How the CIA Became Dangerously Dependent on Outside Contractors

Allison Stanger is the Russell Leng '60 Professor of International Politics and Economics at Middlebury College. Her book, One Nation Under Contract: The Outsourcing of American Power and the Future of Foreign Policy, will be published by Yale University Press in October.

Recent revelations of contractor involvement in CIA covert operations have been shocking. Plotting assassinations of al Qaeda operatives. Planning and executing the harsh interrogation (torture) of suspected terrorists. Loading Hellfire Missiles on Predator drones. At first glance, this looks like free-market fundamentalism taken to its logical extreme, something to blame on the Bush administration. But that conclusion misses the real reasons why the work of government is increasingly in corporate hands. The CIA deploys contractors because it no longer has the in-house capacity to pursue new mission-critical tasks without an assist from the private sector.

A CIA dependent on the private sector was not a deliberate strategic choice but an unintended consequence of the shift in budgetary priorities after the Cold War. The sudden evaporation of our principal enemy prompted drastic reductions in taxpayer money allocated to intelligence, which led to attrition in the number of agency employees as the '90s roared on. Funding for intelligence exploded after September 11, and more hands on deck were needed to meet the new threat, yet the bodies to take on those new challenges were no longer on the payroll. A sense of urgency permeated everything, but there were multiple impediments to quickly expanding the workforce. So the CIA deployed contractors to plug the gap. In so doing, the immediate demand could be met at apparent cost savings; unlike government employees, contractors do not need to be paid benefits. It created a vicious circle: Talented federal personnel, trained by government and armed with federal pensions, could now leave their jobs for the private sector to work alongside their former colleagues for higher pay, a brain drain that only further increased the CIA's reliance on contract help.

This phenomenon is now working against the public interest. Outsourcing is smart when it provides the government with surge capacity in the face of a new and pressing demand. When the job is over and the contract is up, government then does not have redundant employees. But contracting can also be a way of throwing money at problems without reckoning with their root causes. The "when in doubt, contract out" impulse preempts discussion of whether it is prudent in the first place for so much of national security to ride on the profit motive. In addition, the extreme secrecy surrounding CIA operations precluded public consideration of whether the government's dirty work should be a business proposition.

Since CIA contracts fall outside normal licensing protocols and the agency's budget is classified, it had been relatively easy to keep these issues out of the public eye. The change in administration has loosened tongues, however, and a window has been opened on what is in reality a transformed intelligence community.

Although CIA contracting abuses and challenges are the ones currently in the news, the same drama has played out across government. The Departments of Defense and State do not have classified budgets, so it is easy to chart contracting's explosive growth. According to USAspending.gov, the federal government more than doubled its expenditures on contracts from 2000-2008. The Department of Defense was the biggest gross contributor to this upward trend, nearly tripling its contract spending ($133.2 billion in 2000 to $391.4 billion in 2008). But in percentage terms, the State Department underwent even greater change; its contract spending more than quadrupled under the Bush administration ($1.3 billion to $5.6 billion). The revelations of the CIA's reliance on contractors are thus just the tip of an iceberg.

It is one thing to ban contractors from doing things the CIA should never have been involved with in the first place (torture, for example). But it would be another to forbid their use on mission-critical operations such as drone flights over Pakistan, as some critics have suggested. The capacity to do these tasks in-house in many cases no longer exists. High technology war-fighting requires highly specialized support, and the Pentagon has over time increasingly relied on private companies to maintain its state-of-the-art systems. Put simply, the United States would be unable to mount its operations in Iraq and Afghanistan today without contractors, so banning their use in military and intelligence operations is not a viable proposition. At the same time, we have clearly collectively blundered our way into practices that do not serve U.S. interests.

That is why President Obama was wise on March 4 to order a government-wide review of our current contracting practices, with the Office of Management and Budget scheduled to issue guidelines for reform this fall. In the months ahead, we will need to confront the gap between how we want our government to function and how it actually does, and what we intend to do about it. The most important thing that citizens can do is insist that this vital debate take place. Government of the people, by the people, and for the people rides on it.

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