Edward Snowden: Exhibit A for How Washington Blows Money on Contractors

What the leaker's $200,000 salary tells us about the absurd cost of privatizing government.
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Photos of Edward Snowden printed on the front page of Hong Kong newspapers. (Reuters)

No matter how you feel about Edward Snowden's decision to dish on the government's spying habits, there's at least one issue all of us can agree to be outraged over: his salary. Before hightailing it to Hong Kong, the 29-year-old had a plum $200,000-a-year job as a Honolulu-based government-contractor for Booz Allen Hamilton, helping the National Security Agency run its surveillance operation.* This for a fairly low-level professional with a GED. Here, meanwhile, is how Snowden described his pre-leak lifestyle to The Guardian:

"[Y]ou can get up everyday, go to work, you can collect your large paycheck for relatively little work against the public interest, and go to sleep at night after watching your shows."

Low stress. High pay. As long as your conscience doesn't get in the way, it's apparently good to be a cog in our national-security apparatus. 

There's a frustrating reason for that. Over the years, the government has outsourced huge chunks of its operations wholesale to private contractors like Booz Allen, particularly in the realm of intelligence gathering. And it's costing Washington untold billions every year. 

Nobody knows for sure how many contractors the government pays because, well, the government doesn't keep track. But New York University Professor Paul Light has estimated that in 2005, they made up more than half the federal workforce, totaling some 7.6 million employees. Since then, the tally has no doubt grown. And whatever their precise numbers may be, the bottom line is that contractors are now enmeshed in virtually every federal function, from catering to research to spying.

In fact, especially spying. Of the more than 4 million Americans with top-secret security clearance, at least 34 percent work for contractors today. The story of why, according to author Tim Shorrock, dates back to the end of the Cold War, when Congress sliced about a third from the defense and intelligence budgets. The cuts sent many of the country's best national-security minds into the contracting world at the same time that commercial industry was  beginning to leapfrog the government's ability to develop new technologies. Then came September 11th and the war on terror, which unleashed a new geyser of federal spending. Per Shorrock:

[T]he CIA and other agencies were authorized to hire thousands of analysts and human intelligence specialists. Partly because of the big cuts of the 1990s, however, many of the people with the skills and security clearances to do that work were working in the private sector. As a result, contracting grew quickly as intelligence agencies rushed to fill the gap.

Within a few years, relying on contractors had become the norm. In an epic 2010 investigative series on the contractor-industrial complex, The Washington Post explained:

To ensure that the country's most sensitive duties are carried out only by people loyal above all to the nation's interest, federal rules say contractors may not perform what are called "inherently government functions." But they do, all the time and in every intelligence and counterterrorism agency ....

Private contractors working for the CIA have recruited spies in Iraq, paid bribes for information in Afghanistan and protected CIA directors visiting world capitals. Contractors have helped snatch a suspected extremist off the streets of Italy, interrogated detainees once held at secret prisons abroad and watched over defectors holed up in the Washington suburbs. At Langley headquarters, they analyze terrorist networks. At the agency's training facility in Virginia, they are helping mold a new generation of American spies.

They also built the NSA's enormous data-monitoring system, now under so much scrutiny, and today employ workers like Snowden to operate it. As Michael Hayden, the agency's director from 1999 to 2006, told National Journal's Michael Hirsh in an article today, there "isn't a phone or computer at Fort Meade [NSA headquarters] that the government owns." 

One can debate the moral and strategic wisdom of outsourcing national-security operations to for-profit companies that often answer to shareholders rather than, say, voters. But in any event, it's been an expensive choice. For example:

  • In 2007, the government let it slip at a trade conference that it spent 70 percent of the intelligence budget, which is classified, on contractors, including hardware and software providers (the presentation included the charming tagline: "We Can't Spy ... If We Can't Buy!").
  • A 2008 study by the Office of the Director of National Intelligence found that contractors made up 29 percent of intelligence agency personnel, but 49 percent of the personnel budget.
  • The Senate Intelligence Committee has stated that while the average civilian federal employee costs $125,000 per year (with overhead included), an equivalent contractor comes out to about $250,000. 
  • Using the Department of Defense's uniquely detailed data, the Project on Government Oversight (PoGO) has found that military contractors cost three times more than DoD civilians. 
  • PoGO also found that federal government approves billing rates for contractors that are twice as high as average private sector compensation.
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Jordan Weissmann is a senior associate editor at The Atlantic.

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