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.

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.

And of course, we can look at Snowden himself, who was paid handsomely for his work as an IT "infrastructure analyst," presumably tasked with keeping the NSA's computer networks in ship shape. A search of Indeed.com's job board shows that the going rate for an infrastructure analyst these days is $80,000 a year, on average. According to the Bureau of Labor Statistics, meanwhile, only the top 10 percent of computer systems analysts make more than $119,000 annually. Finally, management level IT specialists within the federal government are making around $115,000.

Now maybe Snowden really was just worth his $200,000 salary -- he did have a security clearance, after all, and had worked for the CIA and for Dell as an NSA contractor. Or maybe the government contracting just lends itself to absurd payscales.

How much less would we be spending on the federal workforce if more of these jobs were brought in-house? It's hard to say. But in a chart breaking down where fat could be cut from personnel costs (below, via PoGO) the Pentagon was blunt about contractors: "The savings are here."


The government's heavy reliance on contractors has created ample opportunities for waste, as well as a severe revolving-door problem. On the lowest levels, the director of national intelligence has stated that the government often "finds itself in competition with its contractors for our own employees." On the highest level, you have examples like Booz Allen. As The New York Times noted this morning, Obama's top intelligence official, James R. Clapper, is an alumnus of the contractor, which earned almost a quarter of its $5.7 billion last year from intelligence work. Clapper's Bush Administration predecessor, John McConnell, works for Booz Allen today. 

The Obama Administration taken some steps to "insource" some jobs back to the civil service. But despite outcries from the contracting community, the results so far have less than dramatic. We're still paying far too many guys like Edward Snowden far too many taxpayer dollars. And we probably will be for a long while.

*UPDATE June 11, 2013: Booz Allen has issued an updated press release stating that Snowden was paid "a salary at the rate of $122,000." That, of course, conflicts with the Guardian's account, which reported that Snowden: "had a 'very comfortable life' that included a salary of roughly $200,000. . ." I've placed a call to Booz Allen to try and find out if they believe Snowden was simply exaggerating his salary, if the Guardian was actually referring to a total pay package including bonuses rather than a salary rate, or if there is some other explanation of the discrepancy.

UPDATE 2 June 11, 2013: Booz Allen has yet to return my call for comment. However, The Washington Post's Erik Wemple has some additional reporting:

There's a massive difference between $122,000 and $200,000 -- a 64 percent difference. Yet Glenn Greenwald, the Guardian journalist at the forefront of these stories, says this: "That is a very strangely worded statement -- using 'rate,'" writes Greenwald. When asked whether he'd seen Snowden's pay stubs, Greenwald said he hadn't. "[H]is salary didn't really strike me as a central part of the story, to put that mildly. It's possible Booz Allen is using a pro-rated figure, or it's possible Snowden talked about his salary at his prior NSA job at Dell." A source told the Erik Wemple Blog that Snowden wasn't bonus-eligible.

The word "rate" doesn't strike me as quite so strange. But there still appear to be open questions on this issue. Hopefully more answers will be forthcoming.