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CIA’s brain drain: Since 9/11, some top officials have moved to private sector

By Julie Tate,

In the decade since the attacks of Sept. 11, 2001, private intelligence firms and security consultants have peeled away veterans from the top reaches of the CIA, hiring scores of longtime officers in large part to gain access to the burgeoning world of intelligence contracting.

At least 91 of the agency’s upper-level managers have left for the private sector in the past 10 years, according to data compiled by The Washington Post. Several of the top positions have turned over multiple times in that period: In addition to three directors, the CIA has lost four of its deputy directors for operations, three directors of its counterterrorism center and all five of the division chiefs who were in place the day of the Sept. 11 attacks.

In many quarters in Washington, government officials decamp for the private sector as a matter of course. Defense consultancies routinely hire generals retiring from the Pentagon; the city’s lobbying firms are stacked with former members of Congress and administration officials.

But the wave of departures from the CIA has marked an end to a decades-old culture of discretion and restraint in which retired officers, by and large, did not join contractors that perform intelligence work for the government. It has also raised questions about the impact of the losses incurred by the agency. Veteran officers leave with a wealth of institutional knowledge, extensive personal contacts and an understanding of world affairs afforded only to those working at the nation’s preeminent repository of intelligence.

Among the CIA’s losses to the private sector have been top subject-matter experts including Stephen Kappes, who served as the agency’s top spy in Moscow and who helped negotiate Libya’s disarmament in 2003; Henry Crumpton, who was one of the CIA’s first officers in Afghanistan after the Sept. 11 attacks; and Cofer Black, the director of the agency’s counterterrorism center on Sept. 11.

The exodus into the private sector has been driven by an explosion in intelligence contracting. As part of its Top Secret America investigation, The Post estimated that of 854,000 people with top-secret clearances, 265,000 are contractors. Thirty percent of the workforce in the intelligence agencies is made up of contractors.

Those contractors perform a wide range of tasks, among them assessing security risks, analyzing intelligence and providing “risk mitigation” services in foreign countries.

“Since 9/11, the demographics of the agency have been out of whack. A number of people left the agency earlier than you would think, and you had a large influx of younger people,” said Robert Grenier, a 27-year agency veteran who is now chairman of ERG Partners, a boutique investment bank specializing in the intelligence industry. “The average experience of an officer now is much lower than it has been traditionally, and that has its effects on the agency.”

For private firms seeking to tap into the lucrative industry of intelligence contracting, the value of having agency officers on the payroll is hard to overstate. And although the agency pays its top managers large salaries — the most senior officers make nearly $180,000 a year — private firms are generally able to offer more.

This report is based on interviews with more than a dozen current and former CIA officials. The Post compiled its list of more than 90 upper-level managers

by identifying agency personnel who left for the private sector after serving as directors, deputy directors or chiefs of the CIA’s various divisions, as well as other members of the leadership of the Directorate of Operations, now known as the National Clandestine Service.

CIA spokesman George Little said that “any suggestion that there isn’t world-class, senior expertise at the CIA is flat wrong.”

“Retirement is a fact of professional life,” Little said, “and the CIA has created strong mechanisms to assist our officers as they explore opportunities after retirement and to retain their knowledge before they go.”

The bulk of the agency’s losses to the private sector came roughly from 2002 through 2007, as business with intelligence contractors spiked. In fiscal 2010, a senior U.S. official said, attrition rates at the CIA were at an all-time low.

Some of the officials quoted for this report spoke on the condition of anonymity because of the sensitivities involved in discussing the agency’s inner workings.

Few of them cited problems at the agency as their reason for leaving. Rather, they said, the choice was often financially driven.

One former senior official who had worked in government service for more than 25 years said he looked at the opportunities for advancement at the agency on the one hand and at the looming costs of college tuition for his children on the other. He chose the private sector.

“It was a practical matter,” he said.

Contractors calling

Years of intelligence reforms found the CIA unprepared for the events that followed the Sept. 11 attacks. From 1990 through 1996, Congress had slashed the intelligence community’s budget every year, and from 1996 through 2000, it effectively left the budget flat.

Suddenly, with a demand for better intelligence, the agency needed more bodies. It needed people to deploy to Afghanistan. It needed top-level linguists. It needed interrogators. Insiders and outsiders quickly concluded that the CIA needed contractors.

Richard “Hollis” Helms, a longtime overseas officer and former head of the agency’s European division, founded Abraxas Corp. in the days after the attacks. Helms identified the areas in which the agency needed the most help and began aggressively recruiting current and former intelligence professionals.

Those professionals included mid-level analysts from the Directorate of Intelligence. But they also included top brass such as Rod Smith, a former chief of the agency’s Special Activities Division, and Fred Turco, one of the original architects of the CIA’s counterterrorism center and the former chief of external operations. Meredith Woodruff, one of the agency’s most senior female operatives, signed on to Abraxas in 2006.

“Hollis is brilliant; he realized there was a huge market out there to exploit. He printed money for a while — hired tons of CIA staffers and doubled their salary. He was the first agency guy to figure it all out,” said one former chief of station, the term for the top CIA officer at a U.S. embassy. “You would see people leave the CIA on a Friday and come back on Monday in the same job but working for Abraxas.”

Barry McManus, an agency veteran, was among those who saw the promise of Abraxas.

McManus had worked for the CIA his entire career, with the exception of a few years on the D.C. police force. He started out as a bodyguard for CIA Director William J. Casey, then climbed through the ranks, eventually doing work in more than 130 countries. By 1993, he had become the CIA’s chief operations polygraph examiner and interrogator, responsible for interviewing high-level terrorism suspects and others in the process of interrogation.

But when he turned 50 in 2003 and found himself eligible for retirement, McManus said, he realized he wanted to do something else.

Now, as vice president of training and education at Abraxas, he spends much of his time training others in the law enforcement and intelligence world. Among his contracts is one with the Federal Law Enforcement Training Center, which hired him to lead a four-day class that covers an introduction to terrorism.

According to government contracting documents, in a separate four-day period in 2006, McManus made nearly $40,000 for leading a seminar for immigration officers in “detecting deception and eliciting responses.” A year later, he secured a $238,000 contract to perform guest lectures. Pretty soon, more contracts began rolling in.

McManus said he is well compensated for his work at Abraxas. One of his first big purchases in post-agency life: a black Maserati GranTurismo, which retails for $160,000.

Helms, Abraxas’s founder, declined to be interviewed. In 2009, the privately held firm had an estimated 470 employees and annual revenue of $90 million. Late last year, Cubic, another defense contractor, acquired Abraxas for $124 million.

Growing demand

Many former CIA officers say they are surprised at their worth in the private sector. Some are surprised the private sector wants them at all.

At a 2009 conference hosted by the Digital Government Institute, John Sano, former deputy director of the National Clandestine Service and now a director of business development at Cisco, cracked a joke about his background.

“Let me tell you about my technological expertise: I have none,” Sano told conference attendees at the Ronald Reagan Building in Washington. “I just figured out how the spring on this pen works. That is the limit to my expertise.”

If he didn’t bring technical expertise to Cisco, Sano, a 28-year vet­eran of the agency, did bring something else: the ability to help the firm navigate the sometimes mystifying layers of bureaucracy in Washington.

The same can be said of countless other CIA veterans. A top-level official with experience at the agency might know the right people on the right committees or be able to help identify federal employees who play a key role in awarding a lucrative intelligence contract. They also know how the intelligence world works.

“If you worked on the seventh floor of the agency, you have a view of everything that’s going on in the world from Marrakesh to Bangladesh,” one former operations officer said. “That knowledge is invaluable to companies working internationally.”

Outside the intelligence world, corporations have found reasons to turn to CIA vet­erans in the post-9/11 era. Many former officers now head security for multinational firms. Among others, Robert Dannenberg, a former Central Eurasia division chief, left the CIA to run BP’s international security affairs division and now is the director for global security at Goldman Sachs.

When Mel Gamble, a 40-year veteran of the agency, retired in 2008, he wasn’t sure what he wanted to do. He was retiring as the chief of recruitment for the National Clandestine Service, after serving in jobs that included being operations officer and eventually a chief of station in Africa.

In the old days, through the 1990s, there had been an “unwritten rule,” Gamble recalled: “You would retire and go away. Go raise tulips or dogs.”

But some officials with the agency now have concluded that their retirement income is not enough, and they don’t want to stay at the agency working as “instructors or doing task-specific duties,” Gamble said.

“I didn’t just want to go back to the agency [as a contractor] as so many people do,” said Gamble, who ultimately settled on a position at Electronic Warfare Associates, a defense contractor based in Herndon that advertises services including network penetration testing and computer forensics analysis.

“They knew the ins and outs of how to deal with [the Defense Department], but they didn’t understand other agencies at all and how they were structured,” said Gamble, who has since left EWA for another company. “I tell them, you need to talk to people at this level, or it’s actually this person at the National Security Council who would make a decision on this project.”

A loss of experience

At the agency, some say the wave of departures has led to a sense of unease.

In 2009, after a double agent blew himself up at a CIA base in Afghanistan, killing seven of the agency’s officers, many former officials suggested that the tragedy might have been prevented had the CIA retained more senior personnel at the outpost.

Some officials questioned why the agency had given one of the top assignments there to an officer who had never served in a war zone. Other former officials raised concerns about how intelligence assets were being handled in the field.

“The tradecraft that was developed over many years is passe,” a recently retired senior intelligence official said at the time. “Now it’s a military tempo, where you don’t have time for validating and vetting sources. . . . All that seems to have gone by the board. It shows there are not a lot of people with a great deal of experience in this field.”

Only a year before the bombing, the agency had instituted a new program to mitigate the loss of institutional memory. The program required officers heading out the door to train their successors or participate in oral histories about their own careers. Some officers even make manuals describing specialized work.

At times, though, a transfer of knowledge has not been enough.

In 2010, after the CIA lost Michael Sulick, the head of its clandestine service, to retirement, it chose not to replace him from within its current ranks. Rather, the agency tapped John D. Bennett, a CIA veteran who had served as station chief in Pakistan and who had retired only two months before.

Back from retirement

As far back as 1989, the agency established a retirement program to help former employees adjust to life outside the bubble of the agency. The program, now three months long, teaches agency officials about their benefits and financial management skills.

But these days, it also functions as a recruitment space.

When the retirement program was conceived, fewer than 20 firms came to speak to the retiring classes about opportunities in the workforce outside the agency. Today, 40 to 50 companies vie to attend an agency-sponsored job fair held 10 times a year at the CIA’s retirement center in Reston. Major contractors — including SAIC, Booz Allen Hamilton and CACI — are regular participants.

One agency participant who interviewed with top defense contractors described the conversations as an exercise in figuring out whom he knew in the intelligence world.

“With a couple of firms, it was sort of a blatant, how-can-we-

exploit-your-Rolodex conversation,” said one former intelligence officer. The chief executive of the company he ended up working for told him: “We want to know how the intelligence world works and how we can provide services to them.”

At the agency, Director Leon Panetta has helped slow the exit of talent. But this year he has seen his top three leaders leave the agency. Collectively, they represented more than 75 years of institutional knowledge and operations talent.

One former official said the loss of so many insiders has taken a toll on those connected to the agency.

“Honestly, it’s painful to see, and it’s not in the national interest to see so many men and women at the peak of their experience walk out of the agency at the age of 52 or 53,” the former official said. “The agency would be well served to implement stronger incentives to encourage people to stay.”

Bob Wallace, a 32-year agency veteran who now runs Artemus Consulting Group in Herndon, suggested that the departures from the agency reflect more than the draw of a big salary outside government. Rather, he said, some veterans who have risen to the management level are leaving for a much more mundane reason: bureaucracy.

“People tire of meetings,” Wallace said. “Eventually, they decide they want to jump to the private sector so they can be back on the street again — doing what they love.”