The Looming Defense and Intelligence Budget Battles – the San Diego Connections

by on April 13, 2009 · 6 comments

in Civil Rights, Economy, San Diego, War and Peace

“I have never yet found a contractor who, if not watched, would not leave the government holding the bag.”—Senator Harry S. Truman, 1941

President Obama’s FY 2010 baseline budget of $534 billion for the Defense Department represents a 4% increase over the $523 billion allocated to the Pentagon by the Bush administration for FY 2009. Obama’s budget contains $6.7 billion more than the previous administration thought would be needed for the coming fiscal year. Yet pundits like Sean Hannity (Fox News) and Charles Krauthammer (preferred op-ed columnist of the Union Tribune) are leading a shrill chorus of chicken hawks asserting that drastic cuts in the FY 2010 defense budget are part of a Democratic agenda to weaken the United States military.

Never mind that United States military spending is greater that the defense budgets of every other nation on the planet combined. Never mind that the budget does mandate cuts in programs that are notoriously over budget and behind schedule. Or that dollars for military personnel are increased. Or the increase in special forces and cyber warfare experts. Or that care for veterans is a priority. The real issue at hand here isn’t even the cuts in leftover cold war era weapons programs (although you can be sure that Lockeed Martin will be buying ads telling us otherwise) that the military itself has deemed unnecessary.

At the heart of the matter, hidden behind the smoke screen of the conservative punditry’s predictions of doom and gloom, are questions about accountability in military purchasing and acquisitions. The mantra of greed and excess that Americans have become all too familiar with in connection with the financial industry’s failures in recent times also extends to the defense industry. This is the dirty little secret that our military-intelligence-industrial complex would like to have hidden behind a “top secret” stamp. This is why the industry’s apologists are alarmed.

The budget for FY 2010 proposes a meaningful reduction in the number of contractors working for the Pentagon, particularly in the area of oversight and management of purchasing. The Washington Post quoted defense consultant Loren Thompson as saying “The reduction of nearly one-third of the contractor workforce at the Pentagon is going to be mortal blow to companies that have built their business through outsourcing.”

Over the past decade, it has become common practice at the Pentagon for guidance on purchasing decisions to be provided by private contractors. Not surprisingly, these contractors have often rewarded themselves with lucrative contracts. Failures in the acquisition process often lead to additional contracts being awarded to the very companies that failed to deliver the goods in the first place. Simply put, the foxes have been left to guard the chicken coop, and the American taxpayer has been footing the bill.

Nowhere are these failures more evident than in the intelligence community, whose funding is hidden within the Pentagon’s budget requests. Tim Shorrock’s well researched Spies For Hire: The Secret World of Intelligence Outsourcing (Simon & Shuster, 2008) provides scores of examples encompassing every aspect of the issue at hand:

“By 2007, contractors were so ubiquitous in Washington that they had become a virtual shadow government, and the total number of contracts was valued at $400 billion a year—more than double what it was in 200o. Even the government’s online database for tracking contracts, the Federal Procurement Data System, had been outsourced. With 40 percent of the federal workforce expected to retire between 2007 and 2012, contractors believe that these trends could continue almost indefinitely.”

Contractors in Iraq outnumber military personnel. Green Badges (contractors) outnumber Blue Badges (government personnel) at the Central Intelligence Agency. The National Security Agency’s use of private companies has ballooned, growing from a mere two dozen plus contractors in the 1990’s to over 5400 last year. And one company (Booz Allen Hamilton) was even employed by Defense Secretary Rumsfeld to assist in writing the defense budget. Private contracts now account for 70 percent of the intelligence budget.

Outside the Washington DC area, where most companies maintain offices to facilitate ease of contact with the Pentagon and other security related agencies, San Diego is a focal point for many of the intelligence contractors named in Shorrock’s book. With names like Mantech, CACI, Argon ST, MTCSC, SAIC, SRA, Titan and L-3, they maintain low profile offices in high-tech hubs throughout the region. Much, though not all, of the work that takes in place in these companies concerns SIGINT (signals intelligence), ELINT (electronic signals intelligence), MASINT (measurement and signatures intelligence) and the computer systems that attempt to manage all this data.

Defense department procurement contracts totaled $7.1 billion for companies in San Diego County last year, growing at an average annual rate of 16 percent since 2001. Total DOD expenditures in the region for 2007 were $13.7 billion. The biggest player locally is Science Applications International Corp (SAIC) with more than 9000 federal contracts nationwide, including 100 valued at more than $10 million and two contracts worth more than $1 billion each.

The widespread use of private contractors for military and intelligence purposes dates back to the Clinton administration. The demise of the Soviet Union brought about a period of uncertainty in the defense establishment. Cold War weapons systems were being questioned and DoD budgets were shrinking. A Congressionally mandated task force, the National Defense Panel (heavily populated with defense contractors), endorsed outsourcing to “fully leverage the capabilities, technologies, and business practices of the commercial sector, adapted to the unique mission and special circumstances of the military environment.”

The Clinton administration’s high regard for outsourcing was based on greater efficiencies promised by various think tanks in the face of a political desire to shrink the size of the Pentagon and the intelligence community. By the time the U.S. intervened in Bosnia, there was a 1:1 ratio of contractors to military personnel. Rapid changes in technology were also instrumental in the drive towards privatization. The development of fiber optics, cell phones and the explosive growth of the internet left many agencies at a technologically challenged, and made partnerships with high tech companies desirable.

During the Clinton era, privatization was accompanied by the mandate that management of government contracts would remain under government control. There was an effort, at least, to maintain those functions within the Pentagon that were deemed “inherently governmental.”

The election of George W. Bush, September 11, 2001, and the onset of the global “war on terror” changed everything. The White House began pumping money into intelligence agencies that had spent the previous eight years downsizing. Many of the intelligence officers let go in the 1990’s came back to work wearing nametags from companies like SAIC, Booze Allen Hamilton and CAIC at twice their former rates of pay. There wasn’t time to worry about what was inherently governmental; answers were needed now! The street value of companies primarily vested with intelligence contracts increased by 900 percent over the next three years.

This “lack of adult supervision”, as described by one former intelligence officer in Spies for Hire, lead to a whole series of breakdowns in the conduct of Iraqi war and the war on terror. Three examples should be enough to give a glimpse of the pervasive mismanagement and incompetence that permeates the defense/intelligence establishment:

**The treatment of prisoners at Abu Ghraib at the hands of military personnel was directed by contractors, according to a lawsuit alleging that civilian American interrogators subjected Iraqis to torture and severe mistreatment. The San Diego based Titan division of defense contractor CAIC lost a motion in court last month that claimed they were immune from accountability.

**Project Trailblazer, managed by San Diego based SAIC, was designed to help the National Security Agency sift through huge quantities of SIGINT data starting 2001. SAIC is the agency’s largest single contractor and NSA is the company’s largest single customer. In 2004, Congress responded to ongoing reports about the projects’ failures and cost overruns, and took the extraordinary step of stripping the NSA of its independent acquisition powers, handing them over to the DoD. None-the-less, SAIC is involved with the successor to the Trailblazer program, dubbed EXECUTELOCUS, according to a 2006 investor prospectus. The program still apparently isn’t working too well. As of March, 2007, the agency was processing less than 1 percent of the data that it was collecting.

**The theft of hundred of secret files, including surveillance dossiers on the Muslim community and anti-war activists in Southern California, that were leaked by government employees to defense contractors in exchange for promises of future employment. The conspirators in this case included Marines and law-enforcement officers. One news account named MPRI International Group, a subsidiary of L-3 Communications as one of the recipients of the classified documents.

Those benefiting from all these “outsourced” contacts are threatened by the direction implied within the scope of the proposed defense budget. They are going to fight back with all the resources at their disposal. So the next time you see (or read) one of the usual gang of pundits waxing prophetically about the downfall of the United States, you should be aware that what really going on is a desperate attempt to protect a small group of very profitable corporations.

{ 6 comments… read them below or add one }

avatar nunya April 13, 2009 at 3:50 pm

Excellent post, thank you.


avatar Frank Gormlie April 14, 2009 at 12:36 pm

Great job, of placing a focus on the San Diego angle, local companies on the receiving end of bloated Pentagon budgets. ‘A contractor, a contractor, – a contractor for my kingdom!’


avatar doug porter April 14, 2009 at 1:35 pm

We’d like to thank the following organizations for all the extra web traffic we’ve had on this story today: National Security Agency, Booz Allen Hamilton, the 754th Electronics Unit, Boeing Corporation and SAIC.


avatar mr fresh April 14, 2009 at 1:43 pm

maybe the rag can start an ad campaign…something like “Read What The Big Boys Read”… or “OBRag, preferred by 3 out 4 spies”…


avatar bodysurferbob April 14, 2009 at 2:51 pm

what are you trying to do? pop the magic bubble of our contented little city? don’t we have enough problems without you sticking your nose into our local contractors’ business with our monies?


avatar GovViC. January 28, 2010 at 2:31 am

This is everyones business! At least the people who are forced to work 4 months anually for these “SAFETY MEASURES” we didn’t request. Or those of you just visiting ar vacationing hear who would like to enjoy it without contributing. This is enough! I have been a victim of covert opperations including(not limited to) BEAM WEAPON ATTACKS, as well as SOINC TORTURE carried out through contractors similar to the agancies mentioned above!! How or why should everyone need to be aware of this and eveyone should be aware of these realities before they incur devistating results in your life.


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