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Intelligence Contractors’ Complex

by Barbara Koeppel

Jun 15, 2012 | National Security


In our May 15, 2012 issue, National Security Agency executive turned whistleblower Thomas Drake described the agency failures that led to 9/11. In part two of Barbara Koeppel’s interview with Drake, the ex-spy reveals the agency’s corrupt practices.

Let’s talk about the corruption. What kinds of numbers were involved?

Billions. I have prima facie knowledge about a company called [Science Applications International Corporation, or] SAIC. NSA gave it a huge contract to produce a flagship program called Trailblazer that was supposed to solve NSA’s intelligence data-gathering and analysis problems. But NSA already had an incredibly powerful program called Thin Thread that could handle vast streams of data, analyze and disseminate it — legally, without warrantless wiretapping. And it cost far less.

Under Trailblazer, which was ostensibly awarded through managed competition by a selection committee, SAIC got $280 million to produce a demonstration project in 26 space. months. With add-ons, it soared to $1.2 billion, and that’s just what was on the record.

Why “ostensibly?”

Because Gen. Michael Hayden [then head of NSA] and Bill Black, his deputy director, told the selection committee, “You’re awarding this contract to SAIC to develop Trailblazer.” Period. Black had been at NSA for years, and when he retired in 1997, he went to SAIC. But he returned to NSA in 2000, under Hayden. Sam Visner, the head of SIGINT [signals intelligence] Programs, also came from SAIC. He was brought in to NSA to grow SAIC’s business, and was amply rewarded when he returned to SAIC a few years later.

What happened to Trailblazer?

The billions were wasted! SAIC was the lead contractor and with some partners, which included Boeing, Booz Allen, and Northrop Grumman, it built a “Blazing Saddles” demonstration lab that showcased fancy graphics, projections systems, and the latest hardware. And the Trailblazer umbrella got bigger and bigger, since NSA used it as a funding vehicle for all the money Congress was pouring in. When I was there, NSA spent an average of $400 million a year for Trailblazer alone, in supplementals. But SAIC never delivered the actual system!

Was SAIC ever penalized?


Did you tell the Department of Defense Inspector General?

I gave thousands of pages about how all these billions, ostensibly for national security, were spent.

Again, why ostensibly?

Because most of the money was going to contractors. It used to be that NSA developed its own cutting-edge intelligence stuff, using the best of its in-house talent and skills. But now, it was turning over what had been a government function to contractors — on a vast scale. And it became incestuous.

Why incestuous?

If I’m the prime contractor and I get a very large contract, I share the spoils with those I partner with — my subcontractors — right below me. I get pass-through fees when I hire them, based on the size of the contract. The bigger the contract, the bigger the fees.

Since Congress was pouring in huge amounts of money, especially right after 9/11, you can imagine the contractors’ feeding frenzy. In fact, NSA couldn’t find enough programs…. In executive session, I said, “Since we can’t spend it, why don’t we give it back?” The answer was, “Oh no, Tom, we can’t do that, or they’ll take it away from us in next year’s budget.”

On top of the contracts that are on the record, through plus-ups that are off the record, there are billions more. We just can’t show it. The contractors milk these multi-year contracts for all they’re worth. It’s endemic. It’s one of the single largest redistributions of wealth — funneling incredible amounts of money into a military-industrial-intelligence-Congressional complex. NSA’s budget doubled within 12 to 18 months.

What about the NSA people awarding the contracts? Do they get kickbacks?

No. That would be too obvious. Instead, you have these incestuous relationships. You steer the contracts based on how you issue the RFPs — the requests for proposals. Or you make behind-the-scenes arrangements to funnel the contract to a particular company.

What’s in it for the contract managers?

If you’re career government, you get promotions and bonuses — depending on how many contracts you award and their size. Like I said, bigger is always better. When you leave, you go to industry.

Why did they go after you?

The red herring was that I went to The Baltimore Sun with the Thin Thread–Trailblazer story. The real reason was that I went to the [Department of Defense Inspector General.] Here I am, a senior executive at NSA disclosing…what’s the reverse of the crown jewels? So they had to punish me.
Barbara Koeppel is a writer in Washington, D.C. Michael Hayden and Bill Black did not return Koeppel’s calls. This interview has been edited for space.

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