[Bloquez l'empire!] the power behind the power behind the throne

[amy]

---------------------------------------------------

*Washington's $8 Billion Shadow*

Mega-contractors such as Halliburton and Bechtel supply the government 
with brawn. But the biggest, most powerful of the "body shops"—SAIC, 
which employs 44,000 people and took in $8 billion last year—sells 
brainpower, including a lot of the "expertise" behind the Iraq war.

*By Donald L. Barlett and James B. Steele

02/20/07 "**Vanity Fair*
<http://www.vanityfair.com/politics/features/2007/03/spyagency200703?printable=true&currentPage=all>*"
 - March 2007 --- O*ne of the great staples of the modern Washington 
movie is the dark and ruthless corporation whose power extends into  every
cranny around the globe, whose technological expertise is without  peer,
whose secrets are unfathomable, whose riches defy calculation, and  whose
network of allies, in and out of government, is held together by  webs of
money, ambition, and fear. You've seen this movie a dozen times.  Men in
black coats step from limousines on wintry days and refer
guardedly to unspeakable things. Surveillance cameras and eavesdropping 
devices are everywhere. Data scrolls across the movie screen in digital 
fonts. Computer keyboards clack softly. Seemingly honorable people at  the
summit of power—Cabinet secretaries, war heroes, presidents—turn out  to
be pathetic pawns of forces greater than anyone can imagine. And at  the
pinnacle of this dark and ruthless corporation is a relentless and 
well-tailored titan—omniscient, ironic, merciless—played by someone like 
Christopher Walken or Jon Voight.

To be sure, there isn't really such a corporation: the Omnivore Group,  as
it might be called. But if there were such a company—and, mind you,  there
isn't—it might look a lot like the largest government contractor  you've
never heard of: a company known simply by the nondescript
initials SAIC (for Science Applications International Corporation), 
initials that are always spoken letter by letter rather than formed into 
a pronounceable acronym. SAIC maintains its headquarters in San Diego, 
but its center of gravity is in Washington, D.C. With a workforce of 
44,000, it is the size of a full-fledged government agency—in fact, it  is
larger than the departments of Labor, Energy, and Housing and Urban 
Development combined. Its anonymous glass-and-steel Washington office—a 
gleaming corporate box like any other—lies in northern Virginia, not far 
from the headquarters of the C.I.A., whose byways it knows quite well. 
(More than half of SAIC's employees have security clearances.) SAIC has 
been awarded more individual government contracts than any other private 
company in America. The contracts number not in the dozens or scores or 
hundreds but in the thousands: SAIC currently holds some 9,000 active 
federal contracts in all. More than a hundred of them are worth upwards 
of $10 million apiece. Two of them are worth more than $1 billion. The 
company's annual revenues, almost all of which come from the federal 
government, approached $8 billion in the 2006 fiscal year, and they are 
continuing to climb. SAIC's goal is to reach as much as $12 billion in 
revenues by 2008. As for the financial yardstick that really gets Wall 
Street's attention—profitability—SAIC beats the S&P 500 average. Last 
year ExxonMobil, the world's largest oil company, posted a return on 
revenue of 11 percent. For SAIC the figure was 11.9 percent. If
"contract backlog" is any measure—that is, contracts negotiated and 
pending—the future seems assured. The backlog stands at $13.6 billion. 
That's one and a half times more than the backlog at KBR Inc., a
subsidiary of the far better known government contractor once run by  Vice
President Dick Cheney, the Halliburton Company.

It is a simple fact of life these days that, owing to a deliberate 
decision to downsize government, Washington can operate only by paying 
private companies to perform a wide range of functions. To get some idea 
of the scale: contractors absorb the taxes paid by everyone in America 
with incomes under $100,000. In other words, more than 90 percent of all 
taxpayers might as well remit everything they owe directly to SAIC or 
some other contractor rather than to the IRS. In Washington these 
companies go by the generic name "body shops"—they supply
flesh-and-blood human beings to do the specialized work that government 
agencies no longer can. Often they do this work outside the public eye, 
and with little official oversight—even if it involves the most
sensitive matters of national security. The Founding Fathers may have 
argued eloquently for a government of laws, not of men, but what we've 
got instead is a government of body shops.

The unhappy business practices of the past few years in Iraq—cost 
overruns, incompetence, and corruption on a pharaonic scale—have made  the
American public keenly aware of the activities of mega-contractors  such
as Halliburton and Bechtel. Although SAIC takes on government  projects
such as those pursued by contractors like these, it does not  belong in
exactly the same category. Halliburton and Bechtel supply the 
government's brawn. They pour concrete, roll out concertina wire, build 
infrastructure. They call on bullnecked men to provide protection.

In contrast, SAIC is a body shop in the brain business. It sells human 
beings who have a particular expertise—expertise about weapons, about 
homeland security, about surveillance, about computer systems, about 
"information dominance" and "information warfare." If the C.I.A. needs  an
outside expert to quietly check whether its employees are using their 
computers for personal business, it calls on SAIC. If the Immigration  and
Naturalization Service needs new record-keeping software, it calls  on
SAIC. Indeed, SAIC is willing to provide expertise about almost  anything
at all, if there happens to be a government contract out there  to pay for
it—as there almost always is. Whether SAIC actually possesses  all the
expertise that it sells is another story.

What everyone agrees on is this: No Washington contractor pursues 
government money with more ingenuity and perseverance than SAIC. No 
contractor seems to exploit conflicts of interest in Washington with  more
zeal. And no contractor cloaks its operations in greater secrecy.  SAIC
almost nev5er touts its activities in public, preferring to stay  well
below the radar. An SAIC executive once gave a press interview and 
referred to the enterprise as a "stealth company," a characterization 
that is accurate and that has stuck. "Nobody knows who they are," says 
Glenn Grossenbacher, a Texas lawyer who has battled SAIC in court on a 
whistle-blowing case. "Everybody knows Northrop Grumman and G.E., but if 
you went out on the street and asked who the top 10 [defense]
contractors are, I can guarantee you that SAIC would not be one of them."

Which is all the more remarkable in light of two developments. The first 
is a mounting collection of government audits and lawsuits brought by 
former employees for a variety of reasons, some of them personal and  some
coming under federal whistle-blower statutes. In a response to  written
queries, SAIC characterized itself as a "highly ethical company  and
responsible government contractor, committed to doing the right  thing."
But a review by Vanity Fair of thousands of pages of documents,  including
corporate e-mail messages, offers disturbing revelations about  the
company's inner workings, its culture, and its leadership.

The second development is that several of SAIC's biggest projects have 
turned out to be colossal failures, failures that have occurred very  much
in public.

One involves the National Security Agency, America's
intelligence-gathering "electronic ear" and for many years SAIC's  biggest
customer. The volume of telephone, e-mail, and other electronic 
communications that the N.S.A. intercepts worldwide is so massive that 
the agency urgently needs a new computer system to store it, sort it,  and
give it meaning—otherwise it will keep missing clues like the Arabic 
message "Tomorrow is zero hour," intercepted the day before 9/11 but not 
translated until the day after. SAIC won the initial $280 million, 
26-month contract to design and create this system, called Trailblazer. 
Four years and more than a billion dollars later, the effort has been 
abandoned. General Michael V. Hayden, the former head of the N.S.A. and 
now the director of the C.I.A., blamed the failure on "the fact we were 
trying to overachieve, we were throwing deep and we should have been 
throwing short passes." Happily for SAIC, it will get the chance for a 
comeback in the second half. The company has been awarded the contract 
for a revised Trailblazer program called ExecuteLocus. The contract is 
worth $361 million.

Another failed effort involves the F.B.I., which paid SAIC $124 million 
to bring the bureau, whose computer systems are among the most primitive 
in American law enforcement, into at least the late 20th century. The 
lack of information-sharing is one reason why the F.B.I. failed to 
realize that in the year leading up to 9/11 two of the future
hijackers—including one with known "jihadist connections"—were actually 
living in the San Diego home of an F.B.I. informant. SAIC set to work on 
a system called the Virtual Case File. V.C.F. was supposed to become a 
central repository of data (wiretap transcripts, criminal records, 
financial transactions) from which all F.B.I. agents could draw. Three 
years and a million lines of garbled computer code later, V.C.F. has  been
written off by a global publication for technology professionals as  "the
most highly publicized software failure in history." The failure  was due
in part to the bureau's ever shifting directives, which points  up the
perverse nature of government-by-contract. When the government  makes
unrealistic demands, the contractors go along anyway: they are  being paid
not to resist but to comply. If it turns out they can't  deliver, new
contracts will simply be drawn up. Responding to questions  about the
F.B.I. project, the company conceded that "there were areas in  which SAIC
made mistakes, particularly where we failed to adequately  communicate our
concerns about the way the contract was being managed."

These and other SAIC activities would seem to be ripe targets for 
scrutiny by the new Democratic Congress. But don't be surprised if you 
hear nothing at all: SAIC's friends in Washington are everywhere, and 
play on all sides; the connections are tightly interlocked. To cite just 
one example: Robert M. Gates, the new secretary of defense, whose 
confirmation hearings lasted all of a day, is a former member of SAIC's 
board of directors. In recent years the company has obviously made many 
missteps, and yet SAIC's influence in Washington seems only to grow, 
impervious to business setbacks or even to a stunning breach of security.

Much to the embarrassment of a company entrusted with some of the 
nation's most precious secrets, its San Diego offices were mysteriously 
burgled in January of 2005. A censored San Diego police-department  report
reveals the basic outline. The report notes that the building "is 
patrolled by DOD certified security" and that "the interior lights are  on
motion sensors and would have been activated by the suspects." 
Nevertheless, burglars managed to break into SAIC's headquarters, pry 
open 13 private offices, and walk out with one desktop-computer hard 
drive and four laptops. By SAIC's account, the computers contained 
personal data on thousands of present and past employees, presumably 
including the company's many former C.I.A. operatives, N.S.A.
executives, and Pentagon officials. To date, the burglary remains unsolved.

SAIC has displayed an uncanny ability to thrive in every conceivable 
political climate. It is the invisible hand behind a huge portion of the 
national-security state—the one sector of the government whose funds are 
limitless and whose continued growth is assured every time a politician 
utters the word "terrorism."

SAIC represents, in other words, a private business that has become a 
form of permanent government.

A Plain Brown Envelope
On the evening of January 17, 1961, Dwight D. Eisenhower came down from 
the White House living quarters to the Oval Office and delivered his  last
address to the American people as president. This was the famous  speech
in which he warned against the "disastrous rise of misplaced  power" in
the hands of what he called "the military-industrial
complex"—the sturdy hybrid formed by crossbreeding American corporate 
interests with those of the Pentagon and the intelligence community.

As Eisenhower spoke, a quietly ambitious man on the other side of the 
country, John Robert Beyster, was going about his business as head of  the
accelerator-physics department at the General Atomic corporation, in  La
Jolla, California, one of many secretive companies that sprouted  early in
the atomic era. Beyster had grown up outside of Detroit, served  in the
navy during World War II, and earned a Ph.D. in nuclear physics  from the
University of Michigan before migrating to Southern California  in the
1950s. He was a lanky and nerdy-looking technocrat, but the  tortoiseshell
glasses concealed a driven personality. Beyster believed  that General
Atomic didn't appreciate his ideas, and he began to lay  plans. Within a
decade of Eisenhower's farewell speech, Beyster would  create an
enterprise epitomizing the military-industrial complex that  caused
Eisenhower such dismay. Now, four decades later, that company  epitomizes
something beyond Eisenhower's worst nightmare—the
"military-industrial-counterterrorism complex."

Science Applications International Corporation was born in February of 
1969 in a stucco office building in La Jolla next to a ballet studio 
overlooking the Pacific. "I was not the brilliant, flash-of-inspiration 
type of entrepreneur," Beyster would later recall; rather, he was more a 
"persistent builder type." The name he decided on for his company,  though
brilliantly opaque, reflected an assumption that the real future  of
national defense—or, at any rate, the real future profits to be had  from
national defense—lay in science and technology, not in boots on the 
ground. And a lot of that scientific work would necessarily be
analytical; it would be about thinking as much as about making.
Beyster's very first government contract came from the Defense Atomic 
Support Agency: he was given the task of calculating "the output of 
nuclear devices."

Beyster understood that this particular moment of the American Century 
was the perfect time for shrewd consultants to get into the war
business. The conflict in Vietnam was still raging, and the Cold War 
seemed to have become a permanent fixture of the geopolitical landscape. 
The Nixon administration was promoting a missile-defense system to 
protect its ICBM installations. Scientists were hard at work on a host  of
nuclear projects, including the fabled neutron bomb. Although
computers had yet to revolutionize government and business, visionaries 
like Beyster could see that eventually they would, and so, for SAIC, 
computer systems represented another target of opportunity.

Joined by research scientists from General Atomic and elsewhere, Beyster 
developed a straightforward business plan. As he later explained it, 
"People who came into the company went out and got contracts." Everyone 
who worked for SAIC had to carry his own weight. You might have a Ph.D. 
in physics or applied mathematics, but at SAIC your job fundamentally  was
to sell your high-tech ideas and blue-chip expertise to the army,  navy,
air force, C.I.A., N.S.A., Atomic Energy Commission, and any other 
government agency with money to spend and an impulse to buy. Contracts 
were everything. There is much to be said for SAIC's approach: in its 
four decades of existence, the company has turned a profit every single 
year.

Beyster aggressively packed his company with former generals, admirals, 
diplomats, spies, and Cabinet officers of every kind to fill the
company's board of directors and the upper echelons of its staff. These 
were the kinds of people who would always have easy access to the 
agencies they had left behind—and who someday might even go back into 
government. To be sure, every Beltway defense contractor tries to bring 
retired generals and admirals into the fold, but Beyster offered an 
incentive that others couldn't match: an internal stock-ownership 
program, which promised to make government officials rich after they  left
public service. The stock-ownership program would eventually be  expanded
to include everyone on the company's payroll, but it began as  Beyster's
way of rewarding favored executives and board members, whose  identities
were kept secret. A lucky recipient would learn of his good  fortune when
a messenger appeared in his office carrying a plain brown  envelope
containing a newly minted stock certificate.

SAIC had its own brokerage subsidiary, licensed by the S.E.C., a kind of 
in-house Merrill Lynch called Bull, Inc. The name accurately predicted 
the stock's vitality. Beyster and his board managed every aspect of the 
stock—the number of shares, who received them, and, most important, the 
price. Unlike on Wall Street, where individual stock prices go up and 
down, the SAIC stock price, controlled by Beyster and his board, usually 
moved in one direction only: up. The more contracts you landed, the more 
stock you received. Even if you stayed at SAIC for only a short time,  you
could in the long run earn a lot of money. And if you left SAIC to  go
back into government service, you had considerable incentive to keep 
SAIC's continuing good fortunes in mind.

SAIC's internal stock market was instrumental in the company's early 
success. Peter Friesen, a San Diego attorney who has represented former 
SAIC employees in civil complaints against the company, says, "If you 
find somebody [in government] who wants a job with SAIC later, and he 
sees the steady rise in the stock price over the years and knows he can 
get a job with stock options and stock bonuses, then he's going to be 
sending business over to SAIC. And it worked."

SAIC opened its Washington office in 1970. Although San Diego would 
remain SAIC's home base, the workforce in the Washington area soon 
eclipsed the workforce everywhere else. To ensure support on Capitol 
Hill, corporate outposts were prominently set up in key congressional 
districts. Meanwhile, scores of influential members of the
national-security establishment clambered onto SAIC's payroll, among  them
John M. Deutch, undersecretary of energy under President Jimmy  Carter and
C.I.A. director under President Bill Clinton; Rear Admiral  William F.
Raborn, who headed development of the Polaris submarine; and  Rear Admiral
Bobby Ray Inman, who served variously as director of the  National
Security Agency, deputy director of the C.I.A., and vice  director of the
Defense Intelligence Agency.

SAIC's relative anonymity has allowed large numbers of its executives to 
circulate freely between the company and the dozen or so government 
agencies it cares about. William B. Black Jr., who retired from the 
N.S.A. in 1997 after a 38-year career to become a vice president at  SAIC,
returned to the N.S.A. in 2000. Two years later the agency awarded  the
Trailblazer contract to SAIC. Black managed the program. Donald  Foley, a
current SAIC director, came out of a top position at the  Defense Advanced
Research Projects Agency, the Pentagon group
responsible for developing new military technology. SAIC might as well 
operate an executive shuttle service between its McLean, Virginia, 
offices and the C.I.A., the F.B.I., the Pentagon, and the Department of 
Energy. Technically, federal ethics rules stipulate that former
government officials must wait one year before contacting anyone in  their
former agencies. Sometimes they can't wait: Mark A. Boster left  his job
as a deputy assistant attorney general in 1999 to join SAIC, and  was
already calling Justice three months later on behalf of his new 
employers—a violation of federal law. Boster paid $30,000 in a civil 
settlement.

The Young-Boy Network
The driving force behind SAIC, the man who shaped its personality and 
culture across nearly four decades, until he was forced out in 2004, was 
of course Bob Beyster. From the beginning Beyster was indefatigable, 
constantly on the road, promoting SAIC to any government official who 
would listen. On a 10-day trip, he'd jam in as many as 80 appointments. 
If he had an hour between planes, he'd order his secretary to jam in one 
more. Beyster may have been a scientist by training, but he was a 
salesman at heart. He described himself as a "marketeer."

Although he could be an engaging companion when dealing with military 
brass and agency heads, around the office Beyster could also be distant 
and imperious, an autocrat who ruled with an iron hand. SAIC presented 
itself as a friendly "employee owned" company. Inside, everyone
understood how the stock program was really used—to punish and reward.  No
one harbored any illusions about whose company it was. "In Bob  Beyster's
mind, that company was not the shareholders' company, it was  Bob
Beyster's company," said Gerald Pomraning, a nuclear physicist who  helped
Beyster set up SAIC, in a legal proceeding. "When I was on the  board of
directors, he told us many times that the board of directors  was simply a
legal entity that was required, but it was his company."

Beyster advocated a form of internal entrepreneurship that led to 
cutthroat competition for contracts. Operations were chaotic because 
divisions independent of one another frequently fought for the same 
business. Glenn Grossenbacher, the Texas lawyer, describes the dynamic  as
"eat what you kill." Chief financial officers, frustrated by
Beyster's exacting and sometimes mercurial demands, came and went. The 
company's organizational chart was often in flux. According to one  former
executive, Beyster was known around the office as a "control  freak" who
undermined managers by going around them and dealing directly  with their
staffs. Bernice Stanfill King, a former SAIC executive who  managed the
company's internal stock program, says that Beyster would  often assign a
single job to two executives. "He would call in one  high-level guy and
put him on a project," she explains. "Then he would  call another guy in a
totally different part of the company and put him  on the project. Then
these guys would bump into each other and [wonder],  'What's he doing?'
You never honestly knew what was going on inside.  Nothing was ever in the
open."

As befits a company with deep ties to the intelligence and
national-security community, SAIC's culture has always had a military 
cast to it. Employees are expected to follow orders. Even former
employees are wary of discussing SAIC. One former manager who has worked 
on sensitive, even dangerous assignments abroad spoke about SAIC only 
after receiving assurances of anonymity, saying, "This is a very
powerful company."

In the years when most corporations had glass ceilings for women, few 
were lower or thicker than the one at SAIC. Although Beyster was married 
(and the father of three children), his behavior toward women often 
ranged from coolness to open hostility. His former secretary, Linda 
Anderson, once testified that Beyster was "uncomfortable with women."  She
recalled that when a woman came into a meeting Beyster's manner  became
stilted. "Even his posture changed," she said. King, who sued the  company
for sex discrimination and won, said in an interview with Vanity  Fair
that when passing Beyster in the hall she was not to speak to him  or even
to look at him. Women were made to address the boss as "Dr.  Beyster"; men
called him "Bob." When a woman made a mistake, Beyster  typically called
her on it, using words like "stupid" or "incompetent."  When a man made a
mistake—well, it was just that, a mistake. Beyster's  former secretary
testified that he once instructed her, on the eve of a  major corporate
function, to make sure he wasn't seated next to SAIC's  one female board
member, "because all women talked about was where they  got their hair
done."

Beyster's close associates within SAIC were a succession of young men. 
Known as aides-de-camp, they were usually handsome, well educated, and 
intelligent, with a facility for numbers and a willingness to perform 
personal tasks for their boss. Beyster was an ardent sailor, and in the 
summertime he liked to spend afternoons cruising the waters off San  Diego
aboard his yacht in the company of these young men. George Wilson,  who
once headed SAIC's public-relations operation, has stated in a legal 
proceeding that the young men provided a variety of personal services  for
Beyster, including using SAIC equipment to make copies of
pornographic movies that Beyster would watch aboard his boat.

When Beyster traveled on business, he often took one of the
aides-de-camp with him, and asked his secretary to arrange for them to 
stay in the same hotel room—this according to the secretary's courtroom 
testimony. Wilson said in a deposition that one of the young men he knew 
who slept in the same room with Beyster on these trips told him that he 
didn't like doing it, but that "it was part of traveling with Beyster." 
Some of the young aides-de-camp went on to become executives at SAIC. 
Bernice King testified that Beyster had a name for his young assistants: 
he called them his "baby boys." When asked about these assertions, which 
surfaced in a sex-discrimination case, Beyster declined to comment on  any
particulars, saying, "Although I cannot address the specific points  you
raise from court testimony, I will say that during this trial a  number of
very personal accusations were leveled against me that are not  accurate."

Klondike on the Euphrates
Civilians at SAIC used to joke that the company had so many admirals and 
generals in its ranks it could start its own war. Some might argue that, 
in the case of Iraq, it did.

There isn't a politically correct way to put it, but this is what needs 
to be said: 9/11 was a personal tragedy for thousands of families and a 
national tragedy for all of America, but it was very, very good for  SAIC.
In the aftermath of the attacks, the Bush administration launched  its
Global War on Terror, whose chief consequence has been to channel  money
by the tens of billions into companies promising they could do 
something—anything—to help. SAIC was ready. Four years earlier,
anticipating the next big source of government revenue, SAIC had
established the Center for Counterterrorism Technology and Analysis. 
According to SAIC, the purpose of the new unit was to take "a
comprehensive view of terrorist threats, including the full range of 
weapons of mass destruction, more traditional high explosives, and 
cyber-threats to the national infrastructure." In October of 2006 the 
company told would-be investors flatly that the war on terror would 
continue to be a lucrative growth industry.

SAIC executives have been involved at every stage of the life cycle of 
the war in Iraq. SAIC personnel were instrumental in pressing the case 
that weapons of mass destruction existed in Iraq in the first place, and 
that war was the only way to get rid of them. Then, as war became 
inevitable, SAIC secured contracts for a broad range of operations in 
soon-to-be-occupied Iraq. When no weapons of mass destruction were  found,
SAIC personnel staffed the commission that was set up to
investigate how American intelligence could have been so disastrously wrong.

It is Wednesday afternoon, March 25, 1998, and David A. Kay, who had  been
a U.N. official in Iraq in the aftermath of the 1991 Gulf War, is  on
Capitol Hill testifying before the Senate Armed Services Committee. 
Americans generally remember Kay as the head of the Iraq Survey Group, 
the man who showed that Saddam Hussein didn't possess W.M.D. when  America
invaded in 2003, and that the war was launched under false  pretenses. But
today, in 1998, he is not David Kay, weapons inspector,  but David Kay,
director of SAIC's Center for Counterterrorism Technology  and Analysis.
He is a stockholder in a company known to cognoscenti in  the hearing room
as a fraternal twin of the intelligence establishment.  With great
authority, Kay tells the committee that Saddam Hussein  "remains in power
with weapons of mass destruction" and that "military  action is needed."
He warns that unless America acts now "we're going to  find the world's
greatest military with its hands tied."

Over the next four years, Kay and others associated with SAIC hammered 
away at the threat posed by Iraq. Wayne Downing, a retired general and a 
close associate of Ahmad Chalabi, proselytized hard for an invasion of 
Iraq, stating that the Iraqis "are ready to take the war 
 overseas.  They
would use whatever means they have to attack us." In many of his 
appearances on network and cable television leading up to the war, 
Downing was identified simply as a "military analyst." It would have  been
just as accurate to note that he was a member of SAIC's board of 
directors and a company stockholder. (Downing was also the chief
proponent of a weapons system called Metal Storm, capable of firing a 
million rounds of ammunition a minute; SAIC received $10 million from  the
Pentagon to develop prototypes, but in the last two years the Metal  Storm
company has lost millions.) In the run-up to the war, David Kay  remained
outspoken. He told NBC News in October of 2002, "I don't think  it's
possible to disarm Iraq as long as Saddam is in power and desires  to
maintain weapons of mass destruction."

On all these points Kay and Downing were buttressing the views of Vice 
President Dick Cheney, Defense Secretary Donald Rumsfeld, and others in 
the Bush administration. They were also echoing the assertions of Iraqi 
exiles living in the United States, who had been trying to overthrow 
Saddam Hussein for years. Many of those exiles—people like Khidhir  Hamza,
a onetime atomic-energy official in Iraq, who insisted that  Saddam posed
an imminent nuclear danger to the United States—would in  time receive
paychecks from SAIC. Although his evidence had long been  discredited by
weapons experts, Hamza was among about 150 Iraqi exiles  designated by the
Pentagon as members of the newly chartered Iraqi  Reconstruction and
Development Council. The plan was that, once American  troops secured
Iraq, the I.R.D.C. recruits would move into influential  positions in a
rebuilt Iraqi government.

SAIC served as the paymaster for the Iraqi exiles under a $33 million 
government contract. It brought them all together in the Washington, 
D.C., suburbs, rented apartments for them, paid their living expenses, 
provided various support services, and, later, after the invasion and 
occupation, flew them to their jobs in the new, democratic Iraq. This 
SAIC operation reported to Douglas Feith, the undersecretary of defense 
for policy at the Pentagon, a key assistant to Rumsfeld, and one of the 
architects of the Iraq invasion and occupation. Feith's deputy was 
Christopher "Ryan" Henry, a former SAIC senior vice president.

It was understood in Washington, long before the actual onset of "shock 
and awe," that the Iraq war would be a Klondike gold rush for
contractors. Prior to the war, SAIC was awarded seven contracts,
together worth more than $100 million, without competitive bidding. The 
Defense Department's justification for the no-bid contracts: "We need  the
immediate services of a fully qualified contractor who has the 
unqualified support and confidence of the Pentagon leadership." SAIC's 
personnel, designated "subject-matter experts," were expected to lend a 
hand on such matters as "business development, international and
regional political relations, the role of women in government, and 
government reform." Among SAIC's subject-matter experts was Shaha Riza, 
an Arab feminist and communications adviser at the World Bank. Riza also 
happened to be the girlfriend of Paul Wolfowitz, the deputy secretary of 
defense.

One week before the invasion, SAIC was awarded yet another no-bid 
contract, this one for $15 million, which within a year would balloon to 
$82 million. The contract gave SAIC the responsibility for establishing  a
"free and independent indigenous media network" in Iraq, and for  training
a cadre of independent Iraqi journalists to go with it. The  selection of
SAIC for this job may have seemed counter-intuitive. A year  earlier, SAIC
had been involved in a Pentagon program designed to feed  disinformation
to the foreign press. The program was overseen by a  Pentagon entity with
the Orwellian name of Office of Strategic
Influence, and its aims proved sufficiently odious that someone inside 
the Pentagon leaked its existence to The New York Times. An unrepentant 
Donald Rumsfeld stated that he would shut down the Office of Strategic 
Influence—but in name only: "There's the name. You can have the name,  but
I'm going to keep doing every single thing that needs to be done."

To create its Iraqi Media Network, SAIC hired professional newsmen from 
the United States as consultants. One of them was a former NBC News  staff
member, Don North, who had launched his career as a cameraman in  Vietnam
and eventually rose to become the NBC News bureau chief in  Cairo. North
began with high expectations. Once Saddam Hussein was  ousted, he and his
colleagues hoped to create a BBC-like news operation,  instilling
"standards of international broadcasting and news reporting"  that Iraqis
had never known before. It soon became clear that the  Pentagon and the
Coalition Provisional Authority had other ideas. To  them, the Iraqi Media
Network represented an opportunity to push the  U.S. agenda in Iraq in the
most simplistic sort of way. With SAIC's  cooperation, the network quickly
devolved into a mouthpiece for the  Pentagon—"a little Voice of America,"
as North would put it. Iraqis  openly snickered at the programming. Every
time North protested, he  recalls, he was rebuffed by SAIC executives.
"Here I was going around  quoting Edward R. Murrow," North says, "and the
people who were running  me were manipulating and controlling a very
undemocratic press and media  that was every bit as bad as what Saddam had
established." In the end  the network was turned over to Iraqi control.
Today it is a tool of  Iraq's Shiite majority and spews out virulently
anti-American messages  day and night. "And to think we started it," says
North. The
SAIC-created television network may be the only functioning weapon of 
mass destruction in today's Iraq.

As everyone now acknowledges, no other such weapons have ever been  found,
although search teams ran through more than $1 billion looking  for them.
The closest they came was the discovery, in May of 2003, of a  "mobile
bioweapons lab" in the form of a tractor-trailer whose interior 
configuration looked suspicious. David Kay was on hand to lend credence 
to the notion that the trailer was a weapons lab. "This is where the 
biological process took place," he explained in one NBC News broadcast. 
"You took the nutrients. Think of it sort of as a chicken soup for 
biological weapons. You mixed it with the seed stock, which came from 
this gravity-flow tank up here into the fermenter, and under pressure 
with heat, it fermented." Kay outlined the process step by step. The 
discovery of the trailer was, as the NBC News interviewer allowed, "very 
close to that elusive smoking gun."

It turned out, however, that the mobile weapons lab was nothing of the 
kind. To be sure, the military, back in the United States, did have in 
its possession something that looked a lot like the Iraqi trailer. In 
advance of the invasion, SAIC had built its own version of a mobile 
bioweapons lab, intended to help U.S. troops recognize such a facility  if
they ever came across one. SAIC had built, in effect, a
self-fulfilling prophecy.

After failing to find the W.M.D., Kay told Congress in January of 2004: 
"Let me begin by saying we were almost all wrong, and I certainly  include
myself here." The next month President Bush appointed a
commission to look at how American intelligence managed to miss the  truth
about Iraq's weapons programs. The commission delivered its report  one
year later, and although it sternly pointed to obvious intelligence 
failures, it kept its gaze, as it had been told to do, at a very low 
level—and far away from the issue of whether senior policymakers had 
deliberately manipulated intelligence findings: "The Commission found no 
indication that the Intelligence Community distorted the evidence 
regarding Iraq's weapons of mass destruction," the report concluded.

Three of the commission's staff members had direct ties to SAIC. One was 
Gordon Oehler, the commission's deputy director for review. When Oehler 
left the C.I.A., in October of 1997, after a 25-year career, he in 
essence walked down the street and into the McLean offices of SAIC to 
become a vice president for corporate development. A second commission 
staff member with ties to the company was Jeffrey R. Cooper, vice 
president for technology and chief science officer in one of SAIC's  major
sub-units. The third member was Samuel S. Visner, who holds a  graduate
degree in Washington's revolving-door system. From 1997 to  2001, Visner
was an SAIC vice president for corporate development, and  also a
business-development manager. Next, he moved into a government  spymaster
job, becoming chief of signals-intelligence programs for the  National
Security Agency. During this time SAIC was one of several firms  to
receive a $280 million contract from the N.S.A. to develop one of its 
secret eavesdropping systems. In 2003, Visner returned to SAIC to become 
a senior vice president and the director of strategic planning and 
business development of the company's intelligence group.

As for General Downing, he has become a regular contributor on
television as a military expert on the war in Iraq and America's
options. Everyone seems to have forgotten his earlier bellicosity.

The Flying Hummer
SAIC's ability to prosper is all the more remarkable given its record of 
lawsuits, charges brought by whistle-blowers, allegations of
profiteering, fines assessed by federal judges, and repeated
investigations and government audits. According to one former executive, 
in a sworn deposition in 1992, the practice of "mischarging" became 
"institutionalized within the company." (SAIC denies such allegations.)

The job of establishing the Iraqi Media Network's infrastructure—cables, 
transmitters, dishes—was rife with corruption and waste. In one
instance, government auditors questioned an SAIC invoice for
approximately $10 million. (SAIC says it is unaware of the auditors' 
report.) In March of 2004 the Pentagon's inspector general found
widespread violations of normal contracting procedures: improper
payments to subcontractors, unsubstantiated equipment purchases,
unauthorized personnel on the payroll. One of the more blatant
transgressions concerned SAIC's overall manager of the media effort in 
Iraq. The investigators discovered that he had bought a Hummer and a 
pickup truck in the United States and then chartered a DC-10 cargo jet  to
fly them to Iraq. When a Pentagon official refused to allow the  charge,
the inspector general reported, "SAIC then went around the  authority of
this acquisition specialist to a different office within  the Under
Secretary of Defense for Policy to gain approval and
succeeded." SAIC's performance on the Iraqi Media Network contract is 
now, indirectly, at issue in a lawsuit brought by an employee who  alleges
that she was fired after she tried to draw the attention of SAIC 
executives to what she described in the suit as "unethical, illegal, and 
unsafe practices" by the company in Iraq. Because of the pending legal 
action, this employee declined to be interviewed, but considerable 
documentation is already part of the public record, including portions  of
her personnel file. SAIC's corporate priorities are suggested by one 
commendation the employee received, for her "excellent billing
credentials."

This way of doing business has been an SAIC character trait for years.  In
1991, SAIC was charged with falsifying data submitted to the E.P.A.  on
soil samples from Superfund toxic-waste sites. The law required the 
E.P.A. to identify toxic dumps and determine which ones posed the  gravest
risks. To perform the analysis, the E.P.A. contracted with  independent
labs, including SAIC's Environmental Chemistry Laboratory,  in La Jolla.
The lab was supposed to test soil and water samples within  a certain
number of days of their being received "to ensure the
chemicals being tested for would not have dissipated in the interim."  But
technicians at SAIC's lab tested some samples after the deadline and  then
backdated the results. SAIC mounted a high-powered
behind-the-scenes campaign to escape prosecution. A member of SAIC's 
board of directors, former secretary of defense Melvin R. Laird, wrote a 
personal letter to Attorney General Dick Thornburgh. "I can assure you 
there was no wrongdoing on the part of the corporation," Laird stated. 
Criminal prosecution of SAIC, he went on, would be "entirely
inappropriate." Ultimately the company was accused by the government of 
making "false, fictitious and fraudulent statements," and pleaded guilty 
to 10 counts of making false statements or claims. SAIC paid $1.3  million
in fines and restitution.

A few years later SAIC was in trouble again, this time over its efforts 
to design a flat-panel liquid-crystal-display screen to be used as a 
navigational device in the cockpits of air-force fighter jets. The 
initial contract had been awarded in 1987, but SAIC kept going back for 
more money. The government would shell out millions—even as SAIC assured 
the air force that steady progress was being made. And in fact air-force 
officials had no reason to believe otherwise: they had seen what they 
thought was a demonstration model when SAIC officials unveiled a
slick-looking compact box with a backlit screen. SAIC officials traveled 
to military bases around the country to show off the prototype. A 
respected magazine, Engineering Design News, published a photograph of 
the display screen on its cover.

But the box was a fake. SAIC had been unable to develop the actual 
technology. The prototype—in effect, nothing more than a cheap video 
game—had been cobbled together with components taken from TV sets, 
computers, and everyday consumer appliances. When two SAIC employees 
complained to their superiors, both were fired. Two employees later  filed
whistle-blower lawsuits charging SAIC with defrauding the
government. While denying any wrongdoing, in 1995 SAIC settled the suit 
with the government and paid a fine of $2.5 million.

The ill-fated cockpit-display project was hardly an isolated case. A 
recent case revealed one method SAIC employed to increase the profits on 
a contract. In San Antonio, the air force awarded SAIC a $24 million 
contract to clean up contaminated-waste sites at Kelly Air Force Base. 
Once the project was under way, the SAIC manager overseeing the job 
realized that the work would cost much less than the amount SAIC had 
negotiated. "It was massively overstaffed," Michael Woodlee, the former 
manager, said in an interview. "I didn't need that many [people]." 
Woodlee said he told one of his superiors that "there was no way under 
the moon we could spend all this money."

This is not what SAIC wanted to hear. Woodlee said that, because he 
couldn't spend everything in his budget, his SAIC superiors suggested 
that he "harvest money out of [his] project and send it up the corporate 
ladder." After he resisted, Woodlee contended, the project was taken  away
from him, and he was laid off.

In 2002, Woodlee filed a whistle-blower lawsuit charging SAIC with fraud 
under the federal False Claims Act. Working with air-force
investigators, the U.S. attorney in San Antonio concluded that SAIC had 
in fact grossly understated profits on the contract: rather than the 8  to
10 percent profit the contract allowed, SAIC had, "unbeknownst to the  Air
Force," realized profits of three times that amount, and had
submitted "false and fraudulent statements of its expected costs and 
profits."

SAIC's response was audacious. It told federal officials, in effect,  that
the government was right: the company does increase the profit  margin
beyond the terms of the contract. But there's a reason: risk is  involved,
and the additional profit is compensation for that risk.  According to
documents in the case, SAIC explained that it employs  something called
"Quantitative Risk Analysis" to identify potential  business risks, and
that it factors those costs into its contracts,  although without ever
mentioning the fact to customers. In a written  response, the company
stated that this kind of risk analysis is
"commonly used throughout industry" and "such purely judgmental
information was not required to be disclosed under [federal law] based  on
longstanding legal principles." But by failing to disclose that 
information to federal negotiators, the air force maintained, SAIC 
induced it "to agree to much higher prices than [the air force] would 
have agreed to had SAIC truthfully disclosed its cost and pricing data." 
After SAIC's "risk defense" surfaced, the air force issued a written 
alert to warn other agencies about SAIC's business methods, which it  said
SAIC "intends to continue using."

Although the amount of money in contention was relatively small, the 
principle involved was large, and it had potentially national
implications. Was SAIC using the same formula in thousands upon
thousands of other contracts it had with the government? We'll never 
know. For reasons that remain unclear, the Justice Department decided 
against expanding the probe beyond San Antonio. Is it possible that a 
call was made from one well-placed individual to another? In April of 
2005, SAIC, while denying wrongdoing, settled the San Antonio lawsuit by 
paying a fine of $2.5 million.

More important, the company had forestalled a wider investigation. One  of
Woodlee's lawyers, Glenn Grossenbacher, who has represented other 
whistle-blowers against other companies, describes SAIC as unlike any 
other company he has ever confronted. "These guys handle things very 
differently than other people," he said. "They had better access to the 
Pentagon than the government's own attorneys. They are so well connected 
they were able to isolate this one case. This should have been a
[national] case. The reason it wasn't was because of their political 
clout to shut it down and localize it."

Not every SAIC client is as forgiving as the United States government. 
When SAIC failed to deliver a highly touted security system for the 2004 
Athens Olympics, the Greek government refused to make a final payment. 
SAIC had proposed the most extensive security shield in Olympic history: 
more than 100 command posts, vehicle-tracking devices and sensors 
everywhere, 1,600 video cameras, and a blimp loaded with "sensitive 
equipment" floating "silently overhead acting as an airborne
surveillance center." As video feeds flowed to a central command post, 
SAIC's state-of-the-art software would link all these capabilities. The 
system was to remain in place as an anti-terrorism tool in Athens for 
years to come. But turmoil within SAIC plagued the effort from the  start.
Project managers came and went. On the eve of the games a source  close to
the Olympic planners stated that "the entire Committee without  exception
believe that the 
 system doesn't work."

The Olympics started up on schedule. SAIC's security system did not. A 
newspaper in Athens described the system as "operationally useless," and 
Greek officials improvised simply by adding more guards. Before the  games
began, SAIC and the Greek government had quietly come to an  agreement
that called for continued testing of the system and "final  acceptance to
occur no later than October 1, [2004]"—one month after the  games ended. A
payment of $23 million would follow. SAIC missed this  deadline, too.
After more wrangling the two sides, according to an  Athens newspaper,
reached an understanding that calls for SAIC to  complete work by May
2008, almost four years after the Olympics. As of  last fall, SAIC's
losses on the project totaled a staggering $123  million, and the company
acknowledges "our poor performance on the Greek  Olympics contract." SAIC
is trying to recoup some of its losses in an  arbitration and so far has
managed to keep the lid on potentially  embarrassing revelations about the
competence of a company whose
operations are built on claims of technical expertise.

Radiation Sickness
Given that its founder came from a company called General Atomic it is 
hardly surprising that SAIC has been heavily involved in the nuclear 
business. One early project came in the 1970s and 80s, when SAIC
received Pentagon contracts to reconstruct the amount of radiation 
absorbed by military personnel during atomic-bomb tests and other 
service-related exposures. The government's bookkeeping was so erratic 
from the early days of the Cold War that it was often difficult to tell 
how much radiation soldiers had received and whether it might have been 
responsible for their various cancers. When SAIC did the numbers, few 
veterans qualified for compensation. The Pentagon's nuclear testing was 
in effect off the hook, and ailing veterans were out of luck. After  years
of hearings, Congress in 1988 passed the Radiation-Exposed
Veterans Compensation Act, which gave veterans the benefit of the doubt. 
It was presumed that their cancer was attributable to nuclear exposure 
without considering the radiation dose. By then many of the veterans  were
dead. A health physicist who testified later on behalf of the  veterans
spoke unkindly of the original SAIC work: "Atomic veterans have  been
deprived of benefits intended by Congress through [SAIC's]
deceptive internal dose reconstructions and poor understanding of 
radioactive material distribution in the body." SAIC disagrees, saying 
that it "continues to work with the government to apply the best science 
to performing dose reconstruction for atomic veterans."

Periodically over the years, the Nuclear Regulatory Commission and the 
U.S. Department of Energy, prodded by executives in the nuclear
industry, have sought to ease the rules against re-using "lightly" 
contaminated radioactive waste. The impetus has been the inexorably 
growing stockpile of nuclear debris—much of it lethal—that has been 
accumulating at weapons sites and power plants in America for decades. 
One way to draw down the stockpile would be to recycle large volumes of 
discarded nickel, aluminum, copper, steel, and other irradiated metals 
into usable products. If slightly radioactive metal were combined with 
other metals, the resulting material could be made into all kinds of 
consumer items—knives and forks, baby strollers, chairs, rings, eyeglass 
frames, bicycles, reclining rockers, earrings, frying pans. It also  could
be used in construction.

Lest any of this sound improbable, in the 1980s radioactive table legs 
began turning up in the United States everywhere from restaurants to 
nursing homes. A radioactive gold ring cost a Pennsylvania man his arm. 
The public outcry was so great that in 1992 Congress set out to ban this 
form of recycling. The N.R.C., D.O.E., and nuclear industry saw the ban 
coming and were not happy about it, but they also saw a way out: maybe  it
would be possible to develop broad guidelines that would allow the 
contaminated waste to be recycled based on what were deemed "safe" 
exposure levels. Never mind that there is no such thing as a safe dose  of
radiation. Two months before the ban was signed into law, the N.R.C.  gave
the multi-million-dollar job of formulating the guidelines to an  outside
contractor. The contractor was SAIC.

As the years slipped by, across town, another federal agency, the 
Department of Energy, was handing out a $238 million contract to
B.N.F.L. Inc., at that time the U.S. subsidiary of British Nuclear  Fuels,
"to clean up and reindustrialize three massive uranium enrichment 
facilities" at Oak Ridge National Laboratory, in Tennessee. The
agreement called for B.N.F.L. to recycle "hundreds of thousands of tons 
of metals." British Nuclear Fuels had a questionable track record in the 
nuclear industry. For decades it had dumped plutonium and other
radioactive waste into the Irish Sea and the North Atlantic. Its workers 
had falsified critical quality-control data. When the D.O.E. announced 
the contract, SAIC was identified as a major subcontractor in the 
recycling of radioactive scrap metal.

Because the N.R.C. and the D.O.E. for some reason weren't talking to  each
other, the elegance of this arrangement escaped everyone's
attention. To connect the dots: SAIC was writing the regulations for one 
government agency, the N.R.C., which would set the permissible limits of 
radioactive contamination for recycling, even as it partnered with 
another company, under contract to a different federal agency, the 
D.O.E., to recycle the radioactive metal for which it was drafting the 
regulations.

The synergy of this arrangement was discovered accidentally by a
Washington lawyer, Daniel Guttman, whose longtime passion has been 
conflicts of interest that inevitably—purposefully—arise from government 
outsourcing. Guttman called attention in public hearings to what was 
happening, thoroughly embarrassing officials at the N.R.C. and the  D.O.E.
and stirring the ire of public-interest groups. The N.R.C. killed  its
contract with SAIC. The recycling project was put on hold. And the  N.R.C.
filed suit against SAIC, alleging "false and/or fraudulent 
representations to the effect that [SAIC] was providing services to the 
NRC which were free from bias." SAIC has denied the conflict-of-interest 
claims, and the suit is still pending.

But SAIC is by no means out of the nuclear business. It may be under a 
cloud at the N.R.C., but it's still a partner, with the construction 
giant Bechtel, in the largest nuclear project of all—the $3.1 billion 
effort to build a repository for America's high-level radioactive waste. 
The firm Bechtel SAIC is constructing the repository deep under Yucca 
Mountain, Nevada, where the buried waste will remain lethal for at least 
10,000 years. It could provide a revenue stream for SAIC as far into the 
future as one can imagine.

The Permanent Government
Bob Beyster turned 79 in 2003. He was in his 34th year with the company. 
A writer for The San Diego Union-Tribune, granted a rare interview  around
this time, observed that Beyster was a "little more stooped now,"  but
still vigorous. He continued to run three or four miles almost every  day.
Over the years numerous executives rumored to be his successor had  come
and gone as it became apparent that Beyster had no intention of 
relinquishing power. But the sheer size of the company and its
aggressive, internally competitive style were catching up to Beyster. 
Even Pentagon officials had begun to complain that SAIC's overlapping 
divisions were creating confusion. When the Pentagon talks, contractors 
listen. In 2003, the SAIC board forced him out. By 2004, SAIC had a new 
chairman, Kenneth Dahlberg, a top executive at General Dynamics with  long
experience in the defense industry.

In October of 2006, SAIC carried out a long-anticipated I.P.O., selling 
86 million shares at $15 a share in its debut on the New York Stock 
Exchange, raising $1.2 billion. Reflecting investor bullishness, shares 
rose to $21 in a matter of days. Its prospects have never looked brighter.

Unlike traditional wars, which eventually come to an end, the Global War 
on Terror as defined by the Bush administration can have no end: it is a 
permanent war—the perfect war for a company that has become an essential 
component of the permanent government. Political change causes scarcely  a
ripple. As one former SAIC manager observed in a recent blog posting:  "My
observation is that the impact of national elections on the business 
climate for SAIC has been minimal. The emphasis on where federal
spending occurs usually shifts, but total federal spending never
decreases. SAIC has always continued to grow despite changes in the 
political leadership in Washington."

And the revolving door never stops spinning. One of the biggest
contracts ever for SAIC is in the works right now. It's for a Pentagon 
program called Future Combat Systems, which is described as "a complex 
plan to turn the U.S. Army into a lighter, more lethal, more mobile 
force" and also as "the most difficult integration program ever
undertaken by the U.S. Department of Defense." The contract runs into  the
billions of dollars. The man who helped craft this program at the 
Pentagon was Lieutenant General Daniel R. Zanini. Zanini recently  retired
from the army, and he now has a new job. Can you guess where it  might be?

/Donald L. Barlett and James B. Steele are Vanity Fair contributing editors/

*Click here to comment on this and other articles* <http://www.ichblog.eu>

/In accordance with Title 17 U.S.C. Section 107, this material is 
distributed without profit to those who have expressed a prior interest 
in receiving the included information for research and educational 
purposes. Information Clearing House has no affiliation whatsoever with 
the originator of this article nor is Information ClearingHouse endorsed 
or sponsored by the originator.)/

<mailto:?subject=Information%20Clearing%20House%20-%20%20News&Body=Thought%20you%20might%20find%20this%20interesting%20%20http://www.informationclearinghouse.info/article17136.htm>