Hayden's Code

A few days after 9/11, Lt. Gen. Michael Hayden called three dozen of the National Security Agency's top military officers and civilian executives to his office atop one of the intelligence organization's twin glass towers at Fort Meade, Md. In an August interview with Government Executive, he recalled telling assembled NSA leaders not to worry about finding seats; the meeting would be brief. "We have set ourselves on a course to do certain things," Hayden said, referring to reforms he instituted since becoming NSA director in March 1999. "We are now at war and the nation has been attacked. Is there anything that we have decided to do that we now need to reconsider?" He went around the room asking each manager. Their verdict was unanimous: Change should continue apace. That's all Hayden needed to know; the meeting took 10 minutes.

Hayden's reforms-thinning out longtime employees to make way for new hires expert in different countries, outsourcing information technology, raising the notoriously secretive agency's profile, and consolidating management under a quasi-corporate structure-would continue, even amid the new war on terror. "Everything we had set in motion we not only needed to do, but we needed to accelerate it," says Hayden, an Air Force general who hadn't worked at NSA before taking its helm.

Going Deaf

The National Security Agency is the largest and least known U.S. intelligence agency. While the CIA uses spies to collect information, NSA uses satellites and listening posts to tap into electronic communications such as telephone calls and electronic messages. Its budget, an estimated $6 billion, and its staff, about 40,000 military and civilian personnel, dwarf those of other intelligence agencies. And with the rise of nearly impenetrable terrorist organizations as America's chief foes, U.S. leaders have come to depend on NSA's intercepts as a main source of intelligence.

Founded in 1952, NSA makes and breaks codes for the Defense Department and works closely with other intelligence agencies. It traces its roots to U.S. code-breaking operations during World War II. For five decades, NSA has compiled the best track record of any intelligence gatherers. Its feats range from locating Soviet missiles in Cuba to tapping into conversations at Muammar al-Gaddafi's Libya headquarters. During its first 40 years, the agency-whose very existence was classified during most of the Cold War-employed thousands at Fort Meade at listening stations around the world, and spent billions to build code-cracking supercomputers.

But by the late 1990s, it had fallen on hard times. Once focused on the Soviet Union and its Warsaw Pact allies, NSA was asked to turn to emerging nations such as China, India and Pakistan, and to nascent terrorist groups. But it lacked funds for hiring or retraining a workforce filled with Soviet linguists and Eastern European analysts. Nor could it keep up with wireless and Internet technologies-worldwide cellular phone usage nearly doubled, from 61.7 billion minutes to 120.9 billion minutes, between 1995 and 2000. In 1999, Seymour Hersh wondered in The New Yorker magazine whether NSA was going deaf.

Enter Hayden, a former Belgian linguist for the Air Force who took over the agency and began pushing overdue and sometimes controversial reforms that affected everything from how it was managed to who would work there. Within 50 days, he had scrapped decentralized management in favor of a five-member board reporting to him. After a year, he announced he would outsource nearly 1,000 technology jobs to a Defense contractor.

Despite institutional resistance and limited funding, Hayden began remaking NSA. His reforms deserve scrutiny for lessons they offer managers at other intelligence agencies now overhauling operations. On the heels of this summer's final report from the 9-11 commission, Congress is weighing legislation that would reorganize intelligence agencies to improve coordination and create a powerful national intelligence director.

Teetering on Obsolescence

In January 2000, a software glitch knocked out NSA's computer networks. It still could collect information, but there was no way to access and analyze data in its vast supercomputers. NSA was out of business for only four days, but the breakdown reinforced Hayden's view that the agency's computer infrastructure was teetering on obsolescence.

Lacking funds and expertise for a new computer network, NSA turned to the private sector to take over many computer operations-the agency eliminated 750 in-house jobs-and to upgrade technology. In October 2001, it awarded the Groundbreaker contract-potentially worth $2 billion-to a team of companies led by Computer Sciences Corp. of El Segundo, Calif. The 10-year pact is the largest outsourcing of any kind by an intelligence agency. "I won't claim that the private sector came in here, laid hands on and healed [the IT infrastructure] immediately," Hayden says. "The trend lines are positive." But upgrading thousands of computer workstations has taken longer than expected. NSA underestimated power requirements and had to overhaul electricity, heating and air conditioning before new computers could be installed.

Groundbreaker was part of the effort to expand contractor support. In the 1990s, about 20 contractors did about 85 percent of NSA's contract work. Since 2001, the contractor base has grown from 140 to 2,690 firms. In 2003 NSA executed 43,000 contracts and 21,000 purchase orders, according to Harry Gatanas, NSA's senior acquisition officer.

But NSA is losing control over what and how it buys. Unhappy with its buying and budgeting, lawmakers stripped the agency of its independent acquisition authority in fiscal 2004. NSA's budget now is managed by Defense undersecretaries. At least since 2001, NSA's acquisition processes have been immature, inefficient and ineffective, according to a 2003 report by the Senate Select Committee on Intelligence. "Transformation is expensive and the committee wants to support the director of NSA in his effort, but without knowledge of what is actually being spent at NSA, it is difficult to sustain support," the committee wrote.

Matthew Aid, a former Defense intelligence analyst who has written extensively about NSA, believes Congress gave the Pentagon control of NSA's budget because legislators had lost faith in it. "In essence, this was a slap in the face of NSA. That was a way of saying, 'We don't trust you,' " he says. Lawmakers' support for NSA's plan to overhaul its technology might wane if NSA fails to clean up its books and procurement management, Aid adds. He estimates the agency will need an additional $12 billion by 2010 to upgrade. NSA declined to comment on the effect of losing acquisition authority.

Tuning Up the Team

Shortly after the terrorist attacks, some lawmakers urged Hayden to cancel early retirement offers to veteran NSA employees who lacked the right language and technology skills. The end of the Cold War left NSA with too many Russian and Eastern European linguists and analysts, but too few Arabic linguists and counterterrorism experts, says James Bamford, an investigative reporter who has written two best-sellers about the agency, The Puzzle Palace (Penguin Books, 1982) and Body of Secrets (Doubleday, 2001). "The only way we could get the skills we needed was to hire new people," says Hayden. More than 200 employees took early retirement or buyouts in late 2001. Critics, among them Rep. Jane Harman, D-Calif., questioned releasing experienced intelligence personnel while the nation was at war. Hayden says NSA simply could not afford to keep them. The agency "already [had] squeezed the retraining limit dry" after 1990s cutbacks, he adds.

The oversupply of old-timers resulted from NSA's decision to reduce civilians by about a third between 1990 and 2001 without hiring new workers. But that left NSA with shortages that limited its ability to predict Sept. 11, according to a joint congressional investigation of intelligence failings. "Personnel employed in [NSA's] counterterrorism organization were largely static over several years, despite repeated efforts by local managers to increase the number of linguists and analysts," according to the Joint Congressional Inquiry Into the Intelligence Community Before and After the Terrorist Attacks of Sept. 11, 2001.

Moreover, the report accompanying the 2002 House Intelligence Authorization Act found that due to the dearth of analysts and linguists, NSA collected thousands of pieces of data, including electronic intercepts from terrorist organizations, but either failed to analyze them, or held them too long. Lawmakers are allowing NSA to expand for the first time since the 1980s. The agency hired 820 new workers in 2002; 1,125 in 2003; and will hire 1,500 this year. Hayden says nearly 20 percent of the civilian employees have been hired since 2000, either as replacements for retirees, or as part of the post-Sept.11 expansion.

NSA especially seeks linguists and plans to hire 150 to 200 this year. "We wish we could hire more. We're a monolingual society, that's the challenge," says Hayden. At the end of 2001, the agency had about 11,000 linguists (4,000 civilian and 7,000 military), who could translate 115 languages. Despite having government's largest translator workforce, NSA is a "long way from where it needs to be," Hayden says. Too few speak what he terms "global war on terrorism dialects," such as Arabic, the Pashto and Dari dialects of Afghanistan, and languages from the Philippines and Indonesia.

But NSA needs more than just translation. "We must understand not only the words, but also the intention behind the words," William Black, NSA's deputy director, told the House Permanent Select Committee on Intelligence in November 2003. To encourage linguists to become more skilled and to retain them, NSA has tripled bonus pay. It also has begun pumping millions of dollars into internships, training and scholarships for college and high school students. The agency wants to become the employer of choice for top linguists, as it already is for mathematicians. NSA has more employees with doctorates in mathematics than any other organization in the world.

Hunting, Not Gathering

Early in the morning of March 1, 2003, Khalid Shaikh Muhammad, the mastermind of the Sept.11 terrorist attacks, was dragged from bed in a Pakistan hideout and arrested by U.S. and Pakistani security forces. NSA reportedly had intercepted e-mails and satellite calls that led forces to his doorstep. The e-mail intercept was part of NSA's post-Sept. 11 hunting strategy. Today's NSA no longer merely gathers; it hunts down critical information. It has begun asking its customers-the CIA, FBI and military intelligence agencies-to winnow raw data it has collected. Customers "are looking at what we collected in a less finished form, and they are participating in creating actionable intelligence out of it," Hayden says. "That's a very different role for [signals intelligence]."

He provides no specifics on how the hunting has paid off, but Aid and other analysts say NSA plays a crucial role in tracking down al Qaeda members. Since October 2001, Aid believes, NSA has been intercepting all satellite calls into and out of Pakistan, which helped nab Muhammad and other terrorists hiding there.

Developing more actionable intelligence answers the harshest criticism that the 9/11 commission directed at NSA in its July report. The panel found that in 1999, NSA analyzed communications from three future hijackers, but never searched databases that would have identified them as potential terrorists in need of close monitoring. NSA "saw itself as an intelligence agency to support customers such as the CIA. NSA tried to respond energetically to any request made. But it waited to be asked," the report found.

Hayden says the new hunting strategy also helps NSA deal with the ever-increasing amount of data it collects, as cell phone and Internet communications rapidly increase. Analysts suggest the agency listens to as little as 1 percent of all it collects. Hayden says technology allows for rapid filtering to find specific information without listening to everything. Just a few years ago, he fretted that NSA might not be able to tap into new technologies, such as fiber optics and wireless systems, widely used by U.S. enemies. Now, he says, NSA has learned to use those technologies to its advantage.