JUAN GONZALEZ: Intelligence Director John Negroponte warned Thursday that al-Qaeda poses the gravest threat to the United States and is rebuilding its strength from secure hideouts in Pakistan. His comments were made in written testimony to the Senate Intelligence Committee as part of his annual threat assessment.

AMY GOODMAN: Negroponte also said Iraq was at a violent and “precarious juncture.” He stressed concern over an increasingly confident Hezbollah and outlined a series of other threats to the United States, including from Somalia, Iran and Syria.

JUAN GONZALEZ: Negroponte became the first national intelligence director in April 2005 but is shortly due to move to the State Department, where he will become Condoleezza Rice’s deputy. President Bush last week named retired Navy Vice Admiral Mike McConnell to replace Negroponte as the new chief of intelligence. McConnell said he would work to increase the coordination between the nation’s 16 different spy agencies.

MIKE McCONNELL: I plan to continue the strong emphasis on integration of the community to better serve all of our customers. That will mean better sharing of information, increased focus on customer needs and service, improved security processes, and deeper penetration of our targets to provide the needed information for tactical, operational and strategic decision making.

JUAN GONZALEZ: McConnell is a former director of the National Security Agency and the current director of defense programs at Booz Allen, one of the nation’s biggest defense and intelligence contractors. Under his watch, Booz Allen has been deeply involved in some of the most controversial counterterrorism programs run by the Bush administration, including the infamous Total Information Awareness data-mining scheme. McConnell has also been a leading figure in outsourcing U.S. intelligence operations to private industry.

AMY GOODMAN: Tim Shorrock is an independent journalist who’s been closely following this story. He’s currently working on a book about the privatization of intelligence. He joins us here in Memphis, where he lives. Welcome to Democracy Now!

TIM SHORROCK: Thank you very much.

AMY GOODMAN: So, talk about Mike McConnell and Booz Allen.

TIM SHORROCK: Well, it was interesting that Juan mentioned that he is into — talks about integration of intelligence services, because that’s exactly what Booz Allen does. Booz Allen is one of about, you know, ten large corporations that play a very major role in American intelligence. Every time you hear about intelligence watching North Korea or tapping al-Qaeda phones, something like that, you can bet that corporations like these are very heavily involved. And Booz Allen is one of the largest of these contractors. I estimate that about 50 percent of our $45 billion intelligence budget goes to private sector contractors like Booz Allen.

And Booz Allen Hamilton plays a very integral role in intelligence. It has a very close relationship, as you mentioned, with the National Security Agency. They advise them on their systems integration and things like this. They help bring intelligence together with other intelligence agencies.

And I think this particular appointment is sort of an acknowledgment of how much — of the role that contractors play, but it’s also very dangerous to have somebody from the private sector who’s basically been a Yes man to the intelligence agencies all this — you know, for the last ten years. If you’re a contractor, you do what the government says. So, I mean, where is our oversight? We basically don’t have any oversight of intelligence. And I think this is a very bad direction to be going in.

JUAN GONZALEZ: Now, some of the programs that they’ve been involved with with the federal government have not worked out well, right? There’s some called Trailblazer and Groundbreaker. Could you talk about those?

TIM SHORROCK: Right. Well, the NSA, the National Security Agency, is really sort of the lead agency in terms of outsourcing, and this began long before 9/11. It began in the late — you know, 1998, 1999, when they realized they were getting very behind the commercial world in technology. And so, you know, basically, the NSA has been leading this.

Trailblazer was a very large program that they contracted to a company called Science Applications International Corporation, SAIC. And their job was basically to, as you said before, data mining. They wanted to get all the intelligence they get from the phone intercepts, satellites, and get it into a form that their analysts can read and understand and analyze. And that’s what SAIC has been doing.

The project has cost about $4 billion, and it basically hasn’t worked at all. There are all kinds of problems with it. And this is an example of the kind of — you know, they give contractors control over huge programs, and then they subcontract. But it’s just not done very well. I mean, the government has done a very bad job of managing these programs, and, you know, Booz Allen has been involved in some of the most badly managed of these programs.

JUAN GONZALEZ: And McConnell, not only has he been involved in contracting, but isn’t he the chairman of the alliance of contractors that do business —

TIM SHORROCK: Yeah. Over the last year, he became the chairman of this organization, the INSA, which represents the largest NSA and CIA contractors. So he’s very involved in all levels of the contracting world, in terms of promoting the contractors and in terms of, you know, talking — pushing their interests in the government, within Congress. And so, you know, a guy like this running our intelligence services, as I said before, really is a serious problem.

AMY GOODMAN: What do you expect from the confirmation hearing?

TIM SHORROCK: I think that there’s going to — they’re going to ask him some pretty sharp questions, because — I mean, you mentioned this TIA program. I mean, they have about — they had millions of dollars’ worth of contracts on this Total Information project, you know, which was basically spying on American people, American citizens, antiwar protesters. And so, I think, you know, some of the senators — Senator Feingold, others — have been very interested, you know, want to know what exactly happened in this program. And as I had been working on this subject, writing this book and doing the reporting, I find that, you know, through the corporations you can learn a heck of a lot about the intelligence operations and communities, because they’re so involved in it.

AMY GOODMAN: Tim Shorrock, you write about the fact that Booz Allen is likely involved with the warrantless wiretapping of American citizens.

TIM SHORROCK: Right. Well, basically any large corporation that’s contracting with the National Security Agency has been involved in this. We talked earlier about Trailblazer. They were one of the subcontractors on this. SAIC ran the whole thing. But Booz Allen was a chief adviser to another program, which was the NSA’s internal communications. This was a program called Groundbreaker. And all of these programs are analyzing, you know, the phone calls that they intercept, the government communications from abroad they intercept. And when they’re intercepting phone calls between U.S. citizens and people abroad, the corporations are involved. They have people there working not only as just technical advisers, but also doing analysis. And so, if the NSA is listening in on our phone calls, you can bet that Booz Allen is participating in that.

JUAN GONZALEZ: And I would think that most Americans are worried enough about the fact that the government is eavesdropping on so many of these phone calls, but that it’s also actually being done by private contractors for the government would be even more worrisome to most folks.

TIM SHORROCK: Right. And, you know, I think equally worrisome is the fact that in the last year, when this became a big issue after The New York Times broke the story about the NSA, some Republicans in the Congress tried to introduce legislation to make sure that corporations would not be affected if it was deemed illegal, that they would basically be given a free pass and, you know, not prosecuted. So, you know, I think there’s a real question here about legal liability for these companies if this program is ever deemed illegal.

AMY GOODMAN: To get a sense of how large Booz Allen is, where Mike McConnell comes from, ”Information Week,” you write, “reports Booz Allen had more than 1,000 former intelligence officials on its [payroll]” and that it “employs more than 10,000 TS/SCI cleared personnel.” What does that mean?

TIM SHORROCK: Well, that’s the highest level clearance that you can possibly get. And so that means they have basically an army of, you know, private —

AMY GOODMAN: Ten thousand.

TIM SHORROCK: Ten thousand people. This was one contract that they had with the Defense Intelligence Agency, which I actually found on their website, you know, looking into different pages. But that 1,000 figure was the people actually on their payroll. And that was three years ago. And when I called them about this, they said, “We don’t confirm or deny numbers. We won’t tell you any numbers, but that number sounds reasonable.” So I think they have at least 1,000 on staff. And then, when they put together these projects, that was where their 10,000 number came from, so —

AMY GOODMAN: Who are some names we might recognize?

TIM SHORROCK: Among the corporations?

AMY GOODMAN: Among the top 1,000 officials that Information Week says are on the staff.

TIM SHORROCK: Oh. Well, we all know about James Woolsey, who is the former director of the CIA. He works at Booz Allen, a very well-known neoconservative who was one of the people who really pushed the Iraq war for years. They have all kinds of people that have come — names that most Americans won’t recognize.

AMY GOODMAN: George Tenet, they do.

TIM SHORROCK: Tenet’s not with Booz Allen, but Tenet is an intelligence contractor now. He just joined up, in fact, with a Carlisle company called Kinetic, which is one of the U.K.’s largest intelligence companies now here.

AMY GOODMAN: But, Joan Dempsey?

TIM SHORROCK: Joan Dempsey is the former executive director for Tenet, and she was hired last year by Booz Allen. They have all kinds of high-level officials working for them.

JUAN GONZALEZ: And what are the expectations, in terms of what McConnell will do in the position differently?

TIM SHORROCK: I don’t think he’ll be very much different. You know, what I’ve heard from people — and most of my sources are people inside the industry, inside the corporations — and they basically tell me he’s a Yes man. He’s somebody who’s — they got him in because basically they want him to push their own programs.

But I think it’s very important for your listeners to know and to understand that when talking about the intelligence office, 85 percent of the intelligence budget is controlled by the Pentagon. So we’re talking about a military program here. Everything — the NSA is under the Pentagon. The National Geospacial-Intelligence Agency, which does mapping and imagery, they’re under the Pentagon. The National Reconnaissance Office, which launches satellites, they’re under the Pentagon. And when the budget — when the Intelligence Reform Act passed, you might remember, there was a big fight. You know, the 9/11 Commission wanted to have these national agencies put under the DNI and taken out of the Pentagon, but there was a fight led by people in Congress, who basically represented the contractors, who didn’t want to be taken out of the Pentagon.

AMY GOODMAN: So, is there a huge exodus of people from within government intelligence to these private contractors?

TIM SHORROCK: Oh, absolutely. It’s been going on, you know, since the ’90s, you know, ever since, when in the early ’90s, they cut the intelligence budgets. Lots of people left, and they went into the contracting world. And then —

AMY GOODMAN: Because it pays more.

TIM SHORROCK: It pays three or four times more. And a lot of these people — they call them “green badges,” because a contractor has to wear a green badge when they work inside the agency — they go in the agency, and they’re sitting next to someone making, you know, $45,000, $50,000 a year, and they’re making $200,000, $250,000, $300,000. And it became such a problem that the last year the DNI actually put out a report saying, ’We’re in trouble, because we’re in competition with the contractors for our own jobs.’

AMY GOODMAN: Where is the accountability?

TIM SHORROCK: Where is the accountability? Hopefully, the Democrats are going to do some real oversight in this Congress, and I think they’re talking about it, and I think that’s going to happen.

AMY GOODMAN: Tim Shorrock, I want to thank you very much for being with us. Tim Shorrock is an independent reporter. His articles have appeared in The Nation and Mother Jones and Harper’s, currently working on a book on the privatization of intelligence.