LittleSis has established a new Shadow Gov Working Group to investigate corporations that are key players in the shadow gov space. These companies tend to profit from the privatization of core regulatory and other government functions; are dominated by former government officials, and also boast extensive alumni networks in government; derive much of their revenue either from government sources or through dealing with government extensively; and are not traditional lobbying firms (in other words, their top executives and staff do not register as lobbyists). The name of this research group is inspired by the Open Government Working Group established by Barack Obama in 2009, at the same time his administration was developing plans for an unprecedented crackdown on government whistleblowers. If you are interested in helping us shine some light on these organizations, please consider joining the research group. Or if you just want to stay in touch, get more regular updates from us on twitter or facebook, or sign up for our email list.
The recent and ongoing NSA surveillance revelations have shone a productive spotlight on the role of private contractors in gathering and analyzing national intelligence. Edward Snowden’s former employer, Booz Allen Hamilton, was singled out for its role as an NSA contractor and the fact that almost all of its revenue comes directly from the federal government. But the exact breadth of its role in the intelligence community and how it maintains its powerful relationship with the government remains shrouded in mystery.
This is where Booz thrives – in the shadows – but here at LittleSis we have been working to shine some additional sunlight on Booz and the ways in which it cultivates influence and wins contracts.
By the end of the 2013 fiscal year Booz Allen Hamilton reported $5.76 billion in revenue, 99 percent of which came from government contracts, and boasted a win rate of more than 89% on re-competed contracts. The company’s dependence on contracts is so great that threats to their relationship with the US is the primary risk listed in their annual shareholder report. Some sample disclosures, all comically hinging on the fact that Booz is in a long-term, over-dependent relationship with the US government:
- We depend on contracts with U.S. government agencies for substantially all of our revenue. If our relationships with such agencies are harmed, our future revenue and operating profits would decline.
- U.S. government spending and mission priorities could change in a manner that adversely affects our future revenue and limits our growth prospects.
- Our professional reputation is critical to our business, and any harm to our reputation could decrease the amount of business the U.S. government does with us, which could have a material adverse effect on our future revenue and growth prospects.
Yet despite this clear dependence on government contracts, according to data from the Center for Responsive Politics, Booz’s lobbying efforts have been unusually meager for a company its size with a substantial stake in appropriations, only spending $40,000 in 2002 to lobby Congress around the issue of defense.
Booz lists three competitor classes in its 10-k. The total amount spent by each of these competitors on lobbying, from 1998 to 2012, is shown below. The difference is staggering, with the exception of TASC, which was owned by Northrop Grumman from 2001 to 2009.
|Booz Allen Competitor Lobbying Spending, 1998-2012|
|Competitor group one: US government service providers|
|Competitor group two: Large defense contractors|
|Competitor group three: “diversified service providers”|
|Computer Sciences Corp||$13,614,000|
|Source: Influence Explorer/Center for Responsive Politics|
Again, Booz Allen Hamilton, a $5.76 billion dollar enterprise, spent only $40,000 for lobbying services. How does such a large, publicly traded company acquire and maintain these lucrative contracts in what is ostensibly a competitive market for defense dollars? What differentiates their influence strategy from the competitors?
Booz’s lack of lobbying and complete dependence on federal contracts implies deeper entrenchment than the standard backroom handshakes and rolodex rattling. By mapping Booz’s relationships with the intelligence community, maintained stable of former and current officials, embedment in the military structure, and high-exposure participation on public-private partnerships, a complex influence strategy emerges – one that hinges on removing the revolving door in favor of seamless integration into the intelligence community and its revenue stream.
The Shadow Gov Space
Booz’s strategy starts with the revolving door: many of its top executives are former high-ranking intelligence, military, and other government officials, and many have also moved back through the revolving door into high-ranking positions in the public sector.
As others have noted, the term “revolving door” fails to convey the ease with which Booz executives swing in and out of public officialdom, nor does it sufficiently describe the liminal space they occupy in their public sector and private sector roles – sitting on industry boards as high-ranking intelligence officials; retaining the influence and access attached to their government titles even as they draw private sector salaries. Booz occupies a sort of threshold between the public and private sectors, where the two have merged so as to be virtually indistinguishable – an obvious recipe for corruption and abuse.
Booz’s revolving door connections have attracted some scrutiny in the press. Bloomberg deemed Booz the “Shadow Empire” in a lengthy piece on the company, and observed that Booz’s ability to win contracts seems “ensured by the roster of intelligence community heavyweights” on its payroll. The New York Times published a critical piece on Booz shortly after Snowden’s identity as a Booz employee came to light, focusing on Mike McConnell, a current Booz EVP and former NSA Director and Director of National Intelligence, as well as the current Director of National Intelligence, James Clapper, a former Booz Vice President.
Very few journalists were on this beat prior to the Snowden revelations, however, with a notable exception: Tim Shorrock has written extensively on private intelligence contractors in his book Spies for Hire: The Secret World of Intelligence Outsourcing and in Salon, The Nation, The New York Times, and elsewhere.
As part of our investigation of Booz Allen Hamilton, we delved a bit deeper than the officials that are frequently cited as revolving door examples, like Clapper and McConnell, mapping the connections between Booz’s executive ranks (down to the level of vice president) and government in order to understand where Booz’s institutional connections are strongest. The results are not surprising, but they yield a rich picture of Booz’s interlocking relationships with government:
- NSA. Nine Booz executives have previously worked at the NSA, including McConnell. Other notable ties: Jim Allen, who served as deputy director for analysis and production; Richard Wilhelm, former director of information warfare; Terry Thompson, former deputy director for support services. Thompson is now striking “electronic gold” in the United Arab Emirates as he invents the country’s “own NSA,” according to Intelligence Online.
- Army, Navy, Air Force. Booz’s ties to the Navy, Army, and Air Force are far more deep and extensive than its ties to any other government institutions. The Navy leads the pack, with 20 Booz executives who are former officers and employees. The Army is close behind with 17, and the Air Force is third with 12. Notably, Booz has its longest-running contracting relationship with the Navy (70+ years), followed by the Army (60+) and Air Force (20+).
- CIA. Seven Booz executives have ties to the CIA. Senior executive advisor Joan Dempsey spent 33 years at the CIA and retired after serving as Director, Imagery Systems Acquisitions and Operations – a position which involved “acquiring and operating the nation’s classified imagery satellites.”
- Department of Defense. Henry Obering served as director of the Missile Defense Agency and served as acquisition executive for DoD’s $10 billion missile defense portfolio. Ronald Sanders, a Booz VP, was director of civilian personnel and Steve Soules, an SVP, served as “Director of the Joint C4ISR Decision Support Center, an independent research and analysis center directly assisting senior leaders in the DoD in making investment decisions for integrated command, control, and intelligence systems.”
Notably, many Booz executives oversaw acquisitions and investment processes as government officials, and in their current roles the insider knowledge and relationships they developed naturally helps them win contracts. The process of winning contracts is known as “capture” in the business; several job positions posted on Booz’s website list capture in the scope of responsibilities. For instance, the job description for this “Defense Capture Manager Job”:
Drive major capture efforts from start to finish. Lead capture efforts and supports business staff in captures that are especially demanding and maintain accountability for the success of one or more firmwide “must-win” opportunities. Manage complex captures led by senior-level employees by coordinating market analysis, competitor analysis, gap analysis, and teaming activities in alignment with firm strategy and objectives. Mentor and guide capture team members on the capture process and business development…
Fittingly, “capture” also refers to the process through which the revolving door and other dynamics steer public officials away from their public missions, and into cozy relationships with industries and firms that they should be keeping at arms length. By embedding itself with its government clients in management consulting capacities, Booz is able take capture to a whole new level – and ensure that it will continue to win contracts.
Embedded with the Military
The common journalistic practice of “embedding” with the military has been criticized as a means of exerting excessive control and oversight of the press. As a private contractor, on the other hand, Booz has embedded itself with military to the extent that it seems to have a frightening degree of influence and oversight of military processes. This flows out of its long contracting relationship with the military and its lengthy roster of former military personnel.
Its relationships with the military date to World War II, when it contracted with the Navy to develop a system for tracking German submarines. This was a shift away from its private sector focus, at the time, but the company has since spun off its private sector consulting arm. Now, defense business represents 55% of revenue.
The company’s recruiting pipeline draws heavily on the military, and not just at the executive level as discussed above. The company claims that former military personnel make up a third of their total workforce, and it was ranked #1 on G.I. Jobs Magazine’s 2011 list of the “Top 100 Military Friendly Employers.”
The extent to which Booz staff is embedded with the military, and the forms of high-level “support” they provide to these institutions, can be discerned in job postings on the company’s website.
Current vacancies listed on the company’s website show positions at Ft. Bragg, NC, Ft. Dix, NJ, Camp Roberts, CA, Ft. Gillem, GA, Ft. Knox, KY, and many more. These positions include everything from high-level trainers for simulation systems such as “Virtual Battle Space” and intelligence systems such as “SIGINT” to lower level “Scenario Developers” who develop exercises and training plans [see sidebar].
The job descriptions demonstrate a familiarity with integration into the military structure. According to the postings, Booz employees advise senior military officials, train military staff, collaborate on new technology, and assist in evaluating the effectiveness of programs, all on-site at military bases around the world.
These arrangements seamlessly blend shadow agency with military. The two are so entwined that Booz’s personnel is not only performing functions that would seem to be the purview of the military itself, but also playing leadership roles within the military structure and weighing in on strategic decisions. Capturing contracts must be so much easier when you are already telling leadership what to do.
Booz also cements its influence with a range of intelligence community-building efforts, creating spaces and organizations where public officials and private contractors can rub elbows and discuss policy both out of the public eye and in ways that shape policy debates.
The Intelligence and National Security Association (INSA), a non-profit membership organization that describes itself as a “unique venue for collaboration, networking, and dialogue” for government agencies and private contractors, is a case study in how these shadow gov spaces function. INSA provides the opportunity for private intelligence contractors to mingle with government officials and weigh in on questions of intelligence policy. As Spies for Hire author Tim Shorrock tells it, when it was first launched, its “primary function was to create a space for contractors and their government employers to schmooze in peace.”
INSA’s board of advisors includes prominent intelligence community members from both private companies, such as Booz Allen Hamilton, Northrop Grumman, and SAIC, and federal agencies, including ODNI, DHS, NSA.
Booz has played a prominent role at INSA – McConnell became the first chairman after the re-organization of the outfit in 2005, while a Booz executive. It is also a top member of the INSA President’s Circle (the highest donor level), joined by fellow defense contractors BAE systems, General Dynamics, Lockheed Martin, and others. Booz executives currently sit on both the board and advisory board of the organization.
Shorrock’s in-depth account of the ways INSA blurs the line between private intelligence contractors and government agencies is worth reading in full. In it, he observes that the INSA’s relationship with government improved after McConnell left Booz to become Director of National Intelligence. Soon after, the DNI and INSA co-sponsored a “DNI Industry Day,” where INSA members with government clearances could learn about DNI strategy and budget priorities.
Companies deploy herds of lobbyists and pull out all kinds of stops to acquire information like this; INSA puts it right at their finger tips.
Booz is also deeply involved in other, more public-facing organizations which work to shape policy in part by bringing together elites stationed inside and outside government. One such organization is the Partnership for Public Service, which bills itself as a management resource for the US government. PPS “works to revitalize our federal government by inspiring a new generation to serve and by transforming the way government works.” Its advisory board includes individuals in both the public and private sectors: current and former members of Congress, academic representatives, corporate executives.
Booz, again, plays a significant role at PPS. It is a “Founder’s Circle” member, which requires a $100,000 minimum annual obligation. It is also listed as a “Private Sector Council” Member, which gives its employees access to federal executives. According to PPS the Council allows its members to “stay closely connected to leading experts on government reform and network with federal leaders.”
Booz also holds four seats on the PPS boards. Executive Vice Presidents Thad Allen and Lloyd Howell serve on the governing board (Booz is the only private company with two representatives on the Board of Directors). Booz board members Charles Rossotti (Carlyle Exec) and Philip Odeen (Chairman, AES) both serve on its Advisory Board of Governors (the PPS advisory board list does not list Rossotti and Odeen’s affiliation with Booz).
The heavy Booz presence is rivaled only by organizations like the Council on Foreign Relations, the Senate, and the House of Representatives in PPS’s interlocks tab.
Booz also produces policy reports in partnership with PPS, attempting to shape policy agendas around issues like the federal deficit and federal employee attrition without a hint of irony (to be fair, Booz should have a good handle on federal budgets and the reasons federal employees leave government). Is it a respected, non-partisan think tank issuing these reports, or a large federal contractor with skin in the game? An organization overseen by sitting Senators, or a major intelligence outsourcing profiteer? As is often the case with Booz, the answer is somewhere in between.
For Booz, influence is the business. Lobbying is not a piece of the program; it is the program. From its cultivation of organizations like INSA and PPS, to its deep entrenchment in the military, to its extensive revolving door ties with government, the company is working every angle to ensure that the 99% of its revenue that comes from the federal government will always be there. The incentives are clear for Booz executives, who score massive pay packages – an average of just under $4 million, or $2,000/hour, for each of the top five executives in 2013 – that are essentially sourced directly from the taxpayer.
The marriage of business and government that Booz represents is key to understanding the growth and hegemony of the surveillance state. And with Edward Snowden on the loose, it may also be its undoing.