The NSA‘s Back Door | 215

The NSA‘s Back Door | 215 documents he stole, he selected lists of the NSA’s secret sources in adversary nations. The Snowden breach was a failure that directly traced back to the NSA’s largest and most trusted contractor, Booz Allen Hamilton, calling into question the vexing issue of privatizing secret intelli- gence. Booz Allen, like other private firms that did work for the gov- ernment, was in the business to make money. Indeed, it had found government contracts so much more profitable than its work in the private sector that it sold its private sector unit to Price Water- house. The profitability of government work led the Carlyle Group’s private equity fund to acquire a controlling stake in Booz Allen in July 2008. By 2013, it had increased its revenue by more than $1.3 billion by expanding its government contracts. Even more impres- sive, its operating profit on these contracts had doubled. It did not need to increase its core internal staff to achieve these profits, it just had to hire outside contractors. In 2008, Booz Allen claimed 20,000 employees on its internal staff; in 2013, it claimed fewer than 5,000. The resulting “reduced headcount,” according to its January 30, © 2013, quarterly report, greatly decreased its costs for incentive pay. © It mainly accomplished this reduction by expanding the number of outside contractors it employed, 8,000 in these five years, by one Wall Street analyst’s calculation. They were employed as system administrators, infrastructure analysts, computer security special- ists, and other “geek squad” jobs at the NSA and other government agencies. Their main qualification was their prior security clearances (which as mentioned earlier saved Booz Allen the expense of vetting them and also the loss of income while waiting many months for a clearance). Snowden therefore was highly desirable for Booz Allen from an economic point of view. Even though he had no prior experience as an infrastructure analyst, and he had been detected being untruthful about his degree in computer sciences, he not only had a SCI secu- rity clearance but was willing to take a cut in pay. In keeping with the Booz Allen business plan, such a recruit provided another cog in its profit machine. Not only had the NSA outsourced much of its computer opera- | | Epst_9780451494566_2p_all_r.indd 215 ® 9/30/16 8:13AM | | HOUSE_OVERSIGHT_019703