Outsourcing at NSA boosts Md., security

Spy agency cooperating with industry to better keep up with technology

March 31, 2004|By Robert Little | Robert Little,SUN STAFF

The National Security Agency, scrambling to keep pace with developments in telecommunications and other technologies at the heart of its eavesdropping operations, plans to gradually declassify some work and shift it to businesses "outside the fence lines" of its Maryland headquarters.

The spy agency hopes to exploit the commercial advancements that are making the nation's enemies increasingly hard to find and monitor.

It is pursuing the shift as a matter of national security, but politicians and economists say any migration of the NSA's resources toward the private sector could make a considerable impact on the burgeoning economy of computer and technology businesses in Central Maryland - if a mysterious one, given the NSA's secretive and often classified spending habits.

The agency's total annual budget, though known to be well into the billions of dollars, is classified, as is information about its payroll and the size of its work force.

But the director of the NSA, Lt. Gen. Michael V. Hayden, said yesterday that his agency spent $2 billion last year on contract work in Maryland. And while he did not commit to increasing that figure, he said new procedures for background checks and relaxed guidelines for less-sensitive work should make money available to many more private business around the state.

While its exact size remains a secret, the NSA is one of the state's largest employers and a force in the economy of Central Maryland and the communities surrounding its headquarters at Fort George G. Meade in Anne Arundel County, economists say. Agency officials do not dispute estimates that the NSA employs more than 15,000 people in the region.

"There are dramatic potential opportunities here, with an agency that large," said Anirban Basu, a Maryland economist and head of the research company Optimal Solutions Group. "To the NSA it's just outsourcing, but it sounds like much of that work will be inside the state of Maryland. That could be a very significant opportunity."

Sen. Barbara A. Mikulski, a Maryland Democrat, said: "When we are spending money on intelligence and homeland security, those jobs are not on a fast track to Mexico, a slow boat to China or ... anywhere else in the world. The code-breakers have to be here, and thank God they are."

Cooperating more with private industry makes good business sense, Hayden said, but is being done mostly out of a strategic necessity created by emerging technologies that have transformed and often confounded the agency's intelligence-gathering operations.

While the NSA is still adept at gathering and interpreting electronic data, he said, terrorist groups such as al-Qaida can take advantage of commercial communications and encryption equipment that is developing and improving at a dizzying rate. And to keep up, the agency must work more closely with the companies and individuals driving those improvements.

"We can go outside the fence lines to solve the kinds of challenges that were created outside the fence lines in the first place," Hayden said. "Our physical presence here is a benefit to the local economy, but it's also a benefit to us, and we're trying to take better advantage of that. Our only way of persevering is by relying more and more on what society has to offer."

The forum for Hayden's discussion was a meeting of the Baltimore/Washington Corridor Chamber of Commerce in Linthicum, billed as an examination of the effect federal spending on homeland security could have on Maryland's economy.

Long an advocate of lifting the veil of mystery when the agency's legendary secrecy is not required, Hayden said he wants private industry to look upon the NSA more as a potential partner than a curiosity - at least in a few appropriate and limited ways.

"It's not always obvious when we've made a strategic decision to go in a different direction, but we have, and we want you to be aware of that," he said.

"We won't go to you for everything - there are some things that nobody else does, or that nobody does better than us - but we want to discover what each of us does best."

Hayden offered few specifics about the kinds of work the NSA might shift toward private contractors, except that it would fall within the agency's purview of information technology, encryption, data storage and processing, and mathematics. The change will be gradual and has been in place informally for several years, he said, spurred by such events as an agency computer malfunction and the 2001 terrorist attacks.

The NSA already uses private contractors extensively - the equivalent to 5,000 full-time workers a day, Hayden said - but they are typically treated like employees, undergoing an extensive background check that can last a year and working inside the agency's tight security umbrella.

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