Intelligence Inc.

Like it or not, U.S. spy agencies are relying more on outside help.

At around 9 a.m. on April 8, an intelligence analyst dispatched a troubling communiqué about events unfolding in Poland, a key U.S. ally. "There is speculation in Warsaw that PM Belka could coordinate with the parliamentary speaker and call for a surprise confidence vote in the government next week," the analyst wrote, referring to Polish Prime Minister Marek Belka, who was at odds with ministers of the Democratic Left Alliance (SLD), his chief backers, because he wanted to join another party.

The analyst realized that Belka, a staunch supporter of President George W. Bush and the U.S.-led invasion of Iraq, was vulnerable and that tumult could follow his unseating: "He could very well lose the confidence vote-this would force the president to dissolve parliament," the analyst wrote. He went on to specify the legislative machinations that would transpire and, using percentages, he rated the likelihood that parliament would withdraw Poland's already dwindling contingent of 1,700 troops from Iraq. He even provided sideline analysis of the party infighting that precipitated the potential crisis.

Everything about the analyst's hasty yet thorough message-from the shorthand that recognized his readers as political insiders ("SLD MPs could simply vote no confidence in a PM who failed [to] be loyal to the party.") to the mathematical predictions of outcomes-looks like what we would imagine emanates from the inner sanctum of U.S. intelligence agencies every day: piercing analysis of the fate of nations and the consequences for American interests.

The message, however, came not from a government analyst, but from the e-mail account of Preston Keat, director of research for Eurasia Group, a privately held firm based in Manhattan that looks and acts the way U.S. intelligence agencies might have to if they're going to implement the sweeping reforms that lawmakers and administration officials promise are in store. Some intelligence agencies already rely on Eurasia, and other private shops like it, to make sense of publicly available information and to gain expertise they lack in-house. But intelligence reformers insist the agencies must seek out such experts more frequently to fill gaps in the information that spies can provide.

Eurasia relies on publicly available information-known as open source-to make calls on a variety of political scenarios, from election outcomes to the likelihood of civil war. Keat and his colleagues, who collectively speak 28 languages, read foreign newspapers, devour government reports and even monitor Internet chat rooms for their clients, mostly large financial institutions leery of losing billions of dollars invested in emerging nations if their governments implode.

The United States, too, wants to know whether nations will fall or undergo wrenching upheaval. Indeed, Eurasia analysts don't differ from government analysts in their preoccupations. "All we talk about is political stability," says Maureen Miskovic, Eurasia's chief operating officer, who is not authorized to see classified government information, has never worked for a U.S. agency and isn't even an American citizen-she is British.

In March, Eurasia acquired the assets of Intellibridge, a Washington-based firm founded by retired government and national security luminaries. Now the company wants to build on Intellibridge's base to provide more open source analysis for the CIA, Defense Department and others. The idea has high-level backing. In April, a presidential commission investigating the government's failure to comprehend the state of Iraq's suspected weapons programs determined that the intelligence community, a cantankerous federation of 15 agencies, has relied too much on secret information that too often is obtained from a single source who proves unreliable. On numerous occasions, this has caused national leaders-the intelligence agencies' customers-to miss hugely consequential events, such as the rapid demise of the Soviet Union or the nuclear weapons achievements of Pakistan and India, the commissioners found.

The Iraq commission, headed by Appellate Court Judge Laurence H. Silberman and former Virginia governor and Democratic senator Charles Robb, gave the intelligence agencies some un-flinching advice: "The community may simply not be the natural home for real expertise on certain topics." For instance, "Private sector companies investing millions in emerging markets are likely to have a better handle on current market conditions. Relying on these experts might free up community resources to work more intensely on finding answers no one else has."

Proponents of outside analysis argue that the government doesn't always need classified information to understand the direction of the world. Open source information often is well-documented, and because it has been disseminated widely, it can be reviewed by a broader range of experts who might discover details that others miss. Of course, it's also collectible by just about anyone with an Internet connection or a library card. And this contradicts the ethos of much of U.S. intelligence: The best information is the hardest to get and it must be jealously guarded. Because information is power, the more things the government knows that others don't, the stronger the government.

The CIA scoffs at the suggestion that it doesn't rely on nonsecrets. An intelligence official says flatly, "The assertion that the CIA ignores open source information in collection or analysis is false." But many longtime analysts and managers say otherwise. "One of the biggest problems in the intelligence community is that we have so many policymakers and congressmen who really don't have any respect at all for open source information," says Michael Scheuer, who retired from the CIA in 2004, after heading the unit that tracked Osama bin Laden. "There's a certain sexiness to a paper that's stamped with 'Secret' or 'Top Secret,' " Scheuer says.

Intelligence agencies already use outside analysis; they just don't do it enough, reform-minded groups say. The trick is marrying the secret system with open sources. John Negroponte, the new director of national intelligence, might end up presiding over a network of official agencies and outside analysts. A former CIA analyst and manager says the need to do so couldn't be more pressing. He notes that President Bush has ordered a 50 percent increase in the CIA's analyst workforce as soon as possible. "The only way to do that," he says, "is to outsource."

Spies Like Us

The government clearly wants outside intelligence assistance. Surveying federal contracts for just one week, from late March to early April, showed that the Army began advertising for "human intelligence" experts to develop and conduct collection efforts in Iraq. The National Geospatial-Intelligence Agency contracted for graphic and textual descriptions of worldwide air facilities, which are produced commercially or by foreign governments, but not by the agency. The State Department tapped a firm to provide its intelligence bureau with "professional, administrative and management support." And the Air Force began soliciting information on cheap and easy-to-maintain commercial aircraft for use in "nontraditional intelligence" and "counterinsurgency" missions.

Precise details on how much the 15 intelligence agencies spend with outsiders isn't publicly available, since their budgets are secret. But intelligence veterans say such outsourcing is common practice, driven lately by a confluence of factors: a shortage of skilled, highly paid analysts; the pressing battlefield requirements in Iraq; and the government's almost singular focus on penetrating terrorist networks and understanding international weapons proliferation, subjects about which federal expertise is lacking.

Agencies apparently are more comfortable bringing in outsiders than sending out tasks to them. The former CIA manager says that during his tenure, "[Contractors] sat in desks right next to agency staff employees, doing pretty much the full range of things that staff employees did." They wrote specialized computer applications, created charts and briefings for intelligence customers, and read classified intelligence traffic pouring in from the field. But in almost every case, the contractors were former intelligence agency employees with top-level security clearances.

Intelligence contractors include firms such as Eurasia Group, which mine public information, and those staffed by intelligence agency retirees who end up augmenting federal staffs, often working for their old employers. "I'm a big fan of outsourcing analysis, for the right reasons," says the former manager, who asked to remain anonymous because he worked for one of those CIA contractors.

A former senior military intelligence officer, who likewise sought anonymity because now he works for an intelligence contractor, says today's outsourcing surge is a result of staff shortages. "We've got more missions than we've got people," he says. This isn't a recent phenomenon. Frequent military engagements in the 1990s saw the emergence of a new intelligence corps. "I'd have guys getting out of the Army, and then two weeks later they'd be back on my deployment site in Macedonia, and they're wearing their TRW shirt and starting to grow their ponytail," he says. Northrop Grumman Corp. of Los Angeles, the third-largest government contractor, purchased TRW Inc. in 2002. Today, large federal contractors are acquiring smaller, specialized intelligence shops.

Drawing the Line

For example, in November 2003, Bethesda, Md.-based Lockheed Martin Corp. acquired a government contracts division of Affiliated Computer Services Inc., a smaller firm, headquartered in Dallas, with deep connections to the intelligence agencies. Six months earlier, CACI International Inc. of Arlington, Va., purchased Premier Technology Group LLC of Fairfax, Va., which was founded by former military intelligence officers. From 2002 to 2003, the two longtime federal contractors provided prison interrogators for the Army. Neither company had employed interrogators until they purchased the smaller firms that specialized in such services. CACI's employees deployed to Abu Ghraib prison in Iraq, and Lockheed's went to the detention facility at Guantanamo Bay, Cuba, where the United States holds suspected terrorists and so-called enemy combatants.

Army investigators later alleged that CACI interrogators abused prisoners at Abu Ghraib. No formal charges have been filed against the employees, and Jack London, CACI's chairman and chief executive officer, says they're no longer affiliated with the company.

CACI's and Lockheed's contracts were terminated when the outsourcing of interrogation came to light. The former military intelligence officer, who served in Iraq, says the decision to hire outsiders as interrogators was wrong; such jobs should be reserved for trained military personnel or civilian intelligence agency employees. But a recent investigation of military interrogation practices by Vice Adm. Albert T. Church III found contract interrogators are indispensable to military operations. In a 21-page executive summary of his findings released in April-the full report is classified-Church cites an interview with an active-duty senior military intelligence officer. "Simply put, interrogation operations in Afghanistan, Iraq and Guantanamo cannot be reasonably accomplished without contractor support," the officer told investigators. Church, who is now director of the Navy staff, but was the Naval inspector general when Defense Secretary Donald Rumsfeld ordered the investigation, found that "contractors made a significant contribution to U.S. intelligence efforts." They usually had military intelligence and law enforcement backgrounds, and, "on average were older and more experienced than military interrogators." Of the decision to hire CACI interrogators, London says, "The United States government has deemed it important to come to the industry for certain kinds of support. . . . If they change their direction and start bringing all that in-house, fine."

The former military intelligence officer wishes the military services didn't have to hire out for other vital services-linguists and interpreters, for example. "It was an inevitability of the force mismatch," not enough soldiers for the mission, he says. "I'd prefer you were in the military if you're competent. . . . But we're still availing ourselves of your skills. It's a reality," he says. "We've got to deal with it."

But dealing with it requires closer government oversight of companies, and since the federal contract management corps is shrinking, that won't be easy. So, private intelligence proponents say, the government has to draw a line. The operational aspects of intelligence-interrogation and other human intelligence gathering-should be conducted by government workers, they say. But hiring outsiders-both former analysts and open source experts-for tasks other than operations is safer and advisable. Indeed, the government needs a free-thinking, autonomous analytic corps to challenge official assumptions. The Silberman-Robb commission called for federally funded research centers, which would pay higher salaries than the government, to attract the brightest minds, yet keep a safe and competitive distance from the agencies.

Agencies don't want intelligence operators playing by their own rules. In the worst case, they get Abu Ghraib. And contractors, unlike soldiers, can't be ordered to put their lives at risk. "I wouldn't want a civilian in a tank battalion in Sadr City," the former officer says. "He won't go into harm's way [and] I can't pay him enough. . . . But I would have intelligence available to that uniformed guy [that was] produced by someone in Dockers and Topsiders."

Out With the Old

So why do capable analysts gravitate toward the private sector? The Silberman-Robb report captures the nut of the problem. "Today, the intelligence community can promise the following to talented scientists, scholars or businesspersons who wish to serve: a lengthy [security] clearance process before they begin, a large pay and benefits cut, a work environment that has difficulty understanding or using the talents of outsiders, and ethics rules that significantly handcuff them from using their expertise when they seek to return to their chosen professions. It should come as little surprise that too few talented people from the private sector take the offer."

The report recommended that the new director of national intelligence "develop special hiring rules" to attract those people, including better salary and benefits packages and "streamlined clearance processes." And, in a nod to open source proponents, the commission proposed a new cadre of up to 50 "all-source analysts . . . who would be experts in finding and using unclassified" information as well as protected material. They would work in organizations "willing to experiment with greater use of open source material," and ideally, these "evange-analysts" would lead others to adopt their practices.

Officially, the CIA says it already does this. "The CIA has always placed great emphasis on mentoring and the sharing of expertise and constantly looks for new avenues to do so," an intelligence official says. Not exactly, says Scheuer, the bin Laden expert. Younger analysts, some of whom he mentored, embrace open sources more readily. Their exposure to the free-flowing Internet, the primary means of moving information today, encourages openness. But "old-timers," Scheuer says, particularly those who run the clandestine service, "take [open source intelligence] as a kind of assault on their manhood. It's the cold warrior mentality," he says, a product of times when the best way to overcome an enemy was to steal its secrets.

But today, our chief enemies-terrorist networks-operate like open source groups, not intelligence bureaucracies. Al Qaeda uses the Internet and e-mail to communicate. Copies of Government Accountability Office reports on airport security holes-publicly available documents-were found translated into Arabic in caves in Afghanistan shortly after Sept. 11. Al Qaeda is the prototypical network. It enhances its power by spreading messages and methods, not by hoarding them.

The Silberman-Robb report pessimistically concludes that intelligence agencies will "never be able" to hire enough analysts in key areas, such as linguistics. The authors envision a day when "the influx of younger, more technologically savvy analysts" will "be absorbed by the general population." But that won't happen soon, according to the report.

Intelligence agencies must overcome two entrenched barriers: their resistance to outsiders, who've never worked within the secret realm, and the stifling culture that cuts off analysts from the outside world and offers them less job satisfaction and development than they might find there. Outsourcing might solve those dilemmas, but only in the short term. And any move to increase reliance on outsiders is risky should government oversight lapse.

The former CIA manager says hiring outsiders to avoid becoming insular and to routinely introduce new and heretical ideas into analysis "are all good reasons for doing it. But the reality is. . . that's not at all why it's being done." Today, agencies outsource primarily to fill gaps in staffing and expertise. Any improvement in quality is a byproduct. Intelligence Director Negroponte will determine whether Intelligence Inc. becomes a long-term solution for reform or remains a short-term fix.