Intel Cuts Mean U.S. Will Have More Blind Spots

By John Walcott - Nov 5, 2011 2:49 AM GMT+0700

After seeing spending double over a decade, U.S. intelligence agencies are bracing for about $25 billion in budget cuts over the next 10 years that top officials said will increase security risks.

“We’re going to have less capability in 10 years than we have today,” said Director of National Intelligence James Clapper, who sits atop the 16 departments, agencies and offices that comprise the intelligence community and spend a combined $80 billion a year. “This is about risk management, because we’re going to have some risk,” he said in an interview Thursday with Bloomberg News and two other organizations.

For example, after spending enormous amounts on collecting intelligence to support the wars in Iraq and Afghanistan and the pursuit of al-Qaeda, intelligence officials and policy makers must decide whether to pay less attention to those areas, said a former intelligence official who spoke on the condition of anonymity because he’s still charged with protecting classified information.

Clapper, along with intelligence and congressional officials who spoke on the condition of anonymity due to the classified material, said that much of the savings will come from consolidating a multitude of different information technology systems which together cost about $12 billion a year.

“The focus right now is on eliminating unnecessary and redundant IT systems” across the intelligence community, Clapper told the United States Geospatial Intelligence Foundation’s annual symposium in San Antonio on October 17.

More Clouds

Moving toward cloud computing, single enterprises, and thin clients loaded with fewer applications will help reduce the reliance on outside vendors, help desks and contractors, the officials said. One advantage, Clapper said, is that intelligence agencies will “avoid vendors selling us the same stuff over and over again.”

Because consolidation and reliance on the cloud can create greater security risks, some of those savings are likely to be offset by greater investments in Internet security by the FBI, the CIA and the National Security Agency.

Clapper and U.S. counterintelligence officials, for example, said the U.S. cannot park large amounts of data in the same cloud. Instead, they forecast cyberskies with multiple clouds, some of which can take over if one of them is compromised.

Contractor Cuts

In San Antonio, Clapper, a retired U.S. Air Force lieutenant general and a former executive at Booz Allen Hamilton, SRA International Inc. (SRX) and Detica DFI, now a U.S. subsidiary of BAE Systems Plc, also said the intelligence community “must reduce our contractor profile.” He hastened to add: “If all the contractors failed to come to work tomorrow, the intelligence community would stop.”

The use of contractors, Clapper and other officials said, makes it easier and less expensive for the intelligence community to add and subtract people -- linguists, for example - - as the nation’s needs and interests change. Oversight of contractors should be improved, they said.

Clapper also said he’s determined to avoid the mistakes of past intelligence budget cuts, notably the one that followed the collapse of the Soviet Union.

This time, Clapper said, the U.S. needs to protect its people, which range from traditional spies with language skills to NSA code-breakers and linguists, to the analysts in multiple agencies who must cope with an ever-increasing flood of information -- good, bad, indifferent and malicious -- from spies, informants, tweets, Facebook pages, news articles, emails, spy satellites and overheard phone conversations.

Bin Laden Example

For example, said a senior intelligence official, a staff of 125 people worked 24 hours a day just to analyze the information collected when U.S. special operations forces raided Osama bin Laden’s hideout in Pakistan on May 2 and killed the al-Qaeda leader.

At the same time, the intelligence community must sustain robust research and development of new technologies and invest more in what’s called “overhead” -- the spy satellites that photograph, watch, listen, measure and map areas that interest or concern U.S. policy makers, Clapper said.

Those capabilities are especially important because, as U.S. troops are withdrawn from Afghanistan over the next three years, policy makers will need more of what’s called Intelligence, Surveillance and Reconnaissance (ISR) to war them of possible attacks and protect a shrinking combat force.

Surveillance Targets

Top priorities for U.S. intelligence also will continue to include places such as Iran, North Korea and China where it’s difficult for human spies to move around, recruit agents, and steal secrets.

The proliferation of information technology also means the U.S. must invest more in counterintelligence to protect government and commercial secrets, as a report this week from the National Counterintelligence Executive said.

Keith Masback, the president of the U.S. Geospatial Intelligence Foundation, a group of intelligence specialists, applauded Clapper’s approach in an e-mail.

“In front of the largest annual gathering of intelligence professionals in the nation, to include most of the contractors which serve the community, he could have sort of puffed out his chest and pandered to them saying, ‘I am charged with securing the nation, and I will fight to ensure that the Intelligence Community is spared from cuts,’” Masback said. “Instead, he delivered the cold, hard reality that the IC will have to take its fair share of cuts.”

To contact the reporter on this story: John Walcott in Washington at jwalcott9@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net