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CIA’s Use Of Contractors Draws Fresh Scrutiny

News that the CIA worked with a private contractor on a secret assassination program is the latest evidence of how much the agency has outsourced a range of its activities, including covert missions.

According to The New York Times, the CIA in 2004 worked briefly with Blackwater, the controversial private security firm, on a program designed to target and kill al-Qaida operatives.

The program was scrapped before any missions were launched. But it reflects a practice that became widespread under the Bush administration of using large numbers of outside contractors for activities ranging from specialized translation work to conducting interrogations of terrorism suspects. Soon after taking office, CIA Director Leon Panetta imposed new restrictions on work by contractors, banning them from conducting interrogations.

Still, by 2008, contractors made up 27 percent of the personnel in a U.S. intelligence community numbering well over 100,000 workers. This heavy reliance on the private sector has prompted criticism of the high financial cost as well as the potential lack of accountability of private firms.

A Sudden Need To Staff Up

The roots of the contracting explosion lie in the end of the Cold War, when the intelligence community downsized dramatically, shedding a quarter of its workforce as the apparent threat level diminished. At that point, it was very rare for contractors to be performing spying operations or analyzing intelligence.

But after the Sept. 11 terrorist attacks, when there was a sudden drive to staff up, officials turned to people they knew and could hire quickly as contractors.

Early on, the aim was usually to hire experienced operatives, often retired CIA personnel, with specialized skill sets, such as language expertise. "It doesn't necessarily make sense to bring people in for permanent career positions where their skills may be needed for a very specific period of time at a certain level," said Michael Chertoff, a Bush-era homeland security chief.

The CIA also began its own hiring binge, bringing in a new generation of young, less experienced officers.

"More than half of the agency workforce has been hired since 9/11," former CIA Director Michael Hayden said during a panel discussion Thursday on the topic of intelligence privatization. "It might suggest why we have a pretty open mind about hiring retirees as contractors to come back and try to level that imbalance."

The High Cost Of Contracting

But all this comes at a price. Contractors are significantly more expensive to the government than permanent employees. Contractors make up about a quarter of the total number of workers in the intelligence community, but they account for nearly half of the total personnel budget, according to the Senate Intelligence Committee.

Ronald Sanders, who is in charge of human resources at the office of the Director of National Intelligence, has said that the average contractor costs the government $207,000 — about $80,000 more than the average federal employee.

But Hayden insisted that CIA officials did not turn reflexively to contractors when it came to such missions as counterterrorism. "Please don't get the idea that when the agency has a really tough problem that we go to the yellow pages and look up 'Solutions R Us,' " Hayden said. "We use contractors as an integral part of the workforce."

As the contracting binge continued, an increasing number of contractors were serving as long-term employees working on key intelligence matters. "It created a circumstance where we probably had too many contractors," Hayden said, meaning that CIA managers were effectively competing against each other to hire the best talent.

It also got more expensive. At first, many contractors were hired on an individual basis, but the costs jumped as more and more former intelligence officials joined large companies that sold their services to their former employers at a higher premium.

Critics also worried about the difficulty of holding these outside contractors accountable for their actions when the contracts themselves were highly classified. "The intelligence agencies at least in principle are answerable to Congress," says Steven Aftergood, an intelligence expert at the Federation of American Scientists. "But contractors are at least one step removed from congressional oversight."

Trimming The Number Of Contractors

During his tenure at the CIA from 2006 to 2009, Hayden slashed the number of contractors at the agency by 15 percent and worked to replace contractors employed in the CIA's most central missions with government employees.

Hayden also banned employees from resigning and then returning to work at the CIA as higher-paid contractors within 12 months. "Some of his best people were going out the door because there was a program that was set up that allowed them to return the next day," said Jack Devine, a former associate director of operations at the CIA.

Panetta, the current CIA director, has vowed to continue Hayden's efforts to reduce the role of contracting at the CIA. "I really believe that we have a responsibility to bring a lot of those duties in-house and to develop the expertise and the skills within the CIA to perform those responsibilities," he said during a congressional hearing earlier this year. "I get very nervous relying on outside contractors to do that job."

At other intelligence agencies, however, contracting continues to play a larger role. At the Department of Homeland Security's Office of Intelligence and Analysis, for example, contractors made up 63 percent of the workforce as of 2008.

Chertoff said that the high figure was a result of having to create a new agency from scratch. "You can hire contractors relatively quickly," he said. "To process, hire and train government employees is very slow."

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