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Outsourcing Intelligence: Author R.J. Hillhouse on How Key National Security Projects Are Contracted to Private Firms

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Author R.J. Hillhouse caused a stir in Washington last month when she revealed more than 50 percent of the National Clandestine Service has been outsourced to private firms. Now Hillhouse has exposed private companies are heavily involved in the nation’s most important and most sensitive national security document — the President’s Daily Brief. And there appears to be few safeguards preventing corporations from inserting items favorable to itself or its clients into the President’s Daily Brief in order to influence the country’s national security agenda. [includes rush transcript]

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This is a rush transcript. Copy may not be in its final form.

JUAN GONZALEZ: “Red alert: Our national security is being outsourced. The most intriguing secrets of the 'war on terror' have nothing to do with al-Qaeda and its fellow travelers. They’re about the mammoth private spying industry that all but runs U.S. intelligence operations today. … The private spy industry has succeeded where no foreign government has: It has penetrated the CIA and is running the show.”

Those are the opening lines to a recent article in The Washington Post by R.J. Hillhouse, a blogger and novelist who closely tracks the privatization of the nation’s intelligence agencies. According to Hillhouse, more than 50 percent of the National Clandestine Service has been outsourced to private firms, such as Abraxas, Booz Allen Hamilton, Lockheed Martin and Raytheon.

AMY GOODMAN: Hillhouse’s article in The Washington Post created a firestorm of controversy within the intelligence community. A week later, the Office of the Director of National Intelligence responded, defending the use of private contractors.

Now Hillhouse has exposed that the reach of these corporations has extended into the Oval Office. Private companies are now heavily involved in creating the analytical products that underlie the nation’s most important and most sensitive national security document: the President’s Daily Brief. And there appears to be few safeguards from preventing corporations from inserting items favorable to themselves or to their clients into the President’s Daily Brief in order to influence the country’s national security agenda.

R.J. Hillhouse joins us now from Tulsa, Oklahoma. She has written extensively about outsourcing of the war on terror in her blog, She has also just published a novel called Outsourced. We welcome you to Democracy Now!, R.J. Hillhouse. First, talk about this exposé, what you found.

R.J. HILLHOUSE: Well, what I found is, as you said, private corporations have completely penetrated the intelligence apparatus of the United States. It’s impossible — even in the response to me by the director of national intelligence that was published in The Washington Post, they admitted that without private corporations they would be unable to function. So what we’re seeing is basic responsibilities of government have been handed over to the private sector, which I really don’t have a problem with, but how it has occurred is very problematic. There are layers of responsibility that have been handed to private sector, so the government has actually very little control in some of what’s going on in terms of espionage. There’s management layers, and private corporations actually run other corporations that are doing espionage work, the entire gamut of everything from the NSA, what is being done in pattern analysis with phone calls. Internet traffic is handled by some private corporations. Actual gathering of intelligence on the ground, running of covert operations on behalf of the CIA, it’s all in private hands. It seems that James Bond bills by the hour.

JUAN GONZALEZ: And you talk even about the presidential daily briefing. Could you explain how that has become privatized, as well?

R.J. HILLHOUSE: Well, it’s not clear if the very final document is done by private corporations. It’s clear at every stage of the way, what’s called a government employee or blue badger will sign off on it. But all of the information that goes into it, the analytical products that become part of the President’s Daily Brief, are produced by private corporations, because they’re — the work of analysts who receive their paychecks from corporations such as Booz Allen, Raytheon and others, is not distinguished from that of government employees. So that brings up a huge national security vulnerability, that one could very easily shape or nudge along U.S. national security policy, because this is the most important national security document that we have in this country.

AMY GOODMAN: Explain how the President’s Daily Brief works — first how that intelligence is gathered and then how it’s presented to him.

R.J. HILLHOUSE: The intelligence is gathered by the 16 different intelligence agencies by statute that make up the intelligence community. That would include the more familiar, CIA, the NSA, Defense Intelligence, some [inaudible] various intelligence agencies, the National Counterterrorism Center. And each of those, the analysts first are gather — people gather the product or the intelligence. In some cases, things have been outsourced, like in the CIA the actual case officers are outsourced. They gather that intelligence. It goes to analysts.

In the case of the CIA, the Directorate of Intelligence, my acquaintances tell me that over half is run by private corporations or staffed — the work force is staffed by private corporations with really analytical supervisors signing off on it. So they all gather the intelligence in the field, which much of that is gathered by private corporations in these 16 different intelligence agencies, is put into analytical products that talk about what the major topics or issues are in the different regions. It’s funneled up to the Office of the Director of National Intelligence, which sifts through this and determines which are the most important pressing issues, and those are taken and put into the President’s Daily Brief, which the director of national intelligence briefs the president on each day.

I mean, we’re all, I think, familiar with the President’s Daily Brief, if nothing else, from that famous, I believe it was August 6th Daily Brief from 2001: Bin Laden determined to strike in the U.S. It’s meant to be able to give a heads-up to the president, to the very top of government officials, as to what the potential national security problems are that have to pay attention to that very day. And it’s quite chilling when one realizes that because there is no distinction between the work of private corporations, or the work of corporations — some of these are publicly traded, but I say “private” to differentiate from the public sector — the work of corporations and the work of government employees. And so, there is great potential to introduce things into the intelligence stream or simply to nudge things in a certain direction. I mean, there also would be the possibility of political manipulation.

JUAN GONZALEZ: Now, given the possibility, obviously, that there are accountability issues and ethics issues involved by so much privatization of intelligence work, there would also seem to me to be intelligence issues, questions involved, security issues, in terms of how are these people vetted and also, at least within the agencies, like Central Intelligence, they have career employees who they can follow throughout decades sometimes in terms of their reliability. But how are these private contractors vetted?

R.J. HILLHOUSE: That’s an excellent point. At this stage of the game it’s not as frightening as what will happen over the next five and 10 years. The people are vetted in the same way through the security backgrounds, on polygraphs, etc., as a government employee is. At this case most of them are former government employees that have gone over to the private sector. But the real danger occurs when — and those people have been socialized and trained and been held in government yoke for 20, 30 years, so it’s very unlikely that they would behave against the interest of the U.S. government.

But then, of course, there’s this next generation of spies. What’s going to happen as corporations begin to raise their own case officers, train them in corporate values, rather than the values of public service? And at the same time, we’ve got hemorrhaging going on at the CIA, where over half of the employees of the CIA have been there for five years or less. So we have a situation where it’s really kids running the CIA. So we have a great deal of instability in the system. And as turnover occurs, as companies lose contracts, of course, people become unemployed, and that also is a great counterintelligence danger with what happens to down-on-their-luck spies.

AMY GOODMAN: R.J. Hillhouse, Ronald Sanders, associate director of national intelligence, Office of the Director of National Intelligence, wrote a letter of objection to The Washington Post about your July 8th Outlook article, “Private Spies: Who Runs the CIA? Outsiders for Hire.” He says it was “way off base. It suggested [that] the use of contract personnel by intelligence agencies [such as] the CIA is somehow damaging to national security.” He writes, “Quite the contrary — we could not accomplish our intelligence missions without them. U.S. intelligence agencies were dramatically downsized in the 1990s, in some cases by as much as 40 percent. Whatever else their pre-Sept. 11 failings, our agencies simply [did not] have enough people to do the job.” Your response, R.J.?

R.J. HILLHOUSE: Well, first, I would agree with him on most of that, because those were not — that was not the point that I made, that the use of private contractors isn’t the problem. The problem is how it’s been structured. It’s comes about very quickly and in a wartime situation, so it’s been cobbled together, and it’s a very fragile system, and that’s what I point to. I think many of these private companies are actually doing very good work, but what we need to see is that it’s done in a smarter way, where it’s a more accountable way.

And we need to look at everything that these corporations are doing and see, should that be a government employee or this should be a corporation, because what we’re looking at is entire branches of the CIA are farmed out to private corporations. So you’ll see 20, what they’re called, “green badgers,” or workers for a private corporation, reporting to a single blue badger, or government employee. And within the layers of green, there could be other companies that are reporting — are part of that branch. So it’s multiple, multiple corporations reporting back to a single government employee, who most likely is a very junior person, because of the high level of turnover at the CIA. So, clearly, that one blue badger or employee is not going to know everything that’s going on. So there’s some real accountability issues and questions about the — not just the scope, but the use of contractors. I mean, I completely agree that they couldn’t do it without the contractors.

AMY GOODMAN: And how does weapons of mass destruction fit into this, the lie that was spread? Do you see that as part of this picture or the result of this outsourcing?

R.J. HILLHOUSE: Well, I wouldn’t say it’s a result of the outsourcing. Where I would fit WMDs in is simply a great example of the manipulation of intelligence that can occur when there is a political will to do so. And in this case, there was a formidable bureaucracy to prevent the manipulation of intelligence. I mean, much had to be put in place in order to use the bad intelligence from curveball to stovepipe everything up to the Office of the Vice President and to really do a workaround from the bureaucracy of the CIA that was trying, in many parts of it, to prevent manipulation of the intelligence.

But now what we see is, theoretically, it would be a lot easier to do something like the specter of weapons of mass destruction in another country, because corporations control the intelligence. They control the gathering of it. They control the intelligence in multiple different agencies, so suddenly you could have something being reported in the CIA the same time the NSA is picking up on it and perhaps the Military Intelligence Agency could be picking up. But with their current system, there would be no way to detect that it could actually be the same company that’s behind it, that’s feeding things into the intelligence stream. So that’s how I would tie weapons of mass destruction into it.

AMY GOODMAN: R.J. Hillhouse, we’re going to come back to you, but we’re going to break first. R.J. Hillhouse writes a national security blog, I want to ask about that PowerPoint presentation you got a hold of from the Office of National Intelligence and also ask about your book Outsourced, a novel. Stay with us.


AMY GOODMAN: We are talking to R.J. Hillhouse, runs the blog, Latest article, “Outsourcing Intelligence,” is posted on The Nation magazine website. Juan?

JUAN GONZALEZ: Yes. I’d like to ask you about your novel. In addition to all of the research that you do on intelligence, you have now produced this fictional account, Outsourced. Why fiction?

R.J. HILLHOUSE: Because I found that there were things that could only be written about in fiction. It’s amazing for someone who has lived in the former Soviet Union and Eastern Europe to find that in this country we’re in a similar place. In the repressive regimes, literature has often played the role of bringing things to light that could not otherwise be discussed. And I found that there are some things that are going on in the intelligence community or things that are going on with our government with relationships between corporate and government that it was only safe to discuss under the guise of fiction. So it’s an unusual transformation that a novelist would actually be ahead of media in this. I mean, it is the norm for me to be contacted each week by people from New York Times, Washington Post and others to try to learn about what’s going on in outsourcing. So it’s very strange as a novelist that I actually have moved ahead of that.

And I’ve not only been at the center of controversy in the intelligence community, I’ve also been in the center of controversy in the literary world, because I believe that and I’ve been very public about it, that thriller writers, that novelists, have failed us today. They haven’t helped us understand the darker truths of what’s going on in the war on terror, the ambiguities, the changes that have occurred in how we’re fighting the war on terror and what that shows us about ourselves. Unfortunately, thriller writers have failed us. As you know, it’s mainly — and I’ll call it for what it is — beach reach that we see, that we don’t see literature playing this larger role in society, but rather, the novels become a race of, we have to stop the terrorists from, what would be in a jargon, A, B or C weapons — atomic, biological or [chemical] weapons — and it just — it underscores the narrative of our time, which is, be afraid, be very afraid, and only a hero who will violate the Geneva Conventions, only a hero who will violate the Constitution will save us. So I tried to do something very different with Outsourced.

AMY GOODMAN: R.J. Hillhouse, you focus on Iraq — you focus on Iraq and Uzbekistan in this novel, and also in this novel you say Osama bin Laden has been captured, but they’re just afraid to announce it for fear of terror attacks. Talk more about the core of this story, this fictional account.

R.J. HILLHOUSE: I believe that core of the story is left best left in Outsourced and in discussing it in the fictional account. I mean, I also deal with some other very hot issues that are best discussed only in fiction, such as black sites run by the CIA, the secret prisons. In Outsourced, those black sites have been privatized to private corporations. Private corporations are running the facilities’ management contracts. Private corporations are running the facilities’ security contract. So various things like that can only be discussed in fiction until the mainstream media gets its act together.

AMY GOODMAN: Back on the story that you have been breaking news with in The Washington Post and at The Nation, you recently obtained an Office of the Director of National Intelligence PowerPoint presentation that reveals that 70 percent of the U.S. intelligence budget is allocated to private contractors. Seventy percent.

R.J. HILLHOUSE: It’s an absolutely stunning figure. It was actually the journalist Tim Shorrock that first found that PowerPoint presentation and the slide that showed the 70 percent. My contribution to it was recognizing that because, based of the information in it and in a hidden table in the presentation, it was possible to reverse-engineer the national intelligence budget, which appears that we’re really spending about $60 billion on intelligence each year, and out of that, $42 billion is going to private corporations. So what we see happening is the mainstream media has not been writing about this, has not been exploring it, but we’ve had a $42 billion industry come take over major responsibilities of government, when no one was noticing except a novelist. As I said, it’s quite a turn of events.

JUAN GONZALEZ: And from what you have been able to tell, the impact of all of the intelligence failures around 9/11 and weapons of mass destruction and the reorganization of the nation’s intelligence agencies, what’s been the result of that?

R.J. HILLHOUSE: Well, many of the changes have occurred in the intelligence agency. I’m not sure that they — we could relate those directly to what’s occurred with outsourcing. And, of course, the manipulation of intelligence, that had nothing to do with private corporations, although, as I’ve pointed out, it would be possible to do that quite easily or much more easily now than before.

But what we’ve seen is the CIA and other parts of the national intelligence community failed us when it came to 9/11, and unfortunately, because of changes that have gone on in the last five years, those agencies are much, much weaker than they’ve ever been before. I mean, I would even question whether the CIA will survive another year, and if it does survive on the current trajectory, is it a CIA that we want to have, with, I mean, currently very high turnover rate? They’re in great denial with what’s going on. There have been some measures to try to stop it, but they’re half-measures at best. Over 50 percent of the people working there with less than five years experience, and this is a profession that it takes a — there is a great long learning curve. And within the people that are 50 percent or less five-years experience, there’s high turnover among those, as well. And at the same time, you’ve got another half of the agency is outsourced to private corporations. So there’s some real questions of health of our intelligence apparatus, and it has definitely declined since 9/11. And those are some of the things that I look at fictionally in Outsourced.

AMY GOODMAN: Well, I want to thank you very much for joining us. I want to thank Nesreen for being with us, coming up, the teacher who will be joining us, but I want to thank R.J. Hillhouse, who has written the new book called Outsourced, a novel, and has breaking stories on that issue, among them, “Outsourcing Intelligence,” posted on The Nation magazine website.

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