45. Outsourcing Part II: Privately Operated Intelligence

The privatization of government functions, like the air-waves, the post office, water, and health care has disturbed me for decades and was at the core of my book, Dollars or Democracy (2004). However, I never even considered the privatization of portions of the national intelligence services. Now it turns out that spying on anyone and everyone for profit is something that unaccountable, privately owned corporations have been doing for years.

At the forefront of these high technology outsourcers who were getting large contracts from the National Security Agency (NSA) was a secretive intelligence group called Booz Allen Hamilton. (BAH). This elusive outfit, which was concerned with the improvement of surveillance equipment, also served as a guide and training ground for the Intelligence Community’s revolving door interchange of high ranking government positions. My curiosity was aroused by how BAH managed to achieve this special position in Washington’s restricted intelligence community.

Booz Allen Hamilton (BAH) was founded in Chicago one hundred years ago by three businessmen who gave the firm its name. In 1940, after almost three decades of consulting for such major companies as Goodyear Tire and Montgomery Ward, its management contractors were called in to help the vast restructuring of the US Navy after the Japanese attack on Pearl Harbor. As patriotic contractors, BAH prided themselves for soon having a representative in each of the Navy’s many wartime departments. This infiltration of contractors was to set the pace for its future defense work in intelligence and national security.

As the cold war intensified after WWII, BAH became increasingly involved in intelligence matters. It hired a dazzling board of former CIA and security officials forging strong links with the intelligence community and its military defense clients. The company gradually involved itself in virtually every aspect of intelligence gathering.

By the summer of 2001 it had become an important external consultant of the National Security Agency (NSA) with its advisory role in the integration of internal communications systems called Project Groundbreaker. This position enabled BAH to capture a flood of intelligence contracts in the aftermath of the 9/11 attacks. Christopher Ling, a BAH vice-president said later that “An entire analytic production system geared to detect large-scale cold war adversarial capabilities was suddenly required to transform.” The budgets for outsourcing grew dramatically in the Bush administration which felt it essential to reshape the NSA’s covert communications capabilities without attracting the attention of the media or the public.

BAH’s strategic role also changed. A CIA operative, Joan Dempsey, said : “I like to call Booz Allen the shadow intelligence community” because it has “more former secretaries of this and directors of that” than any government department. On its website BAH described its intelligence work as integral to its broadening expertise in information technology: “Whether dealing with homeland security, peacekeeping operations, or the battlefield, success depends on its ability to collect, safeguard, store, distribute, fuse, and share information.” BAH did not mention its equally important ability to cover up, hide, or even on occasion, to distort.

The more security was outsourced the more difficult accountability became for those overseeing intelligence in the US Congress. Increasingly BAH had become crucial in advising top officials on how to integrate the 16 agencies within the American Intelligence Community (IC). Questions began to arise from members of Congress about who was really in charge of any given operation: The head of the government Agency or Department, the managers of operations, the contractors or the highly trained and skilled workers/operatives? Rep. Henry Waxman (D-CA) chairman of the House committee on Government Oversight, charged in 2007 that BAH had a significant conflict of interest over its contract to oversee an $8 billion initiative to Secure America’s borders with Mexico and Canada by means of a “virtual fence” of cameras, radar, satellite observation and sensors that would transmit imagery and data to border patrol agents. At the hearing, Rep. Waxman pointed out that although 98 people had been hired to oversee the contract, “the problem is that 65 of these people don’t work for the government, they work for the contractor (BAH). You’re relying on them to do the function that the government ordinarily would do.” The Department of Homeland Security official responded by asserting that BAH had been hired for advice not oversight.

Early in 2007 BAH also began to work on the Cryptographic Modernization Program, one of the most important intelligence initiatives of the final years of the Bush administration. By the end of 2007 BAH, owned and run by a group of 300 vice-presidents, had become a key adviser and prime contractor to all of the major U.S. intelligence agencies. Most of these BAH executives had deep experience in the intelligence community and had even begun to serve as a training cadre for senior positions when they got back to government.

These board members all gathered at company headquarters in McLean Virginia in the late autumn of 2007 for an extraordinary two day meeting at which the vice presidents signed off on a “new strategic direction” which involved separating BAH’s commercial and government units into two separate private companies. It therefore came as something of a surprise, after its efforts to shed its image as an equity firm specialized in defense, to learn that the Carlyle Group, a flourishing private investment firm, had bought a majority stake in the intelligence branch of the now divided Booz Allen Hamilton firm for $2.5 billion. The Carlyle unit retained the name of Booz Allen Hamilton and each of its Vice-Presidents was reportedly rewarded with the equivalent of more than a million dollars in cash, shares, or dividends.

Carlyle, which had been launched barely two decades earlier by four enterprising fund raisers, had already gained status as an asset management firm specialized in acquiring businesses related to the defense industry. Using its powerful political as well as economic connections, Carlyle completed the acquisition and resale of various military electronic systems in the early 1990s. Its most notable defense industry investment came in 1997 with the $850 million acquisition of United Defense Industries which it then sold in stages until April 2004 when it started to downplay its focus on defense industry investment which, in effect, had been turning secretive government work into private profit..

BAH today is part of the internationally diversified Carlyle group where it continues to make large profits of close to $3 billion in government intelligence contracts it lands every year. The strategically created toxic brew of secrecy surrounding the intertwined activities of BAH, Carlyle and the National Security Agency were exposed by the intelligence revelations of Snowden a year ago.1

As evidence of BAH’s close relationship with US administrations, Obama’s chief intelligence official James R. Clapper Jr. is a former Booz Allen executive. The executive who held that position in the Bush administration, John M McConnell, now works again as a director of Carlyle’s BAH.2

When buyout firms like Carlyle, which now has close to $200 billion in assets and offices in more than 30 countries, combine with a firm like BAH, the enforcement of tax reporting requirements inevitably becomes more opaque. The opportunities of executives to create offshore tax avoidance schemes also are easier. Their loyalty to their shareholders exceeds what they might owe to the nation. When private companies like Carlyle’s BAH become a substitute for genuine checks and balances on the government’s surveillance activities, a nation’s security is compromised. When profit becomes the driving force behind its intelligence communications, a nation’s security is further compromised. There are those who may contend that capitalism itself is all about profits and that the basic security of the economy – and consequently of the nation – depends on profits. This raises basic questions about what has happened to our values under capitalism and, indeed, challenges our priorities regarding our genuine desires for security.3


1Andrews, Burrough and Ellison “The Snowden Saga” Vanity Fair, May 2014, p. 111

2Many of the facts in this article were cross-checked on the internet. Hours after I entered the name of James R. Clapper Jr. my computer went into an unexplained spin causing material to be displaced and drafts of this blog to be deleted from my Microsoft file. A chance accident or surveillance?

3Yorick Blumenfeld, Dollars or Democracy,2004, pp. 165, 222

44. Outsourcing Part I: Security

When a single individual can expose the contents of an entire secret, hidden and somewhat illicit intelligence network involving different agencies, corporations and separate government departments, it is easy for some of my patriotic but naïve friends, as well as a vast number of politicians, to focus the blame on that scapegoat ‘traitor.’ The real challenge is not to punish the wrongdoer but to recognize that the problem is much larger: it is systemic. It encompasses not only the whole intelligence community but our security. As an extremely well-researched article in Vanity Fair1 made clear to me, not only has a lateral, “dark” intelligence network developed, but also, while one level of operations is driven by the critical security needs of government, another, which has been outsourced and privately owned, is also driven by money and profit.

Tackling such a large subject in one relatively short blog was overwhelming, so I have divided it into three separate submissions: The first deals with the overall challenges of outsourced and privately owned security, the second is focused on the operations of one of the largest of these secretive groups, and the third concentrates on the associated but curiously parallel security operations of the privately owned prison industry. Government outsourcing of security now encompasses such diverse areas as Information technology (IT), border controls, prisons and intelligence gathering. A few of the larger outsourced security groups, like Serco and G4S that are involved in our protection, hire thousands of public servants to work in their private, for-profit endeavors.

I will be asking three basic questions:

  • Is outsourcing government functions to privately owned groups the way to make the state and its inhabitants more secure?
  • Does outsourcing security save money for the state?
  • Who actually benefits from the outsourcing of security?

The annual spending of billions of dollars and pounds on outsourced security is not being seriously examined in either the United States nor the UK. In large measure this is because there is an ethical and political as well as economic division between those who fear and deplore “big government” and those who believe that an efficiently run government – irrespective of its size – can provide effective security for the nation. Another factor not often considered, is that outsourcing to private corporations provides those in government, and in particular the intelligence groups like the CIA and the NSA, with an easy way out of responsibility or being held to account.

There are also those ideologues and politicians in Wall Street and the City (of London) who want government to falter so that private enterprise (read: profits) can take over. There appears to be no limit to Republican machinations in Washington to privatize governmental functions regardless of the risk and danger this might pose for the nation. Republican strategy entails starving the governmental agencies of resources so as to give the impression to the electorate that agencies like the EPA (Environmental Protection Agency) are failures. They want to convince voters that everyone would be better served by private enterprise. Ergo: outsource security.2

In large measure outsourcing governmental functions is a considerable source of wealth for those with political connections like the Carlyle/Booz group (to be examined in the next blog), for the vast network of lobbyists, the huge corporations like IBM and Dell, and the ever growing group of security operators like Serco and G4S in both the US and the UK. Little attention is paid to the fact that 70 percent of the entire US intelligence budget is spent on hiring private contractors. And here we are considering billions of dollars. According to the Washington Post, just the NSA’s ‘black budget‘ (allocations to covert operations) is over $10 billion (£6 billion). The private companies that have been outsourced by the government’s intelligence agencies vastly increased in numbers and in profits after the terror attacks of September 11, 2001.

“Especially since 9/11, the NSA has increasingly outsourced much of its core mission, relying on private contractors to do the dirty work of government” said a former employee of the agency and a Booz Allen Hamilton contractor. Edward Snowden, who worked for the same contractor said in an interview for a German television channel that ‘Anyone who has the skills – who can convince a private company that they have the qualifications to do so – will be empowered by the government to do that; and there’s very little oversight – there’s very little review.”

Many companies were involved in building the NSA and CIA’s internal telephone and computer networking systems, their data networks, and expanded into operational areas which had not previously been open to outside contractors. They included SAIC (Science Applications International Corporation), L-3 Communications, Northrop Grumann, Lockheed Martin, Palantir, Raytheon Intelligence and Information Systems, Narus, The Analysis Corporation, Verizon, Boeing Integrated Defense Systems, Serco and many others who played a role in the ‘shadow’ NSA and its new surveillance operations like Muscular, Prism, ThinThread and Trailblazer. These were all part of a legally questionable metadata collection program.

While allowing its own workforce to slowly atrophy, the government was all too willing to outsource to private contractors much of the security operations for which it used to be responsible. The result was minimal oversight. The development of closely-knit financial relationships between the NSA and its contractors extended to a ‘revolving door’ where former spooks became CEO’s of surveillance companies and the executives of private contracting firms who held top-secret clearance landed high ranking jobs with NSA.3 However, the increasingly convoluted history of the intertwined relationship in security matters between the private and governmental sectors was kept largely hidden from the public until exposed by Snowden.4



1Suzanna Andrews, Brian Burrough and Sarah Ellison, “The Snowden Saga,” Vanity Fair, May 2014 p.158
2Richard McGregor and Geoff Dyer, ”Too much information,” Financial Times, November 2, 2013
3David E. Sanger, “NSA Nominee,” New York Times, March 12, 2014, p. A18
4Glenn Greenwald, “They have gone too far,” The Guardian, June 8, 2013, p.7

43. Vanishing Leisure

What has happened to those relaxing and nostalgic days of leisure so brilliantly epitomized in the George and Ira Gershwin song Summertime?1 An aura of laziness and child-like contentment seem to overtake us when listening to this evocative song. We often tend to associate musical phrases with leisure, as well as with memories of another place, time or even a different spiritual state. We tend to connect different popular songs about Easter, Christmas, New Year, the autumn and springtime with a variety of memories. Leisure is thus a state of mind and of being we desire and which can be evoked and stimulated by music even in our increasingly leisure-less age.

Almost three hundred years ago Jonathan Edwards phrased this power of music in a most spiritual fashion: “The best, most beautiful, and most perfect way that we have of expressing a sweet concord of mind to each other is by music. When I would form, in my mind, ideas of a society in the highest degree happy, I think of them as expressing their love, their joy, and the inward concord, and harmony and spiritual beauty of their souls, by sweetly singing to each other.”2

Leisure is a time free from engagement, yet nearly everyone I know is struggling with the frantic pace of contemporary life and racing to keep up with it! They are in a rush to get more money, to gain recognition, to find a better job, to exercise power and influence, “to survive”, as well as to help others, and even to find love online. These days there is almost no social leisure time left for eating a meal. Even friendship is becoming increasingly challenging in the age of electronic communication. And who now has time for hobbies like sewing, stamp collecting, doodling or even writing letters by hand?

The demands of capitalist economics for efficiency, speed and competition have driven us to adopt different life-styles with less time left for leisure. Work for those in employment is increasingly infringing on what used to be free-time. This is not happening without protest: The French have been trying to reduce tensions by examining different ways to prevent corporations from contacting their employees via emails, texting, and phone calls after working hours. There are discussions how a corporation could block communications from 11pm to 9am, while another company might refrain from asking responses to emails between 8pm and 8am. In Germany, Volkswagen has tried ending all email communications at the end of the work day. Some pleas for a calmer, uninterrupted home life are getting through.

The “working day” also has become increasingly longer (by some two hours) in the United States for those holding university degrees and proportionately shorter for those who dropped out of school. According to the American Time Survey (2013) men in the US also enjoy, on average, at least one hour more leisure time per week than women. (At least this is a statistic which gives employment and some amusement to those conducting such surveys!)

What has led to this state of affairs where many of us do not even get enough hours of sleep? The electronic technological advances in the 20th century like the computer, mobiles and the Internet have radically altered our pace of life. Half the population seems to be talking on their mobiles as they walk. But the new forms of communication have altered what used to be direct and slower human contact into instantaneous electronic ones. Absent from this are touch, smell and the crucial eye-to-eye contact which reveal so much.

Much of our energies are now taken up by emails, watching films, playing video games, pornography, getting the latest news or sport results, obtaining information from different sources like Wikipedia or searching for internet shopping bargains. Should all of these screen activities taking up so much time be considered as leisure? They certainly could not be categorized as ‘work.’

Leisure implies a state of being free of anxiety, pressure or mental struggles. Anxiety is now manifest in millions of sufferers of insecurity of all kinds: economic, social, sexual and material. In our era of extraordinary and unprecedented social change, anxiety is no longer an unusual human reaction. Much of this is evidenced by the enormous increase in the intake of medicated pills, sedatives, anti-depressants as well as placebos! (Marijuana and alcohol have long been used to lower anxieties so I shall not include these here.) Perhaps it is the lack of leisure which has led Scott Stossel, 44, the editor of The Atlantic magazine, to write My Age of Anxiety in which he describes three decades of therapy for his endless struggle with it. The impressive sales of the book show how many people identify with this problem. Music could help by setting aside the inner conflicts he described. It can serve to lower such anxieties by putting us in a different state of mind. Leisure also is a way into which music can transport us to escape reality.

The time available for leisure has varied from one age and one society to the next: anthropologists speculate that hunter-gatherers had considerably more leisure time than agriculturists. Two millennia ago, the great orator, Cicero, remarked that a patrician Roman compatriot “was never less at leisure than when he was at leisure.”3 Much the same can be said about many contemporary billionaires, some of whom feel compelled to strive endlessly without realizing their compulsion. Today’s rich tend to work longer hours than the poor (who may only find part-time jobs and tend to spend much of their leisure time watching television.)4

The American economist Thorsten Veblen contended in 1899 that leisure was a “badge of honor” worn by the wealthy while the poor who made such leisure possible did their dirty work. Today, in marked contrast, “work” in the advanced economies has become knowledge-intensive and brain challenging in many areas. Those working at their computers can experience the kind of satisfaction that the rich used to seek in their leisure time. As The Economist pointed out: “leisure is no longer a sign of power. Instead it symbolizes uselessness and unemployment.”5 The fact is that work and leisure have become intertwined. Sociologist Arlie Hochschild of the University of California, Berkeley found in her research that as work in the office has become intellectually challenging, people start to enjoy it more than life at home. Some “escape” to the office to “relax” away from the dull, repetitive day-to-day chores

Alas, none of us in our youth received training on how to use our leisure time. And yet, “to be able to fill leisure intelligently is the last product of civilization,” declared the philosopher Bertrand Russell.6 Are we failing this test?

The most positive and impressive change in our ability to pursue leisure has been in the way music is now available to us at will. In its capacity to relax us, music has become a basis for our greater enjoyment of leisure. Never before in history has such a variety of superbly performed music been so readily available to so many on an around-the-clock basis. Its wondrous power lies in the ways in which it relaxes our highly complex mental faculties. Music is the most penetrating and beneficial of all the arts and yet how pathetically little of it is studied in our years at school. This must change if we want to enhance our enjoyment of leisure. Oscar Wilde declared in one of his greatest lectures: “Music is the art in which form and matter are always one, the art whose subject cannot be separated from the method of its expression, the art which most completely realizes the artistic ideal, and is the condition to which all the other arts are constantly aspiring.”7

Indeed, for those complaining about the pressures they feel from the high speed of daily life, I endorse music as one way to escape and enjoy leisure again.


1George and Ira Gershwin, from Porgy and Bess (1935)
2Jonathan Edwards, Miscellaneous Observations on Important Theological Subjects. (1747)
3Cicero, de officio III
4“Free exchange,” The Economist, April 19, 2014, p.75 (also: economist.com/blogs/freeexchange)
5op.cit. p.75
6Bertrand Russell, The Conquest of Happiness (1930)
7Oscar Wilde, lecture in New York, January 9, 1882