Uncle Sam keeps SAIC on call for top tasks

Government turns to California company for variety of sensitive jobs

October 26, 2003|By Scott Shane | Scott Shane,SUN STAFF

When the Pentagon wanted to assemble a team of Iraqi exiles to assist in restoring postwar Iraq, it gave the job to a company with a name not chosen for flashy marketing: Science Applications International Corp.

When Gov. Robert L. Ehrlich Jr. wanted experts to assess alleged security problems with electronic voting machines Maryland is buying, he, too, turned to SAIC.

The National Security Agency signed a contract with SAIC last year to overhaul its top-secret eavesdropping systems. The Army hired the company to support the delicate task of destroying old chemical weapons at Aberdeen Proving Ground. The National Cancer Institute relies on SAIC to help run its research facility in Frederick.

And this month, when the Transportation Security Administration decided it needed help disposing of all those nail clippers confiscated from air travelers, it gave the multimillion-dollar contract to SAIC.

While SAIC is dwarfed by such defense giants as Bethesda-based Lockheed Martin, no contractor does a more mind-boggling variety of jobs for the government. None is entrusted with more sensitive tasks. Yet few Americans have heard of the San Diego-based company, whose forgettable name and low public profile have long been a draw for publicity--shy intelligence agencies.

SAIC is the 34-year-old brainchild of one man, physicist J. Robert Beyster, who will step down as chief executive officer next month, and its structure as an employee-owned, decentralized company is unique. But its role as on-call contractor for the Washington bureaucracy illustrates the benefits and controversies of contracting at a time when the private sector handles much of government's business and officials move routinely from agencies to contractors and back.

"We're in an era when everything from garbage collection to prison systems to public schools are being turned over the private companies," says P.W. Singer, a Brookings Institution scholar and author of Corporate Warriors: The Rise of the Privatized Military Industry. "The privatization wave is immense and often shocking."

The billions being doled out for Iraq reconstruction - such as the contract for oil-field restoration by Halliburton, once headed by Vice President Dick Cheney - have come under fire from members of Congress who suspect well-connected companies will benefit more than the people of Iraq. But such contracting is no aberration. It is the way government runs.

The federal government pays contractors well over $200 billion annually, or about 30 percent of discretionary spending, according to Harvard University contracting expert Steve Kelman. For some agencies, the proportion is far higher: The Pentagon spends nearly half of its budget on contractors, NASA about 78 percent and the Department of Energy 94 percent.

In the competition for these riches, SAIC has grown from $243,000 to nearly $6 billion in revenue since 1970. Two-thirds of its work comes from the federal government, and 14,000 of its 40,000 employees work in the Washington, D.C., area.

Any company so intertwined with security agencies can seem spooky. A news brief in June announced that SAIC had rented space in Sterling, Va., for a unit called "Reconnaissance and Surveillance Operations," not further identified. A 1996 article in an Air Force journal spoofed the company as "VAIC" - Violence Applications International Corporation - and an old joke hints at one of the company's biggest customers by asking: What is SAIC backward?

SAIC's record is not perfect: Iraqis and international organizations have accused SAIC of bungling a Pentagon contract to set up new Iraqi media, and the Maryland voting machine contract has been clouded by allegations of a conflict of interest.

But an overall reputation for competence and expertise has won for SAIC such key jobs as designing the federal instant background-check system for gun buyers and putting together the security system for the Salt Lake City Olympics.

SAIC was built on two principles Beyster believed would encourage worker loyalty and enterprise: All stock is held by employees, and operations are extraordinarily decentralized.

"It's in one-person offices and 500-person offices," says Steve Rizzi, 40, a corporate vice president and 20-year employee who works in Annapolis. "What the company's really all about is the inspiration of individual entrepreneurs."

In Annapolis, Rizzi says, SAIC people are in three completely separate offices - Rizzi's 100-person information technology shop; EPA's Chesapeake Bay Program office; and a maritime operation that designs yachts for the America's Cup.

What draws sharp people to SAIC, Rizzi says, is "the freedom to build the business you want to build. ... The company is extremely opportunistic."

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