9 June 2013
Leaker’s Employer Is Paid to Maintain Government Secrets
By Binyamin Applebaum and Eric Lipton
The New York Times


WASHINGTON — Edward J. Snowden’s employer, Booz Allen Hamilton, has become one of the largest and most profitable corporations in the United States almost exclusively by serving a single client: the government of the United States.

Mary F. Calvert for The New York Times

John M. McConnell, a former director of national intelligence, is now an executive at Booz Allen.

Over the last decade, much of the company’s growth has come from selling expertise, technology and manpower to the National Security Agency and other federal intelligence agencies. Booz Allen earned $1.3 billion, 23 percent of the company’s total revenue, from intelligence work during its most recent fiscal year.

The government has sharply increased spending on high-tech intelligence gathering since 2001, and both the Bush and Obama administrations have chosen to rely on private contractors like Booz Allen for much of the resulting work.

Thousands of people formerly employed by the government, and still approved to deal with classified information, now do essentially the same work for private companies. Mr. Snowden, who revealed on Sunday that he provided the recent leak of national security documents, is among them.

As evidence of the company’s close relationship with government, the Obama administration’s chief intelligence official, James R. Clapper Jr., is a former Booz Allen executive. The official who held that post in the Bush administration, John M. McConnell, now works for Booz Allen.

“The national security apparatus has been more and more privatized and turned over to contractors,” said Danielle Brian, the executive director of the Project on Government Oversight, a nonprofit group that studies federal government contracting. “This is something the public is largely unaware of, how more than a million private contractors are cleared to handle highly sensitive matters.”

It has gone so far, Ms. Brian said, that even the process of granting security clearances is often handled by contractors, allowing companies to grant government security clearances to private sector employees.

Companies like Booz Allen, Lockheed Martin and the Computer Sciences Corporation also engage directly in gathering information and providing analysis and advice to government officials. Booz Allen employees work inside the facilities at the N.S.A., among the most secretive of the intelligence agencies. The company also has several office buildings near the agency’s headquarters in Fort Meade, Md.

The company employs about 25,000 people, almost half of whom hold top secret security clearances, providing “access to information that would cause ‘exceptionally grave damage’ to national security if disclosed to the public,” according to a company securities filing.

In January, Booz Allen announced that it was starting work on a new contract worth perhaps as much as $5.6 billion over five years to provide intelligence analysis services to the Defense Department. Under the deal, Booz Allen employees are being assigned to help military and national security policy makers, the company said.

Representative Peter T. King, a New York Republican and former chairman of the House Homeland Security Committee, said he had no reason to believe that a private contractor was more likely to become a source to reporters than a government official, because both need a security clearance before they can handle top secret information.

“Security is so tight and procedures so strictly enforced, this is really a surprise,” he said of the leaks by Mr. Snowden. “This will have to be fully investigated, inside and out, to find out what happened here. Were there warning signs? Were there issues in his background?”

Stewart A. Baker, who served as general counsel at the N.S.A. in the 1990s and more recently as a top official at the Department of Homeland Security, said he worried that the reliance on outside contractors might, in some ways at least, make the government more vulnerable to leaks.

“Inside the government, there are structures designed to make sure that people understand that they can raise concerns about the lawfulness of particular activities in a variety of established channels,” Mr. Baker said. “You can go to the inspector general or to the Intelligence Committees, and you don’t have to pierce the veil of secrecy to get high-level attention to your concerns without exposing national secrets. It is a little less obvious to employees at a contractor.”

Booz Allen, which notes in securities filings that its business could be damaged by leaks, acknowledged in a statement that Mr. Snowden had been an employee.

The company, based in Virginia, is primarily a technology contractor. It reported revenues of $5.76 billion for the fiscal year ended in March and was No. 436 on Fortune’s list of the 500 largest public companies. The government provided 98 percent of that revenue, the company said.

Its rapid growth, fueled by government investment after the Sept. 11 attacks, led to a 2008 buyout by the Carlyle Group, a private equity firm, followed by a public offering in 2010.

Booz Allen has formed a particularly close relationship with the intelligence agencies, and others besides Mr. Clapper and Mr. McConnell have spent time in the company’s executive offices.

Mr. McConnell has been an advocate for increased federal spending on cybersecurity. He told the CBS News program “60 Minutes” in 2010 that foreign governments had the capacity to bring down the country’s power grid and financial system.

“The United States is not prepared for such an attack,” he said.

The company has also had at least one previous highly publicized problem maintaining data security. In 2011, files maintained by Booz Allen were acquired by the online activist group Anonymous, which claimed to have stolen tens of thousands of encrypted military passwords.

Christopher Drew contributed reporting from New York.

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