respond to.’’

Going beyond concerns of hierarchy, there is always the concern of contractors’ employees changing jobs, carrying with them valuable information and knowledge of the trade and capabilities of the IC. It is more like ‘my freedom begins where your nose ends’ situation. There appears to be gross inaccuracies in the guidelines for sharing of intelligence with private intelligence firms. As Lt Col Johnson wrote, “Was a General Security of Military Information Agreement (GSOMIA), which forms the framework for the sharing of intelligence between governments, valid when one of the (recipient) is from the private sector?” Ergo, tracking the security of data and other confidential information after the termination of a contract is a challenge that is hard to overcome.

Also consider the case of Edward Snowden, a former employee of Booz Allen Hamilton, a leading private intelligence contractor, who is now famous for leaking sensitive data on intelligence activities. Snowden’s revelations have certainly led to a much-required debate on privacy and ethics of spying, but the cost of idealism cannot be quantified against the damage done to the capabilities of hiring agencies. This could have been averted only if the contractors had the agency level counterintelligence measures. In the words of Will Black, a critic of privatization,

Due to the privatisation of intelligence services, there are many more people out there with sensitive data who could be persuaded to part with it by nothing more than a smile from a pretty face or one too many pints of beer.

Should India Embrace Outsourcing and Privatisation of Intelligence?

The above narrative describes a tricky experiment conducted by the US, mainly prompted by the need to find a way to generate intelligence on the emerging challenges in distant lands, about which the government agencies had little knowledge. In the following years, the idea of privatisation has been a considered and debated across the world. However, the US’ experience has created a perception elsewhere that the costs significantly outpace the benefits. Even Britain, which is a close ally of the US, limits private partnership to the procurement of specialised equipment. Core intelligence functions still remain the government’s forte. This is true for India too. With respect to foreign intelligence, India’s requirements are not as vast and diverse as the US. The broad national security concerns of India’s intelligence agencies, intelligence on Pakistan’s order of battle or activities related to sponsorship of terror from within their borders for example, are not questions the private contractors can address with greater effect than the government agencies. Therefore, recognising this fact, and the challenges associated with privatisation of intelligence as observed from the US’ experience, it is safe to conclude that outsourcing of national security intelligence in India, with a foreign dimension, is a risk not worth taking. However, internal security offers two critical areas where the government agencies can consider partnering with private entities, with obvious risks associated.

Counterterrorism is one of India’s most important internal security challenge that can be tackled better with private partnership. The concern of terrorism is exacerbated by the acute shortages in police manpower. The ‘overstretched’ duty share of the beat police has made gathering of counterterrorism intelligence rather difficult. Here private security firms can assist state agencies in CT operations. There are already established private security firms providing security to some of the nation’s critical infrastructure, buildings and locations. Increased intelligence cooperation with these firms can limit the burden of counterterrorism on the federal and state agencies. Therefore, while the core intelligence collection and analysis on terrorism can remain with the national intelligence agencies, a tactical level cooperation between private security firms is beneficial. However, one must be aware that some of the issues found in the American case with private contractors can be found here as well. The question of detention powers, for instance. So, the Private Security Regulations Act of 2005 must be sufficiently amended, and guidelines be set, to enable greater cooperation between the state agencies and private contractors in overall capabilities development and effective deployment.

Another tricky but worthwhile experiment is intelligence cooperation is with NGOs working in disturbed areas like Kashmir and the North-East. Speaking of the convergences of interests between the state agencies and NGOs, William E DeMars explains that, “The two groups have experienced a convergence of attention toward analysing the causal linkages between war and humanitarian crisis”. By their very nature, NGOs are averse to engaging with the government for several reasons. But, ways can be worked out to develop and maintain liaison channels on the basis of trust, to obtain information from the NGOs. However, intelligence cooperation with NGOs is easier said than done because NGOs operate in conflict zones at the mercy of the perpetrators, which gives them access to the victims of conflicts. This places them in a position of antagonism with state agencies, making cooperation a challenging task.

In total, outsourcing and privatisation of national security intelligence may seem a tempting choice to enhance productivity, but the costs and challenges are bulky. In the limited operational sphere that India is engaged, there is not much urgency to outsource core intelligence functions to private contractors. The problems associated with privatisation of intelligence in the Western democracies is remarkable. In a country like India where legal authorisation and parliamentary oversight is absent, the aforementioned challenges will only multiply. In the field of strategic intelligence, however, two other important areas namely “Open-Source Intelligence” and “Intelligence Pedagogy” can be strengthened through establishment of a relationship between the intelligence community and universities and think tanks in peacetime, which shall be explored in future articles.

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About the author

Dheeraj P C

Dheeraj PC isa PhD Scholar in Intelligence Studies at the University of Leicester, U.K. His research interests include on the dynamics of intelligence in military operations, counterterrorism and national security. His articles on the stated themes have appeared in several reputed international academic journals and policy & security forums.