The short but profitable tale of how 483,000 private individual have "top secret" access to the nation's most non-public information begins in 2001. "After 9/11, intelligence budgets were increased, new people needed to be hired, it was a lot easier to go to the private sector and get people off the shelf," and sure enough firms like Booz Allen Hamilton - still two-thirds owned by the deeply-tied-to-international-governments investment firm The Carlyle Group - took full advantage of Congress' desire to shrink federal agencies and their budgets by enabling outside consultants (already primed with their $4,000 cost 'security clearances') to fulfill the needs of an ever-more-encroaching-on-privacy administration.
Booz Allen (and other security consultant providing firms) trade publicly with a cloak of admitted opacity due to the secrecy of their government contracts ("you may not have important information concerning our business, which will limit your insight into a substantial portion of our business") but the actions of Diane Feinstein who promptly denounced "treasonous" Edward Snowden, "have muddied the waters," for the stunning 1.1 million (or 21% of the total) private consultants with access to "confidential and secret" government information.
Perhaps the situation of gross government over-spend and under-oversight is summed up best, "it's very difficult to know what contractors are doing and what they are billing for the work — or even whether they should be performing the work at all."
First, Diane Feinstein's take on it all...
“I don't look at this as being a whistleblower. I think it's an act of treason,” the chairwoman of the Senate Intelligence Committee told reporters. The California lawmaker went on to say that Snowden had violated his oath to defend the Constitution. “He violated the oath, he violated the law. It's treason.”
So how did all this get started?... (via AP)
The reliance on contractors for intelligence work ballooned after the 9/11 attacks. The government scrambled to improve and expand its ability to monitor the communication and movement of people who might threaten another attack.
"After 9/11, intelligence budgets were increased, new people needed to be hired," Augustyn said. "It was a lot easier to go to the private sector and get people off the shelf."
The reliance on the private sector has grown since then, in part because of Congress' efforts to limit the size of federal agencies and shrink the budget.
Which has led to what appears to be major problems.
But critics say reliance on contractors hasn't reduced the amount the government spends on defense, intelligence or other programs.
Rather, they say it's just shifted work to private employers and reduced transparency. It becomes harder to track the work of those employees and determine whether they should all have access to government secrets.
"It's very difficult to know what contractors are doing and what they are billing for the work — or even whether they should be performing the work at all,"
... And to the current PRISMgate whistleblowing situation:
Of the 4.9 million people with clearance to access "confidential and secret" government information, 1.1 million, or 21 percent, work for outside contractors, according to a report from Clapper's office.
Of the 1.4 million who have the higher "top secret" access, 483,000, or 34 percent, work for contractors.
Because clearances can take months or even years to acquire, government contractors often recruit workers who already have them.
Why not - it's lucrative!!
Snowden says he accessed and downloaded the last of the documents that detailed the NSA surveillance program while working in an NSA office in Hawaii for Booz Allen, where he says he was earning $200,000 a year.
Analysts caution that any of the 1.4 million people with access to the nation's top secrets could have leaked information about the program - whether they worked for a contractor or the government.
For individuals and firms alike.
Booz Allen has long navigated those waters well.
The firm was founded in 1914 and began serving the U.S. government in 1940, helping the Navy prepare for World War II. In 2008, it spun off the part of the firm that worked with private companies and abroad. That firm, called Booz & Co., is held privately.
Booz Allen was then acquired by the Carlyle Group, an investment firm with its own deep ties to the government. In November 2010, Booz Allen went public. The Carlyle Group still owns two-thirds of the company's shares.
Or, a full-majority stake.
Curiously once public, The Booz Allens of the world still operate like a psuedo-private company, with extensive confidential cloaks preventing the full disclosure of financial data. But don't worry - we should just trust them. Via Bloomberg's Jonathan Weil.
Psst, here's a stock tip for you. There's a company near Washington with strong ties to the U.S. intelligence community that has been around for almost a century and has secret ways of making money -- so secret that the company can't tell you what they are. Investors who buy just need to have faith.
To skeptics, this might seem like a pitch for an investment scam. But as anyone who has been paying attention to the news might have guessed, the company is Booz Allen Hamilton Holding Corp.
"Because we are limited in our ability to provide information about these contracts and services," the company said in its latest annual report, "you may not have important information concerning our business, which will limit your insight into a substantial portion of our business, and therefore may be less able to fully evaluate the risks related to that portion of our business."
This seems like it would be a dream arrangement for some corporations: Not only is Booz Allen allowed to keep investors uninformed, it's required to. I suppose we should give the company credit for being transparent about how opaque it is.
And while the media and popular attention is currently focused on who, if anyone else, may be the next Snowden struck by a sudden pang of conscience, perhaps a better question is what PE behemoth Carlyle, with a gargantuan $170 billion in AUM, knows, and why it rushed to purchase Booz Allen in the months after the Bear Stearns collapse, just when everyone else was batting down the hatches ahead of the biggest financial crash in modern history.
From Bloomberg, May 2008:
(Go to link for the rest of the post)