HOUSE_OVERSIGHT_020317.jpg

165

companies acted less like management consultants and more like temporary employment agencies
in finding for the NSA the computer specialists, who had the necessary security clearances.
Unlike intelligence services, their fate depended on turning profits. Since the value of their
contracts was largely limited by competitive bidding, their business plans were predicated on their
ability to minimize the costs of fulfilling these contracts. Their principal cost was the salaries they
paid their independent contractors. Their business plans therefore depended on finding large
numbers of computer technicians in the private realm willing to work at a NSA base at relatively-
low wages. This task became more difficult as many potential recruits could find higher paying
employment with more of a future in the burgeoning private sphere. They could also increase
their revenue streams by getting additional contracts which, in turn, meant recruiting even more
workers. It was hardly a business plan which could afford to give priority to quality control. In
the private sector, there is usually an unambiguous external measure of failure. For example, for
an automobile company such as General Motors can measure the performance of its executive by
reckoning it change in net income. With secret intelligence work, the metrics for failure are far
less clear. This curious aspect of secret work was part of the advice given to White House lawyer
in the Obama Administration seeking a position with the NSA in 2012, He was advised that
among the advantages of working for a super-secret agency was that if one errs or has a failure.
“It stays secret.” He later found out in the Snowden case which exploded during his tenure at the
NSA, that not all failures stay secret.

Even so, the NSA cannot always find convenient metrics to measures its own failures. For
example, it can quantify the amount of data it is intercepting, it cannot count the intelligence it
misses. There is no getting around the a priori proposition in the intelligence game: “what is
successfully hidden is never found.” But there is a failure that cannot be hidden: a security
breach in which a perpetrator uses NSA data to publically expose the NSA’s sources. Up until the
Snowden breach in 2013, the NSA had had experienced only one such a public failure. It was the
capture by North Korea in 1968 of the USS Pueblo, which had been carrying out highly-sensitive
electronic communications interception for the NSA. Because the Pueblo crew failed to destroy
the NSA’s encoding machines, which several days were flown to Russia. The stakes were so high
that the Pentagon even considered using nuclear weapons to limit the damage of the seizure. The
Snowden breach was much worse because, among the thousands of documents he stole, he
selected lists of the NSA’s secret sources in adversary nations. Making matters worse, the
Snowden breach was a failure that directly traced back to Booz Allen Hamilton, the NSA’s
largest contractor.

Such a failure calls into question the vexing issue of privatizing secret intelligence. Booz Allen,
like all other outside contractors, was in the business to make money. Indeed, it had found
government contracts so much more profitable than its work in the private sector that it sold its
private sector unit to Price Waterhouse. The profitability of government work led the Carlyle
group’s hedge fund to acquire a controlling stake in Booz Allen in July 2008. By 2013, it had
increased its revenue by $1.3 billion by expanding its government contracts. Even more

HOUSE_OVERSIGHT_020317