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Hamburger and O'Harrow report: "Booz Allen now faces a greater test: Lawmakers and other officials are asking whether the company should be held to account for Edward Snowden, a former employee who had obtained national security documents and leaked them to the news media while at the firm."

Booz Allen Hamilton's Cyber Solution Center in Annapolis Junction, Md. (photo: Jeffrey MacMillan/WP)
Booz Allen Hamilton's Cyber Solution Center in Annapolis Junction, Md. (photo: Jeffrey MacMillan/WP)


Edward Snowden's NSA Leaks Aren't the First Security Breach at Booz Allen

By Tom Hamburger and Robert O'Harrow Jr., The Washington Post

09 July 13

hen allegations of improper contracting behavior hit Booz Allen Hamilton, the national security consulting firm in McLean bounced back stronger than ever.

In 2008, a Booz Allen employee at MacDill Air Force Base in Florida was granted the highest-level "top secret" security clearance even though he had been convicted a few months earlier of lying to government officials in order to sneak a South African woman he had met on the Internet into the country.

Last year, the Air Force temporarily suspended the San Antonio division of the company from future contracts because it had obtained and distributed confidential Pentagon bidding data for its own competitive advantage. In 2006, the Justice Department said the company overbilled travel ex�penses, and the agency initially recommended that Booz Allen be barred from federal contracting.

Those incidents had little or no impact on Booz Allen's success in recent years or on its ability to compete for federal contracts, which last year provided 99 percent of the company's $5.8 billion in revenue.

Booz Allen now faces a greater test: Lawmakers and other officials are asking whether the company should be held to account for Edward Snowden, a former employee who had obtained national security documents and leaked them to the news media while at the firm.

But if the past is a guide, the government is not likely to scale back its reliance on Booz Allen or other large contractors soon, industry officials and policymakers agree. Although intelligence agency reliance on outside firms has declined some in recent years, the latest available estimates still show that about 70 percent of the U.S. intelligence budget is spent on contractors. And big, well-established companies continue to have outsize influence.

That is particularly true for Booz Allen, one of the most powerful firms within the government's defense and national security structure. Nearly half of the company's 24,500 workers have top-secret clearance.

The company also has deep connections within the defense and intelligence communities, including James R. Clapper Jr., a former Booz Allen executive who is the director of national intelligence, and R. James Woolsey, a former CIA director who was a senior vice president at the firm until 2008.

The man now heading Booz Allen's intelligence operations, retired Vice Adm. John Michael McConnell, was the head of the National Security Agency in the mid-1990s and was appointed in 2007 by President George W. Bush to lead the government's newly established Office of the Director of National Intelligence, which was set up to coordinate domestic and foreign intelligence gathering.

Those relationships and the sheer volume of work Booz Allen does for the federal government may have given the firm and others like it leverage when they face disciplinary actions, watchdog groups say.

The Project on Government Oversight testified in June that since 2000, there have been tens of thousands of suspension and debarment actions levied against companies and individuals. But its chief counsel said the number of large name-brand contractors, such as Booz Allen, that have been sanctioned can be counted on two hands.

"The government's reliance on large contractors is often difficult to overcome," said Scott Amey, general counsel to the nonprofit watchdog group, which maintains a contractor misconduct database. "Therefore, large contractors are in a powerful position to avoid suspension or debarment actions."

There is no indication that Booz Allen faced penalties when its employee at MacDill received top-secret clearance despite his criminal record. The travel-overbilling case was settled with the payment of a fine.

Only the case concerning the San Antonio office resulted in an actual suspension. That action, taken by the Air Force, did not affect ongoing work and lasted two months.

The company declined comment on the past cases. But a spokesman, James Fisher, said, "Booz Allen is proud of our reputation for the highest ethical standards, built over nearly 100 years of service to our government and commercial clients."

As the Snowden story continued to generate front-page news, Booz Allen chief executive Ralph Shrader predicted that his company would overcome the bad publicity from the Snowden leaks.

In remarks to employees at a "town hall" meeting late last month, Shrader said, "I think the important thing to understand is we cannot and will not let Snowden define us."

"You define us. The work we do for our clients defines us, not the occasional aberrant in our midst," he added. "There is nothing here for us to hang our heads about. We are a fine, fine firm. We stand on the list of Fortune's Most Admired Companies. I plan to be on the list year after year."

Past Complaints

The disclosures by Snowden represent one of the most grievous breaches of security in the history of the super-secret NSA. Snowden, 30, who worked for just three months at Booz Allen, managed to obtain top-secret documents detailing broad government surveillance of telephone records and Internet traffic.

Little is known about how Snowden, a former security guard without a college degree, was able to get top-secret clearance and position himself at Booz Allen to obtain national security secrets.

"My position with Booz Allen Hamilton granted me access to lists of machines all over the world the NSA hacked," he told the South China Morning Post on June 12. "That is why I accepted that position about three months ago."

Booz Allen has accepted responsibility for past complaints of wrongdoing but continued to win contracts.

In 2006, the Justice Department proposed barring the company, along with four other major consultants, from participating in contracts for having received rebates from airlines, credit card companies and hotel chains while billing the government for the full undiscounted cost of the travel. The government dropped its lawsuits against the firms after they agreed to monetary settlements, with Booz Allen submitting nearly $3.4 million to the Treasury.

A few years later, the company received unwanted attention in a federal court prosecution of the MacDill employee working as a "counter threat analyst" at U.S. Central Command's Joint Intelligence Operation Center in Tampa.

The employee, Scott Allan Bennett, had received one of the highest-level security clearances available in late 2008, even though a few months earlier he had been convicted of making "willful false and misleading representations" to the U.S. government.

The case, raised in Senate correspondence last week by Sen. Bill Nelson (D-Fla.), concerned an effort Bennett made on behalf of a South African woman he had met on the Internet who wanted to visit the United States. According to court documents, Bennett sought to get her a visa by falsely claiming that she would be working with the White House and the State Department while in the United States. He was sentenced to three years of probation.

In 2010, Bennett was arrested again after appearing intoxicated at the gate to MacDill Air Force Base, home to U.S. Central Command. He was subsequently charged and convicted on weapons charges and charges of making additional false statements to the government.

At the trial in Tampa, U.S. District Court Judge Virginia M. Hernandez Covington asked how Bennett could receive a top-secret clearance after his conviction. The U.S. attorney's office in Florida was unable to answer the question, according to news reports.

The judge's concern was echoed in a letter written by Nelson to the Senate Intelligence Committee Chair Dianne Feinstein (D-Calif.) in June. "Serious quality-control questions have been raised here," Nelson wrote, asking that the committee investigate such cases. "We may need legislation to limit or prevent certain contractors from handling highly classified and technical data."

Now in prison at the Schuylkill Federal Correctional Institution in Minersville, Pa., Bennett could not be reached for comment. His Washington attorney, Jeffrey O'Toole, declined to comment.

In 2012, the Air Force proposed barring the San Antonio office of Booz Allen from bidding on future contracts. The division had hired a Pentagon official who brought with him on his first day of work "non-public information," which he shared with the company to help it win an information technology contract.

The Air Force lifted a temporary suspension on Booz Allen in April 2012 when the firm agreed to implement ethics and other reforms and pay $65,000. At the time, Booz Allen issued a statement saying that the company "accepts responsibility for that incident and related matters and agrees to implement firm-wide enhancements to its ethics and compliance program."

Although the 2006 and 2012 requests for barring the company from bidding for certain contracts surprised those who follow intelligence contracting, those cases did not seem to damage the firm's overall reputation.

"The company did have a few instances of misconduct," said Steven Aftergood, who follows intelligence contracting for the Federation of American Scientists. "But that number is not terribly surprising for a company of that size."

Yet the problems, in particular those raised by Snowden and other employees with improper access to confidential materials, suggests a broader systemic problem, Aftergood said.

"The current situation didn't come about by accident," he said. "It is the product of economic and political incentives that favor it. Those incentives continue to exist, so there is a serious question about how much it is going to change."

Future of Contracting

Booz Allen is hardly the only company touched by allegations of mishandled government contracts. In 2011, 1,094 individual and corporate contractors were suspended or barred by the departments of Defense and Homeland Security alone, according the latest available federal data. There were probably more, but transgressions by firms that contract intelligence work are not released publicly by the federal government.

Michael Birmingham, a spokesman for the Office of the Director of National Intelligence, said the intelligence community has lessened its reliance on �private-sector contractors.

In 2008, about 27 percent of intelligence-community security clearances had been granted to private-sector workers, he said. Today, that number has declined to about 18 percent.Overall, as of late 2012, 4.9 million people have been granted security clearances, about one-fifth of them work in the private sector, according to data made public by the Office of the Director of National Intelligence.

But the growth in contracting in defense and homeland security work continues. That has been fueled by several factors � ongoing public worry about terrorism, antipathy toward big government and an evolution in Washington's revolving-door culture that provides extraordinary rewards to top government officials who go private, experts say.

Yet even outsourcing's most vocal skeptics agree contractors are here to stay, despite what they contend are illusory savings.

"Curbing the use of contractors would be difficult or impossible," said Chuck Alsup, a retired Army intelligence officer and vice president of the Intelligence and National Security Alliance, an Arlington County-based association of private companies and individual experts. "It would be, frankly, unwise."

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+5 # ReconFire 2014-09-20 22:34
I commend you on you're campaign, but you need to realize two things, (1) the 900 lb. gorilla in the room is the CA. corrections union, and (2) it doesn't really cost $62,300 to incarcerate someone for a year. This is BS that prison systems spew to get more funding (prisoners families pay for allot of the costs associated with incarceration).
Good luck with you're endeavor.
 
 
+23 # James38 2014-09-20 23:07
Whatever the actual figure for incarceration, a huge waste of money is caused by the "Drug War".

The fooliah puritanical attempt to enforce prohibition laws has always been doomed to failure. All that is ever accomplished by prohibition is more crime, more profit for illicit producers of the banned substance, more health problems and death due to impure substances and irregular doses, more broken families and more misery in general.

Prohibition never works. Drug Laws Make Drug Lords.

The "great success" in Puerto Rico, for example, when a massive bust of the local "Dons" broke up the long established control of the drug business in the late 1970's. This led to more violence, not less drugs. Also, since the importation of large amounts of pot from Colombia was made nearly impossible, heroin and cocaine became far more abundant (and cheap) and pot prices rose from $25 per ounce to $250 per ounce or more, which encouraged the market for more heroin and cocaine. The number of people in prison for drug offences has continued to rise.

This is typical of the utter useless failure of prohibition. We didn't learn from the alcohol prohibition fiasco, so we are repeating the mistakes and reaping the same awful consequences.

Education is indeed the answer. Well educated people with a decent chance for a well-paying job will not abuse drugs nor look to drugs for income - but they may enjoy some recreational use - and that is normal human behavior.
 
 
+11 # James38 2014-09-20 23:17
Persons with substance abuse problems will always exist. With all substances, a small percentage of people using them will tend toward abuse.

As with alcohol (now legal again), and tobacco (perhaps the most dangerous drug of all, always legal and even subsidized), education will reduce the problems, and treatment and job training will be the correct answer for those with problems.

Substance abuse is not a criminal act, it is a social and medical problem, and is never helped by incarceration. It is far more humane and far less expensive to offer treatment, help, and education to those who need it.

While we see with great relief the recent movements toward national decriminalizati on of marijuana, how much longer will it take for the policies of reason to replace "Drug War" hysteria?

One key fact is that prohibition does not reduce the availability of a substance (unless a truly totalitarian and draconian society is developed in which repression replaces freedom). A Doctor of my acquaintance had a major change of mind when she realized that her decision not to drink alcohol was not based on its legality. She realized that booze could be given away free on every street corner, and she would still not drink. She became a strong advocate of ending the Drug War.

Heroin is widely reviled as dangerous, yet it is widely available under prohibition. Anyone who wants it can get it - they just pay more, and risk death from accidental overdose.
 
 
+2 # randrjwr 2014-09-21 14:09
I have long thought that all addicts should be given their drug free of charge with no questions asked in a clinical setting, thus taking the profit out of the illicit drug business. The cost of obtaining the drugs to be administered would be far less than the cost of the drug wars in both money and in human lives.
 
 
+9 # m... 2014-09-20 23:32
 
 
-23 # Roland 2014-09-21 06:15
 
 
+1 # think4once 2014-09-21 07:26
Roland,I am usually with you on the majority of your comments, as with this one,, however, something that is most often overlooked by all who contemplate or converse about the subject of gvt-over-spendi ng, is this... The Black Budget...
To quote the movie "Independence Day" when the prez learns of the so called area 51 projects he asks how the get funding for something like this... and the father of Goldblooms character says ...
" You don't really think they actually spent $10,000.00 on a toilet seat, do you?"
...
So, to you ,Roland, and all who care, I say this,,,
Privatization of prisons is morally wrong on all levels... and the idea that private sector can do things better and more efficiently than gvt is true in most cases.. but that's only because the Black Budget funnels all that-supposedly - wasted money..
The gvt only pretends to be incompetent because it's better than having you know what they are really doing with that money.
 
 
-4 # MidwestTom 2014-09-21 12:09
I listened to conversation with some friends (over some beers) about new business ideas. One idea thrown on the table was to offer to send white prisoners to Siberia, and black prisoners to Liberia. The cost would be 25% of what it costs here, and as an incentive to accept the transfer, the prisoners would have their sentence halted. Those with life sentences would renounce the US citizenship and become citizens of their new host country.

Once released their new host country could use their American taught skills.
 
 
-1 # PCPrincess 2014-09-22 07:42
The vast majority of the prison population are not lifers, but those with sentences under ten years. Of those, most are drug-related offenses. Drug-related offenses includes not only possession or distribution, but also crimes committed in order to purchase drugs on the black market. Our society would best be served by eliminating the drug laws, reducing the prison-industri al complex by over half, but, until we remove the corruption that has been allowed to flourish within our legislative systems, that will not happen. There is a hug sum of money attached to America's new slave trade.
 
 
0 # Buddha 2014-09-23 11:20
Sounds like you have some racist White Separatist friends who have come up with a completely unhelpful racist "solution" fueled by YOUR drug of choice, beer...
 
 
0 # randrjwr 2014-09-21 14:16
Quoting m...: "Public Schools= Not-Privatized (yet) =No corpo-profiteer ing incentive= no lobby $$ for politicians = no money for schools."

"..yet.."; but watch out, the Koch brothers and their henchmen are working hard and making progress. Public education must be preserved at all costs. All of what m... says here is true, true, true.
 
 
+8 # Kootenay Coyote 2014-09-21 07:59
 
 
+2 # Vardoz 2014-09-21 11:45
Our nation has become an anti life nation. Everything that is being done to the majority is either causing death and destruction or killing the planet.
 
 
0 # candida 2014-09-21 12:51
Quoting Vardoz:
Our nation has become an anti life nation. Everything that is being done to the majority is either causing death and destruction or killing the planet.

I agree. I've thought of the U.S. as having a necrophilic culture for some years now.
 

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