US Intelligence officials: $42.3 billion bill for spy services last year

The budget disclosure, the first since 2001, confirms that the bulk of money was spent on private contractors, sparking an outcry.

Anyone wondering, in this age of global terrorism, how much money the US intelligence community spends on spy services was given an answer on Tuesday: $43.5 billion in 2007, according to Mike McConnell, the director of national intelligence.

So how exactly was that money spent? And who got the money?

The publication of the figure is a rare display of transparency. Government officials normally refuse to divulge intelligence budgets on the grounds of national security, as The New York Times reports this week.

The intelligence budget has twice before been made public: in 1997 and 1998, the C.I.A. disclosed that its budget was $26.6 billion and $26.7 billion, respectively. But since the Sept. 11 attacks the Bush administration has refused to make similar disclosures, fighting legal challenges from several advocacy groups.

The figure does not include billions of dollars spent by military services on intelligence, the Times points out. This is only a partial accounting of intelligence spending, The Washington Post says.

It includes salaries for about 100,000 people, multibillion dollar secret satellite programs, aircraft, weapons, electronic sensors, intelligence analysts, spies, computers and software.

The Post puts the $43.5 billion tab into perspective:

For comparison, last year's intelligence spending was about half the $91 billion President Bush is proposing to spend over the coming year on the Agriculture Department, and somewhat more than the $35 billion budget of the Homeland Security Department.

The figure nonetheless is still likely to add fuel to the controversy of how the government spends its money in the war on terrorism. That's because what counts is who got most of the $43.5 billion.

A Defense Intelligence Agency presentation in May of 2007 showed for the first time, according to a June 2007 investigative report by, that 70 percent of the US intelligence community's work is done by contractors. That means that, just as civilians in Iraq and Afghanistan are increasingly hired to provide security and perform other quasimilitary functions, so too are civilians contracted to do intelligence work.

The figures revealed this week helps confirm that the US government is paying more money to contractors to do intelligence work than at any other time in history, reports

More than five years into the global "war on terror," spying has become one of the fastest-growing private industries in the United States. The federal government relies more than ever on outsourcing for some of its most sensitive work, though it has kept details about its use of private contractors a closely guarded secret. Intelligence experts, and even the government itself, have warned of a critical lack of oversight for the booming intelligence business.

What exactly did contractors do in return for 70 percent of $43.5 billion last year? It's anybody's guess,'s Tim Shorrock says:

Because of the cloak of secrecy thrown over the intelligence budgets, there is no way for the American public, or even much of Congress, to know how those contractors are getting the money, what they are doing with it, or how effectively they are using it. The explosion in outsourcing has taken place against a backdrop of intelligence failures for which the Bush administration has been hammered by critics, from Saddam Hussein's fictional weapons of mass destruction to abusive interrogations that have involved employees of private contractors operating in Iraq, Afghanistan and Guantánamo Bay, Cuba.

What is known is that greater reliance on contractors means higher costs, says.

Over the [period of the mid-1990s to 2005], the total value of intelligence contracts more than doubled, from about $18 billion in 1995 to about $42 billion in 2005.

That's because, on average, contractors are paid about double the salary of government employees.

Some analysts with intimate knowledge of the intelligence community charge that the money is not well spent. James Carroll, whose father founded the Defense Intelligence Agency in 1961, pointed to the question of accountability in an Aug. 27, 2007, editorial for The Boston Globe.

Given the often shocking record of what US intelligence officials have done over the years, why does it matter if such activities are carried out by contractors? The answer patently goes to the question of accountability. Public servants who are bound by oaths to the Constitution and the law understand what the measure of behavior must be, even if they fall short of it. Activities involving the surreptitious, especially, have properly been reserved to public institutions subject to political oversight. Private parties, bound by contract, operate at remove from such limit and accountability, which may be why borderline activities like interrogation or rendition are increasingly farmed out to them.

The Defense Intelligence Agency itself summed up the differences of accountability in a slide presentation.

Some have asked whey the government relies so heavily on contractors rather than using government employees. A partial answer was given to The Washington Post in August, after the Defense Intelligence Agency announced it was outsourcing more than $1 billion worth of intelligence work to contractors:

A former senior Pentagon intelligence official said yesterday that the DIA is struggling to do "the in-depth intelligence work required under present circumstances" and that is why it is preparing to contract for outside help. He cited the military's efforts in Iraq to provide human intelligence sources to forces that rotate out after tours of a single year. "That is hardly enough time to develop serious, dependable Iraqi sources," he said.

In response to the media outcry about its outsourcing of spywork, the Defense Intelligence Agency tried to clarify:

Many of the media reports incorrectly imply that this is all new work representing an increased dependency on the use of contractors and that contractors would be doing work that is properly done by government employees.
Consistent with the Federal Acquisition Regulation, this notice does not include inherently governmental functions. DIA maintains direction and control of all intelligence operations.
Contrary to media reporting, DIA does not outsource analysis. As part of the DIA team, contract personnel augment the government-led analytic efforts to provide knowledge and expertise to DIA's customers. However, DIA government senior analysts and leaders rigorously review and approve all analytic products. Government managers are fully in charge of the analytical process.
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