Data Leak Could Undermine Trust In Government Contractor
In recent decades, a quiet revolution has been transforming the way Washington works.
Because the U.S. government does not have the workforce to complete all of its tasks, it employs private companies like Booz Allen Hamilton to do the work for it. Booz Allen is the company where Edward Snowden, who said he leaked secrets about the National Security Agency, most recently worked.
Over the past 25 years, this contract workforce has grown and plays a major role in the U.S. government, says Paul Light, a professor of public service at New York University.
"We've become highly dependent on it," he says.
Booz Allen is just one of the numerous companies that have ridden the privatization wave to great success. For years the company earned much of its profits by selling management services to the private sector. But in 2008, the company split up, and part of it was sold to the private equity firm The Carlyle Group. That part makes virtually all of its revenue working for the government.
George Price, an analyst at BB&T Capital Markets, says Booz Allen is a good example of this growing workforce.
"I would say Booz Allen is probably, if not actively working, has worked for most major agencies in the federal government," Price says.
Booz Allen specializes in IT work, especially in the hot area of cybersecurity. Some of its biggest contracts are with military and intelligence services like the National Security Agency. Many of the firm's 25,000 employees are people who, like Snowden, are former government workers who come with security clearances.
One of the reasons Booz Allen prospers is because people with strong ties to the intelligence community who know their way around the government end up working for the firm. For example, James Clapper, the current director of national intelligence for the Obama administration, used to work at Booz Allen. The man who held the same job in the Bush administration, Mike McConnell, now works at the firm. McConnell spoke in a video produced by Booz Allen about the importance of cybersecurity.
"Nation-states are building cyberwarfare tools," McConnell said in the video. "They will use the same means to get into a system that they would use for espionage or exploitation."
People like McConnell and Clapper helped Booz Allen quietly earn the confidence of government officials, says Tom Rodenhauser, the managing director at Kennedy Consulting Research and Advisory.
"There's a high degree of, I would call it, professionalism and confidentiality that permeates the company," Rodenhauser says of Booz Allen. "Part of its bedrock principles is having that confidentiality aspect. That's how consultants work."
The question now is whether the Snowden incident will undermine that trust. Rodenhauser says he thinks this will lead the government to question the company.
"I think the larger impact might be whether the government, as a client, comes back to Booz Allen and says, you know, 'We don't know if we can trust you with your people,' " Rodenhauser says.
For its part, Booz Allen has expressed shock about the revelations and promised to cooperate with the investigation. (On Tuesday, the firm said Snowden had been fired on Monday, one day after he went public about his claims.) Snowden worked at Booz Allen for just a few months after stints at the NSA and CIA.
A lot of people in and out of government apparently worked alongside Snowden over the years without voicing suspicions of him. Unless something more comes out about Booz Allen's vetting practices, says Price of BB&T Capital Markets, it's unfair to pin the blame on the company.
"I think this is going to be viewed more as a rogue incident and an unfortunate perceptual incident in terms of publicity," he says. "But I don't think it's going to amount to much more than that."
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